AGRIDEX

About AGRIDEX:

• It was launched by National Commodity and Derivatives Exchange (NCDEX).
•  It is the country’s first agricultural futures trading index.
• Agridex, launched on 25 May,2020 comprises 10 liquid commodities traded on NCDEX.
• The values of these 10 commodities — soybean, chana, coriander, cottonseed oilcake, guar gum, guar seed, mustard seed, refined soy oil, castor seed and jeera — will define the value of this index.
• The index represents various agricultural commodities of both kharif and rabi seasons, with price references throughout the year.
• Agridex will also facilitate the participants in hedging their commodity risk based on price anticipation of the products.

What is futures trading?

• Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined future price and date.
• A futures contract allows an investor to speculate on the direction of a security, commodity, or a financial instrument, either long or short, using leverage.
• Futures are also often used to hedge the price movement of the underlying asset to help prevent losses from unfavorable price changes.

Prelims Question

Consider the following statements regarding AGRIDEX commodity exchange:
1.It is country’s first agricultural futures trading index.
2.It is based on the value of 10 agricultural commodities.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to the Prelims Question