Stock or share market is a market where securities or shares of different companies are issued and traded over the exchange. here an individual buy or sell share of different companies that occur in National Stock Exchange or in Bombay stock exchange.
here Commodities based stock means that operations of that company or raw material that company may be a individual commodity like irrigation industry aviation industry, paint and tyre industry for all this industry there raw material may be crude oil.
Thus the up and down in prices of crude oil may be directly or indirectly affect the operation of that company and this would impact the prices of share of a individual company.
And the commodities are raw or primary product that can be bought or sold. in India different commodities are traded on its Derivative contract or in future contract.
derivative are the contract whose value is derived from the underlying asset. this are 1 month expiry contract for delivery of goods on specific future date. all this commodities future contract are exchange traded securities like a stock future contract that are traded over Multi Commodity exchange (MCX).
Suppose An individual Purchase a single lot (i.e 100) Gold Sep Future Contract at the rate of 30000/- by paying a initial margin.
he is making a contract that will accept the delivery of 1 Kg. gold before the expiry of contract by paying full amount.
To understand this we can say To invest in cash or in stock PC Jewller whose CMP is around 470.45/- share and to buy gold future contract in MCX is different thing.
here the prices of gold may affect the operations of that company ( like annual sales, production etc) through cost of purchase.
In stock market positive and negative movement in share will not affect the profit and loss of company, but profit and loss would affect the prices of share in equity or stock market.
Like a share market tips in cash, commodity, future and option a individual can also receive a recommendation in currency market. When he is expecting to invest in currency derivative that is a financial instrument to invest in currency derivative.
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