Demand for e-series copper more than gold, silver.
Gold and silver may be losing a little bit of their lustre for precious metal-loving Indian retail investors. Copper seems to be fast becoming their new favourite.
Investors have started adding copper to their portfolios by buying e-series contracts of the red metal, traded on the MCX-promoted National Spot Exchange of India.
Since November, the average daily volumes of e-copper contracts on the National Spot Exchange have jumped manifold.
The daily average turnover (DAT) in e-copper has shot up from Rs 23.05 crore in November 2010 to Rs 318.17 crore this October. In the same period, the DAT in e-gold and e-silver has risen to Rs 250.98 crore and Rs 205.81 crore from Rs 20.20 crore and Rs 56.55 crore, respectively.
The main reason for investors moving from gold and silver to copper is that the prices of the two precious metals have run up very quickly in the past couple of years. In comparison, copper prices have slipped. Since January, gold and silver prices have run up 30 and 13 per cent, respectively, whereas copper prices have been down 20 per cent.
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Amar Singh, head-commodities, Aditya Birla Money, says, “Retail investors parked their funds in anticipation of a higher potential of price increases in copper as compared to other metals. Copper contracts on the National Spot Exchange remain popular due to price volatility in the global markets.”
Copper is traded only on commodity futures exchanges and the National Spot Exchange. The returns have been good. In the past seven years, copper has given negative returns only twice: in the year of crisis, 2008, and the current year.
Financial experts are also quite bullish on copper. “For portfolio diversification, copper is an ideal commodity. Retail investors can participate in a commodity linked with the global economy,” says Jayant Manglik, president, retail distribution, Religare Securities Ltd.
E-copper is a contract where investors get the delivery in demat form from the exchange.
“The contract e-copper is primarily meant for retail investors who want to invest small. They can buy a minimum lot of 10 kg (one contract) and book the second lot as and when they want. The accumulation can be done over a period of time, either to get delivery or sell when prices are higher,” says Anjani Sinha, managing director of the National Spot Exchange.
Some experts say retail investors are looking at the commodity to make profits over time and use the proceeds to purchase precious metals later. The overall demand for gold jewellery has taken a hit this year as 15 per cent sales shifted to coins and exchange-traded funds, says Rajiv Jain, chairman, Gems & Jewellery Export Promotion Council.