What is commodity trading in India?
Commodity trading in India happens primarily on the Multi Commodity Exchange (MCX) through futures and options contracts. Unlike equities where you buy shares of a company, commodity contracts derive their value from physical goods like gold, crude oil, or agricultural products.
MCX is open for trading from 9:00 AM to 11:30 PM (or 11:55 PM during US daylight saving time), which means you can trade commodities well after equity markets close. This extended window is useful for tracking global commodity prices that move with international markets.
Available commodities
- Gold (and Gold Mini, Gold Petal): The most popular commodity on MCX. Standard lot is 1 kg (~₹60 lakh), but Gold Mini (100g) and Gold Petal (1g) offer smaller contract sizes for retail traders.
- Silver (and Silver Mini, Silver Micro): Standard lot is 30 kg. Silver Mini (5 kg) and Silver Micro (1 kg) are more accessible. Highly volatile with larger intraday moves than gold.
- Crude Oil: Tracks global Brent/WTI prices. Standard lot is 100 barrels. Crude Mini (10 barrels) is popular with retail traders. Very liquid with tight spreads.
- Natural Gas: Standard lot is 1,250 mmBtu. Known for extreme volatility — 3–5% daily moves are common. Not recommended for beginners.
- Others: Copper, zinc, aluminium, lead, nickel, and agricultural commodities like cotton and mentha oil. Liquidity varies widely — stick to gold, silver, and crude for tighter spreads.
Brokerage comparison for MCX
Most discount brokers charge the same flat fee for MCX as equity F&O. However, since commodity contract values can be very large (1 kg gold = ~₹60 lakh), the brokerage as a percentage of trade value is often negligible.
- Zerodha: ₹20 per order or 0.03%, whichever is lower. On a Gold Mini contract, ₹20 flat applies.
- Dhan: ₹20 per order across all commodity contracts.
- mStock: ₹0 for all trades (lifetime zero brokerage plan) — includes MCX.
- Upstox: ₹20 per order for commodity futures and options.
- HDFC Securities: Percentage-based, typically 0.05%–0.1% — on a ₹60 lakh gold contract, that's ₹3,000–₹6,000 per trade.
Regulatory charges on MCX (CTT instead of STT)
The biggest structural difference: commodity trades attract CTT (Commodity Transaction Tax) instead of STT. The rates are similar but not identical to equity F&O.
- CTT on futures: 0.01% on the sell side — same as STT on equity futures.
- CTT on options: 0.05% on the sell side (on option premium) — lower than equity options STT of 0.0625%.
- Exchange transaction charge: MCX charges around 0.0026% — slightly higher than NSE equity but varies by commodity.
- Stamp duty: Applied on the buy side, same state-wise rates as equity derivatives.
- GST: 18% on brokerage + exchange transaction charges, same as all segments.
Agricultural commodity derivatives are exempt from CTT, making them cheaper to trade from a tax perspective. However, liquidity in agri contracts is limited.
Which brokers offer commodity trading?
Most major brokers now offer MCX trading, but it's not universal. You typically need to activate the commodity segment separately — it's not enabled by default in your trading account.
- Available at: Zerodha, Dhan, Upstox, Angel One, mStock, Fyers, ICICI Direct, HDFC Securities, Kotak Securities, 5paisa — all offer MCX trading.
- Limited or unavailable: Some newer fintech brokers like Groww and INDmoney focus primarily on equities and mutual funds. Check with your broker if commodity trading is available before opening an account specifically for MCX.
Activation usually requires filling out a short form and may involve an additional KYC step. There's typically no extra charge for enabling the commodity segment.