A Study of Financialization of Commodity Markets in India

• Published in: E3S Web of Conferences
• Main Authors: Rodrigues Joswin Prince, B Vinnarasi
• Format: Article
• Language: English
• Published: EDP Sciences 2023-01-01
• Subjects: financialization; commodities; stock market; commodity prices; india
• Online Access: https://www.e3s-conferences.org/articles/e3sconf/pdf/2023/36/e3sconf_iconnect2023_07011.pdf

For numerous financial institutions, Commodity Futures (CF) has emerged as a widespread asset class since the 2000s. From 2000 to 2010, the estimation of the number of commodity index traders quadrupled, also, the number of hedge funds tripled. Recently, it has been noticed that in India, there occurs a vast inflow of investment toward the CF. Simultaneously, there occurs a problem of extremely higher prices along with volatility in commodity prices in India. However, studies on the financialization of the Commodity Market (CM) in India are not sufficient. This study was presented for analyzing the role of the financialization of CMs in India. Analyzing the association betweenCMs and equities markets in India is the major intention behind this study. Here, the Indian- MCX of India, the NSE of India, and the S&P500 Index are the sources from where the data has been gleaned. The outcome has been evaluated by utilizing a vector autoregression. The output demonstrated that no positive interdependence was exhibited by the correlation betwixt MCX Comdex returns and CNX Nifty. Consequently, a higher percentage of the mean value was attained by the commodity of daily returns of metal of commodity of agriculture.