Global links force bourses to stay open

The commodity futures exchanges were open yesterday even as the equity markets were shut since they have a higher co-relation with the international markets.

The Multi Commodity Exchange (MCX) of India, the National Multi Commodity Exchange of India (NMCE) and the National Commodity and Derivatives Exchange of India (NCDEX) were open for trading yesterday, while the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) were shut account of the second phase of general elections.

This commodity futures exchanges were open despite the fact that their volumes are a fraction of the volumes traded on the equity exchanges. The combined daily volumes of the three comexes is just about Rs 200-250 crore compared with BSE-NSE combine's derivatives volume of about Rs 12,500 crore.

"The price co-relation with international markets is distinctly high in commodity markets. All the international markets were open yesterday. The evening sessions are particularly important as they run parallel to the US markets," Narendra Gupta, deputy managing director, NCDEX said.

The MCX also had both its Indian and New york sessions open. MCX registered cumulative 380 trades amid a volume of 1,015 kg and an open position of 1219 kg in its three gold contracts. Its three silver futures contracts clocked a volume of 4715 kg amid an open position of 12,110 kg at close of its Indian session today.

At the NCDEX, 93 members traded up to 4 pm. There were around 1,400 trades put through. Open interest was around 960 kgs and 23,150 kgs in gold and silver, respectively.

It was 4,000 MT in case of rapeseed-mustard seed, 1,471 MT for refined soy oil, 640 MT for chana, 305 MT in rubber, 730 MT for guar and 235 MT for pepper. There were active trades in all contracts relating to silver, gold, refined soy oil, pepper and rubber.

The evening trading sessions help futures traders to synergise trades with those on the US markets.

With the introduction of evening trading, volumes especially in gold and silver are expected to double in few months.

Gold futures trading on the commodities division (COMEX) of the New York Mercantile Exchange is considered to be a benchmark for futures trading world over.

COMEX division gold futures and options provide an important alternative to traditional means of investing in gold such as bullion, coins, and mining stocks. Gold futures contracts are valuable trading tools for commercial producers and users of the metal.

The underlying product price, that is, the gold price in the spot market is benchmarked against the London morning and afternoon fix announced twice a day by the London Bullion Market Association.

London is the global hub for over-the-counter precious metals trading, bridging time zones.

Since India has no production of gold and silver domestically, the world's largest consumer of yellow metal hinges on international markets for its supply. Given the situation, global pricing comes to play in the domestic price conversion.

Parallel trading is also drawn from the US in cotton and oilseed futures. The Chicago Board of Trade is looked up at for oilseeds and oil futures, especially the soy bean complex, while New York Board of Trade is important for cotton futures.