The global meltdown and the financial crisis across domestic and international equity markets, have forced several domestic broking houses to choose some option to surpass this lean phase. Many broking houses are currently focussed more on trading in commodities, especially gold and crude oil, while some broking houses are also looking at currency futures to give their clients more options to generate some gains.
Mandar Pote, analyst (bullion and metals) at Angel broking said, “It has been seen in recent times that not only gold but other commodities like silver, are also catching the attention of retail investors. Apart from that, at this juncture, when Indian equity markets are down, commodities are the only helping hand for several broking houses to overtake this financial tsunami.”
In the current calendar year till date, the 30-share Sensex of the Bombay Stock Exchange (BSE) has shed over 1k points, while the broader S&P CNX Nifty of National Stock Exchange (NSE) is down by over 270 points.
Not only can the investors trade in gold but they can also participate in the futures market to hedge their risk, “In the current market, investors are not willing to invest in the equity market, so commodities is the main option left for them. Also, we have seen a good amount of increase in the volumes of commodities at our broking house in the past few days,” added Pote.
An analyst from a leading broking house, on the condition of anonymity, said, “In these troubled times, there is lack of retail participation in equity markets. After the sudden rise in gold, investors are looking at this option to secure their future.”
Anita Gandhi, head of institutional business at Arihant Capital Markets said, “As stock markets are volatile, investors are willing to invest in gold due to its safety factor. Not only that, but several investors are also hedging their risk by investing in gold.”
Numerous broking houses have also started looking at the currency futures segment, which is a relatively new segment for broking houses. Rakesh Goyal, head-distribution at Bonanza Portfolio Ltd said, “Not only are we looking at commodities, but we are also building up a team for currency futures in several parts of the country. This diversity gives many options to our investors to evade the risk in the equities market.”