Smaller towns spice up futures trading

Volumes in second-rung cities up 51 per cent for NCDEX & 40 per cent for MCX in the first quarter

From Kanpur to Coimbatore, commodity trading is gaining rapid ground. Smaller centres are playing a major role in pushing volumes in the commodity futures market, which has been growing at a scorching pace. Brokerage houses are also reporting a perceptible rise in business from these centres.

Going by the National Commodities and Derivatives Exchange of India (NCDEX) data, in the April-June quarter of 2005-2006, traded volume of commodity futures in second-rung cities jumped by 51 per cent compared with January-March quarter of 2004-2005. The total volumes traded in the first quarter was Rs 23,761 crore, which is 7 per cent of the nationwide volumes.

The Multi Commodity Exchange (MCX), the other Mumbai based nationalised commodity exchange, has reported a 40 per cent quarter-on-quarter jump in traded volumes in these centres. Its business from smaller centres is worth Rs 10,667 crore in the first quarter of 2005-2006.

These two exchanges account for over 80 per cent of the total trading volumes in commodities. Despite the high growth in volumes, these centres, however, still account for a small percentage of the total business. Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune still account for the largest chunk of volumes.

Both the exchanges launched a slew of commodities the last year. The commodities generating maximum interest on NCDEX include guarseed, guargum, bullion, pulses such as chana and urad, soyabean and soya oil, and jeera.

MCX too is seeing wide interest in its agri-commodity products such as refined soya oil, chana, masur, and black pepper besides gold, silver and crude oil.

Sunil Ramrakhiani, head "" commodities, IL&FS Investmart Commodity Brokers, said there was a rise in volumes from smaller towns such as Ludhiana, Meerut, Kanpur, Southern Gujarat, Calicut and Coimbatore.

Kashyap Pujara, assistant vice-president, Susheel Global Commodities, said: "Enquiries from local centres have gone up considerably and awareness is specially high on global commodities such as crude and gold. Besides, volumes on regional commodities have also picked up."

"NCDEX is mainly dealing in agriculture commodities. Smaller cities have a good understanding of this business," Narendra Gupta, chief business officer of NCDEX, said.

The bourse has been conducting awareness programmes and one-on-one interactions with traders in over 300 small cities. It has covered Ajmer, Kota, Bhilwara, Satara, Sangli and Kolhapur and a host of other places under this programme.

MCX managing director Jignesh Shah said: "Awareness through seminars and conferences is the key to a rise in volumes."

He also added that initiatives such as dissemination of spot and futures prices through "Commodity Suchana Kendra" and provision for real time prices on its terminals with fair and transparent trading systems is increasing interest in commodity trading.

A BRIGHT FUTURE

• MCX and NCDEX account for over 80 per cent of the total trading volumes in commodities
• Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Pune account for the largest chunk of volumes