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India’s Commodity Market Stands Strong Amid Global Economic Woes

By: Pinki Tue, 17 Oct 2023 11:07:16

India’s Commodity Market Stands Strong Amid Global Economic Woes

Despite global challenges, India has been an economic bright spot, displaying significant growth. Economic growth increased by 7.2% in the fiscal year 2022/23, making its growth rate the second highest among G20 countries and almost twice the average for emerging market economies. Commodities have been instrumental in maintaining India’s resilience. The gradual decline of inflation is expected as food prices normalize and government measures increase the supply of key commodities. Lower commodity prices have also helped manufacturers increase margins and offset the impact of cumulative interest rate increases. With commodities gaining traction due to lower prices and increased access to the market, India may receive more of a boost in strength as global economies are expected to slow down.

Enhancing the agricultural sector

India’s agricultural sector is a major economic pillar, providing livelihood to roughly 60% of the country’s population and a significant percentage of the gross domestic product. The country is also one of the leading producers of commodities like milk, wheat, and horticulture. The commodity market plays a vital role in ensuring the strength of the agricultural sector. With more market participation and investments going into key commodities, farmers, and producers can get more profits and support for their work to minimize the impact of losses. Investing in agricultural businesses providing these commodities also allows for improvements in production and productivity, post-harvest and processing, market intelligence, marketing, and logistics. For instance, India’s horticultural sector can further capitalize on untapped potential through agricultural technology, or agtech, to further improve business processes and boost India’s overall economic growth even further.

Growth of online trading

Online brokerages and trading platforms have digitalized the trading process, allowing people to access financial markets and trade assets using their devices. Platforms and apps enable people to trade commodities on a retail level, contributing to economic growth and personal wealth building. Using this technology also allows traders to keep trading costs low amid price fluctuations, hedge their portfolio with diverse commodities, and delay or sometimes completely avoid stop-outs. With easier access to markets and an enhanced trading experience, more people have become interested in investing and trading commodities and other assets. Trading tech allows investors to access the top-traded commodities in the world, from industrial and agricultural materials. Investing in crude oil, gold, natural gas, and more aids in hedging against losses from other asset classes while contributing to India’s agricultural sector and commodity market.

Festive season boosts

The commodity market is also set to see a surge in demand during the festive season in India. Many Indians buy gold during Dhanteras or for winter weddings, and common household goods like spices and edible oil also see a rise in sales as delicacies and feasts are prepared for celebrations. The prices for these commodities have also been dropping, which is expected to drive up the demand and increase sales. Customers may be more encouraged to purchase items like gold, spices, or edible oil, and the commodity market is gearing up for this influx. But with more people flocking to buy these items, local businesses also receive the support of increased demand and sales. Better business performance also aids in contributing to the overall growth of the Indian economy.

The commodity market plays an essential role in strengthening the Indian economy, especially as global events impact growth and progress all over the world. The country is already benefiting from robust domestic demands, strong public infrastructure investment, and a strengthening financial sector; if the commodity market and investments in raw materials can be further capitalized on, the country may be able to increase resilience as economic woes threaten to worsen.

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