The financial environment in India is changing at a very fast pace and the commodity market is becoming a more attractive market to investors. This market, which has traditionally been dominated by institutional investors, is increasingly being opened to retail investors and has become more accessible and relevant to retail investors, with the enhanced regulation, wider digital accessibility and the growing necessity to diversify portfolio, it has become relevant even to first-time stock market participants.
India has vigorous commodity markets in all forms, such as gold and silver, crude oil and other agricultural products, which trade internationally and frequently non-rhythmically with equity and bond markets. Since inflation, world tensions, and changes in the supply chain influence the prices of commodities, retail equity investors should track these trends closely to spot sector-specific stock opportunities.
Jarvis Invest, one of the best AI-powered SEBI-registered stock market advisor, helps investors take confident action with personalized, data-driven stock recommendations designed to maximize returns.
A Brief Overview of India’s Commodity Market
India’s commodity market is witnessing a significant surge, driven primarily by the Multi Commodity Exchange (MCX) and the National Commodity and Derivatives Exchange (NCDEX). As of July 2025, commodity derivatives turnover jumped to ₹45.8 lakh crore, with MCX accounting for nearly 98% of the volume. Retail participation has also grown sharply, now comprising around 35% of total traders up from just 12% five years ago. This growth is fueled by smaller lot sizes, simpler KYC, and user-friendly trading platforms. While MCX dominates non-agri commodities like metals and energy, NCDEX continues to focus on agricultural products. This rise in volume is closely watched by stock market participants
The Rise of Gold and Silver as Safe Havens
Indians have long cherished gold as a hedge and status symbol. But now they’re trading it too fueled by geopolitical uncertainty and persistent global inflation. In late July 2025, MCX gold futures hovered near ₹98,490 per 10 grams (October contract), while analysts eye a possible rise toward ₹101,700 per 10 grams amid bullish momentum. Meanwhile, silver futures surged to around ₹1,13,439 per kg (September contract), reflecting increased investor interest
Retail investors turned to these precious metals as hedges against inflation and economic uncertainty. With international factors like US interest rate changes, Middle East tensions, and central bank gold buying driving price volatility, gold and silver remain a crucial watchlist item for anyone looking to preserve wealth or gain from price movements. But instead of buying gold directly, savvy investors are looking at stocks in gold financing, jewelry export, or silver mining firms.
Energy Commodities Are Back in Focus
- Over 85% of the crude oil needs of India are imported. That is why crude oil prices are an important economic determinant and in your portfolio. The prices of crude oil reached a level of between 72-98 per barrel during the last one year owing to the OPEC decisions, US shale production, and geopolitical tensions.
- The mini crude oil contracts on MCX have been used more and more by retail traders to trade these moves. Natural gases have also continued to move more actively with winter being the high season in terms of demand worldwide.
- In the commodity market, energy prices are also a measure of transport, manufacturing and inflation rates and therefore act as a pointer to the rest of the markets. The knowledge on these price changes not only provides the investors with an ability to understand the trend of commodities but also the behavior in the stock market.
Agricultural Commodities A Seasonal, Yet Strategic Bet
- Agri-commodities such as chana, cotton and turmeric are making an entry, though they do not make quite as much of a glamorous impact as gold or crude. The NCDEX statistics indicate an amplified retail interest in crops due to weather forecasts, government Minimum Support Prices (MSPs), and monsoon reports.
- The retail investors are also venturing into commodity options, especially on agri products. These provide a low-risk tool to take advantage of seasonal price volatility ideal to conservative newcomers.
- Agri-commodity markets are becoming increasingly pertinent as the supply chain breaks partially due to the changing climate, impacting crop production volumes and leading to price instability. But, they are highly seasonal and influenced by the government policy hence have to be studied carefully.
- From an equity perspective, stocks in agri-processing, irrigation systems, and fertilizer production often react to agri-commodity cycles. These stocks offer seasonal potential and are worth watching for those who prefer equity over commodity contracts.
Commodities as a Diversification Tool – Within Equities
- The low correlation of commodities with equities presents one of the biggest advantages of commodities. In cases of falling stock markets when inflation levels reach higher values or pressure to increase the rate or even the world panic commodities are likely to move the opposite direction in this case gold or oil.
- Smart investors are now diversifying their equity portfolios by tracking how commodity trends influence listed companies across sectors like metals, energy, and agriculture. Just like stock indices, commodity indices such as MCX iCOMDEX serve as valuable benchmarks—helping retail investors align their stock strategies with broader market movements.
- Commodity based diversification may help to limit the volatility of the portfolio and enhance long term risk adjusted returns particularly in an uncertain macroclamatory.
What Should Retail Investors Do?
The first thing that investors have to do is to comprehend their risk profile. Commodities are highly rewarding but not everybody should take them especially in leveraged forms. For conservative investors, gaining exposure to commodity-driven market trends through equity investing is a safer and more accessible route. Those with moderate to high risk appetite can explore sector-specific stock opportunities in industries such as metals, energy, and agri-business — all of which are directly influenced by global commodity prices.
Tracking international developments like US Fed announcements, OPEC meetings, global demand outlook, and currency fluctuations is crucial, as these factors strongly impact stock sectors linked to commodities. Leading exchanges such as MCX and NCDEX regularly release market reports, host educational webinars, and share commodity outlooks — use these insights to make informed equity investment decisions that align with market momentum.
Jarvis Invest is a SEBI-registered investment advisor. Recognized as one of the best SEBI-registered advisories in India, it helps you invest smarter and manage your stock portfolio with confidence.
Frequently Asked Questions
1. What is a commodity market?
Ans. A commodity market is where raw materials like metals, energy, and agricultural goods are traded. In India, this is done via organized exchanges like MCX and NCDEX.
2. Can retail investors participate in the commodity market?
Ans. Yes. With mini and micro contracts, easier KYC norms, and digital platforms, retail participation has grown significantly in recent years.
3. Which commodities are best for beginners?
Ans. Gold, silver, and crude oil are among the most liquid and widely traded commodities, making them suitable for first-time investors.
4. Is commodity trading risky?
Ans. Yes. Commodities are volatile and influenced by unpredictable factors like weather, global events, and policy decisions. Beginners should avoid leverage and start with small positions.
5. What are the best commodity stocks to buy in India right now?
Ans. Top-performing commodity stocks in 2025 include leaders in metals, oil & gas, and agri-commodities. With Jarvis AI, you get ready-to-invest stock recommendations backed by ai with Jarvis Portfolio Management in India.
6. How can commodities help in portfolio diversification?
Ans. Commodities often move independently of stock markets, helping reduce portfolio risk during equity market downturns.
