New Delhi, Oct. 23: Daily trading volumes in the commodities market is expected to increase by a third to Rs 20,000 crore in 2007-08 from Rs 15,000 crore now.

According to a joint report prepared by Assocham and the National Multi-commodity Exchange of India (NMCE), the basket of 120 commodities currently being traded may also be enlarged to touch 250 in 2007-08 because of a growing interest in the futures market.

About one-and-a-half years ago, the daily trading in the commodities market was around Rs 8,000 crore.

With the shaping up of services by warehousing and banking sectors, there are better linkages between the spot and futures markets. This has given rise to nationwide commodity trade in large volumes, said the report.

Improvement in commodity cycle is also helping in diversifying the asset portfolio. This is expected to help investors who traditionally focused only on equities and fixed income instruments diversify their portfolio.

Commodities as an asset class possess several characteristics that are attractive to investors over sustained periods in terms of portfolio diversification and less volatile returns.