What is NCDEX and How Does it Work?
NCDEX full form is National Commodity and Derivatives Exchange. It leads in agricultural commodities trading, and you can leverage it to earn profits while trading in Indian agriculture products. Incorporated as a public limited company in 2003, NCDEX uses state-of-the-art technology to help traders conduct error-free trading.
NCDEX trading if done in the right manner can add significantly to your wealth and since India is one the largest producers of wheat, milk and rice, etc., it plays an important role in promoting the agriculture sector of the nation.
Advantages of NCDEX
- Increased Market Transparency
By maintaining an online futures market for crops, this national commodity exchange has helped increase market transparency.
- Assist Farmers in Price Discovery Process
NCDEX commodity exchange assists farmer in the country in the price discovery process, enabling them to price their goods more accurately even if they aren’t active in the futures market.
- Cutting Out Middlemen
In the past, middlemen mostly controlled market information in India. However, thanks to the introduction of online commodity exchanges like the NCDEX, it has eliminated middlemen to a great extent.
- Improving Agricultural Practices
Exchanges like NCDEX commodity have standardised quality specifications of various products through contracts, thereby raising quality awareness. Today, farmers are increasingly focussing on enacting farming practices, resulting in high-quality crops.
NCDEX Demat Account
With an NCDEX Demat account, you can trade in agricultural commodities such as chana, coffee, cereals, oil and sugar, among others. Also, this account helps you to you can secure your shares in electronic format and conduct trade hassle-free.
Importance of NCDEX Demat Account
With an NCDEX Demat account, you can help farmers bolster growth of agricultural products, and support one of the prime employment generation sectors of the economy. At the same time, this account facilitates the entire trading exercise bringing convenience to the table.
How to Open an NCDEX Demat Account?
To open NCDEX Demat account and start NCDEX trading:
- Select a Stockbroker
To open an account, choose a stockbroker who is typically a member of NCDEX commodity exchange. You can either avail the services of a full stockbroker or a discount broker.
- Fill up the Application Form
Fill up the application form with all the required details and submit it to your broker. You need to furnish proof of your identity and address, among others.
- In-Person Verification
In-person verification is a mandatory exercise in the NCDEX Demat account opening exercise. Here, the broker will verify all the information given by you and authenticate it.
- Deposit Margin Money
To start NCDEX trading, you need to deposit margin money upon opening of the account. Margin money is a type of security money that you need to deposit to broker which comes handy in case you suffer a huge loss. The margin money is generally 5-10% of the contract value.
NCDEX Account Advantages
An NCDEX account helps you leverage the potential of the agri-commodity trading to the fullest. India has a flourishing agricultural sector, and you can easily participate in its growth with an NCDEX account.
Also, this account weeds out middlemen, a bane for farmers for long along with enhancing market transparency. Farmers can know the price and demand for their crops in the market, and thus take a stand accordingly.
How to Analyse a Cash Flow Statement?
Companies generally present their cash flow statement in two formats – direct and indirect – with the latter being more common. It has three segments:
- Operating
- Investing
- Financing
As operating cash flow comes directly from a company’s core business, they are at the heart of the cash flow statement. Organisations with high operating cash flows are self-sustaining and healthy. Investing cash flow shows the adjustment about investments in fixed assets and financial assets.
On the other hand, financing cash flow shows inflows and outflows related to raising and repaying debt and equity capital. If there’s a consistently negative operating cash flow and positive investing cash flow, it means that a firm is conducting its operations by selling its assets. It’s a sign on an ailing company.
However, if there’s a positive financing cash flow and low/negative operating cash flow, then it shows that the firm is not utilising its capital optimally.
Free Cash Flow
Free cash flow refers to the surplus cash a company has after meeting its capital expenditure requirements. It’s one of the essential features of any business as it measures any discretionary cash that a firm is able to generate for its shareholders. It’s equivalent to savings of a household.
Conclusion
As evident, NCDEX commodity trading is a good way to diversify your investments and going through cash flow statement and free cash flow of a firm helps you in making an informed decision.
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