| Definition |
Market where raw materials and primary products like metals, energy, and agriculture are traded. |
Market where ownership shares (stocks) of publicly listed companies are bought and sold. |
| Underlying Assets |
Physical commodities such as gold, oil, wheat, and natural gas. |
Equities representing ownership in companies. |
| Participants |
Producers, consumers, speculators, and hedgers. |
Retail investors, institutional investors, traders, and companies. |
| Trading Venues |
Commodity exchanges like MCX, NCDEX, CME. |
Stock exchanges like NSE, BSE, NYSE, NASDAQ. |
| Price Determinants |
Supply and demand, geopolitical events, weather, global economic conditions. |
Company performance, earnings, economic indicators, market sentiment. |
| Contracts |
Standardized futures and options contracts, sometimes physical delivery. |
Stocks are perpetual; derivatives like options and futures available. |
| Settlement |
Cash settlement or physical delivery of commodities. |
Cash settlement; ownership transfer of shares. |
| Volatility |
Often higher due to external factors like weather and geopolitics. |
Moderate to high depending on company and market conditions. |
| Leverage |
High leverage commonly used with margin trading. |
Leverage available but generally lower than commodities. |
| Investment Objective |
Hedging, speculation, and portfolio diversification. |
Wealth creation, income through dividends, and capital gains. |
| Regulation |
Regulated by SEBI (India) and commodity regulatory bodies. |
Regulated by SEBI (India) and securities regulators. |
| Liquidity |
Varies by commodity; often less liquid than stocks. |
Generally highly liquid, especially large-cap stocks. |
| Taxation |
Taxed as non-equity assets; short-term capital gains apply. |
Equity taxation rules apply; benefits of long-term capital gains tax. |
Commodity Market vs Stock Market