Commodity trading catches fire

The National Commodities and Derivatives Exchange of India (NCDEX) and the Multi Commodity Exchange of India (MCX) have reported record turnovers in the last few days on surging volumes in underlying trades.

In fact, on certain occasions in September, individual commodity exchanges have reported a turnover higher than the combined cash and derivatives segments turnover of theBSE.

For instance, the NCDEX turnover hit an all-time high of Rs 2,479 crore on September 9, and had recorded a turnover of more than Rs 1,000 crore on September 6.

This has taken the cumulative turnover in September till date to more than Rs 14,600 crore. The heightened activity in the commodity markets took the average daily turnover on the NCDEX from Rs 550.63 crore in August to about Rs 1,825 crore in September till date.

Similarly, MCX reported a turnover of Rs 1,645.96 crore on September 3, its highest daily turnover till date. In September alone, till date, the MCX has reported a total turnover of Rs 6,350.91 crore, translating into a daily average turnover of Rs 793.86 crore in September, as compared to Rs 645.94 crore in August.

With over 80 per cent of trading coming from bullion, MCX clocked volumes of 13,063 kg in gold and 7,39,330 kg of silver on a single day (September 3), according to data from the MCX website.

Market sources pointed out that the turnover figures have crossed the four figures (Rs 1,000 crore) mark in daily trades in less than a year of the national commodity exchanges commencing operations, which indicates that investors and traders alike are taking to commodity trading in a big way.

Brokers added that as of now commodity trading is only available in the futures segment and turnover should rise considerably once options trading is introduced.

MCX managing director Jignesh Shah said, "The new levels reached are a testimony that more traders and investors are realising the significance of a practical and optimal market place which is up to their expectations. The government is also keen on promoting the futures trade in agriculture commodities, which will provide immense possibilities of volume in futures trading in the days to come."

According to Narendra Gupta, chief business officer, NCDEX, "Volumes on online commodity trading will be further bolstered with better facilities being provided."

He added that volumes and participation are poised to rise exponentially over the next year as the depth and liquidity of the market increase.

Incidentally, the oldest stock exchange in the country, the Bombay Stock Exchange (BSE) has recorded lower volumes in the equities segment in the last few weeks but market participants attributed this to investors staying away from equity market on account of no clear direction.

Turnover in the cash segment of BSE has been in the range of Rs 1,500 crore in September so far with negligible turnover recorded in the derivatives segment.

The BSE reported a turnover of Rs 1,493.10 crore on September 3 and Rs 1,530.28 crore on September 8, the days when turnover on the commodity exchanges peaked.

The maximum volumes in NCDEX are currently coming from Guar seed (cluster beans) followed by soya, chana (chick peas) and silver.

MCX has reported a majority of its trading coming from bullion with Soy oil, pulses, kapas, long cotton, and wheat being the other commodities which have contributed significantly to the volumes.