Commodities market players are hopeful that Finance Minister Arun Jaitley will announce steps towards permitting investments by foreign institutional investors and mutual funds in commodities. 

Sources told Moneycontrol that capital and commodities markets regulator SEBI has told the Finance Ministry that it is comfortable with opening up the commodities markets to institutional investors.

SEBI had proposed that Foreign Portfolio Investor (FPI) categories I and II, and also domestic mutual funds be allowed to invest in commodities. 

Category-I includes government and government-related investors such as central banks, governmental agencies, sovereign wealth funds and international or multilateral organizations or agencies. 

Category-II includes regulated funds such as mutual funds, investment trusts and insurance companies. It also includes regulated investors such as banks, asset management companies, investment managers or advisors and portfolio managers. Recently, SEBI wrote to the Reserve Bank of India seeking its views on allowing hedge funds to invest in commodities.