The NCDEX Commodity Index is an equal-weighted
spot price
In finance, a spot contract, spot transaction, or simply spot, is a contract of buying or selling a commodity, security or currency for immediate settlement (payment and delivery) on the spot date, which is normally two business days after the ...
index of 10 agricultural commodities covering different goods such as oils and oilseeds, fibres, etc.
It is the first such index to be launched in
India
India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country, and the most populous democracy in the world. Bounded by the Indian Ocean on the so ...
. Based on the components of the spot price index, NCDEX also displays the national index futures- essentially, the no-
arbitrage
In economics and finance, arbitrage (, ) is the practice of taking advantage of a difference in prices in two or more markets; striking a combination of matching deals to capitalise on the difference, the profit being the difference between the ...
price if one were to buy futures on the spot index. This price is derived by tracking the futures prices of the index components at the same weightage as the spot index. Currently, index futures are not allowed in India under the ''FCRA'' (''Forward Contracts Regulation Act'', 1952), which requires compulsory physical settlement of futures contracts.
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Commodity price indices