The Indian trading sector comprises of all the companies involved in the distribution and sale of goods to customers, in both wholesale and retail formats. The study aims at examining the determinants of inventory performance measures of Indian trading firms across various product segments. The study is based on econometric analysis of inventory measures using extensions to an inventory turnover model. The empirical model is implemented using financial data of a sample of 407 Indian trading firms for the period 2000-2013. Panel data regression technique is employed for analysis. In tune with the existing literature on retail firms in US and Greek contexts, inventory turnover ratio is negatively correlated to Gross Margin, positively correlated with sales growth, capital intensity and company size. Hypothesis on negative correlation between inventory turnover and distribution expenses ratio was not supported by the analysis. The maximum variability in the inventory turnover ratio was explained by the model when considering fixed effects associated with different firms and across different years and product segment wise effects for each explanatory variable. As the study is based on aggregate analysis of financial data, it may not capture some of the important operational variables. This study could help managers in identifying the reasons for differences in inventory performance across different firms and in the same firm across time. It may help managers in making aggregate level inventory decisions. Being one among the few studies on trading firms in an emerging market, this study has the potential to stimulate further research in this region. We analyse the inventory behaviour of the wholesale and retail trading industry in Indian context. We introduce a new research hypothesis in our study as an addition to the models suggested in the literature.