MCX jumps 10% to trade near two-year high, rallies 52% in 7 months

Shares of the Multi Commodity Exchange of India Ltd. (MCX) surged 10 per cent, to trade nearly two-year high of Rs 1,030, on the BSE on Tuesday on back of heavy volumes. The stock was trading at its highest level since November 2, 2017.

Volumes surged after foreign brokerage Morgan Stanley upgraded the rating on MCX to overweight from equal-weight, and raised its price target to Rs 1,260 from Rs 870 per share.

The stock has risen sharply from its 52-week low of Rs 644, touched on February 19, 2019, and has outperformed the frontline index by surging 52 per cent in the past seven months. The benchmark S&P BSE Sensex rose 8 per cent during the same period.

Earlier this month, MCX and Zhengzhou Commodity Exchange (ZCE), one of the leading commodity exchanges in China, had signed Memorandum of Understanding (MoU) for cooperation and the exchange of information.

MCX offers commodity futures contracts in bullion, base metal, energy and agricultural commodities, whereas commodity futures with both agricultural and non-agricultural products like cotton, rapeseed oil, seed & meal, sugar, flat glass, methanol, pure teraphthelic acid (PTA) and thermal coal as underlying's are traded on ZCE.

“The market regulator Securities and Exchange Board of India (Sebi) had released the guidelines for ‘Design of Commodity Indices and Product Design for Futures on Commodity Indices’ on June 18, 2019, which enables the company to commence futures on commodity indices,” MCX said in FY2018-19 annual report.

"Regulatory tailwinds like institutional participation, indices and tie-up with retail bank subsidiaries will boost trading volumes by around 10 per cent and increase depth in the long run. Globally, institutional clients account for around 50 per cent of the total derivatives volumes," said analysts at HDFC Securities.

"We continue to remain constructive on the long-term growth opportunities, concerns on increase in competition and pricing pressure is gradually subsiding. The market is expanding with entry of new market participants and products,” the brokerage firm said in Q1FY20 result review.

At 11:30 am, MCX was trading 9 per cent higher at Rs 1,018 on the BSE, as compared to a 0.16 per cent decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined three million shares changing hands on the NSE and BSE so far.