Indian Commodity Market Case Study

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CAUSAL LINKS BETWEEN GOLD AND SILVER PRICES OF INDIAN COMMODITY MARKET KIRITHIGA. S NARESH. G ABSTRACT Indian commodity market is one of the emerging markets in the world. With the globalization and advances in technology the commodity trading has become feasible for market participants. The recent policy changes paved way for investors to play in the commodity market and that lead the commodities to emerge as an asset class and get shares in their portfolio. The market efficiency is one of the important feature that gives confidence for the investors to trade in any market. This also fits to the Indian commodity market. The precious metals such as Gold and Silver which has an emotional bonding with the Indians are now emerging more as…show more content…
The globalization and advances in technology have significantly changed the way of trading and increased the market participants in the commodity markets. The factors determining prices and the frequency with which prices change has increased exponentially in spite of this timely access to information and analysis is the only way to succeed in commodity market. The futures markets helps in managing the risk associated with the uncertainty of future prices. The efficiency of futures markets arises from their ability to predict the future price of an asset at a specified future date without any bias. A market is said to be efficient in an informational sense if the prices of the assets traded on that market promptly reflect all available information. This is a strong argument and in terms of weak argument prices will reflect all available information up to the point where the cost of gaining additional information is equal to the profits derived from that information. Efficiency can be achieved when traders make use of arbitrage…show more content…
Dey and Maitra (2012) studied the price discovery process of pepper by applying Granger causality, Co-integration, Error Correction model. They found a unidirectional causality from Futures to Spot prices in the pepper Futures market. Sehgal et. al. (2012) studied the price discovery relationship for Indian Agricultural Commodities. They found the price discovery process is efficient and also recommended to strengthen the market regulatory framework to the Forward Market Commission (FMC). Their study also revealed the need for warehousing and market linkages in

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