NCDEX to start metals, energy contracts in Q3

The National Commodity and Derivatives Exchange (NCDEX) plans to introduce new contracts in metals and energy sector in the third quarter of the current financial year, said P H Ravikumar, chief executive officer of the exchange.

"In the metals sector, the upcoming contracts include nickel, zinc and tin while in energy it includes petroleum products," he said.

For natural gas, NCDEX has signed a memorandum of understanding with Gail Ltd. The exchange will initially start spot trading in natural gas. It also plans to introduce futures trading later depending upon the response and approval from the regulator, Forward Market Commission, he said.

Currently, Gail has the monopoly in natural gas, which makes proper price discovery difficult, a Mumbai-based energy sector analyst said. He added that the initiatives of the exchange will help in fetching a proper price.

India's domestic natural gas demand exceeds supply and the demand mainly comes from fertiliser and sponge iron units.

A firm standing in the new sectors will help the exchange get rid of the 'agri exchange' tag. The exchange got this tag as agri contracts always performed well on the NCDEX. The precious metals performed well on other national exchange, The Multi-Commodity Exchange of India.

Currently, seven out of eight contracts garnering over Rs 100 crore daily turnover on the NCDEX are agri-commodities, including chana, urad, sugar, chilli, tur, jeera and soy complex. Silver is the only metal which is one of the top revenue earners.

On the 'agri exchange' tag, Ravikumar said, "It's the market place that determines where we are and what commodity we deal in. I do not really agree with this as it is solely the steel contract on NCDEX that is doing well. Even our copper cathode contract is picking up fast."

The exchange's turnover in the last fiscal was Rs 2,80,000 crore and it expects around 40 per cent growth this year.

"I am hopeful of a higher growth than this and so I do not wish to put it down as a figure. My optimism comes from the fact that we achieved half of last year's total turnover in the first quarter of the current financial year."

Last fiscal, the exchange had 51 per cent market share. It increased to 58 per cent in the first quarter this year.