The Hindu Business Line : Pulses crash on NCDEX tracking stock limit order

Prices of pulses such as chana, tur (arhar) and urad crashes on the futures market on Wednesday as market players resorted to panic sales following the Maharashtra Government's decision to impose stock limits on wheat and pulses. On NCDEX, pulses hit the lower circuit limit of six per cent just before close of session. Wheat also closed low, dipping by 2.7 per cent.

According to traders, prices fell mainly on account of the Maharashtra Government's decision.

More to follow

The news of the stock imposition order came late on Tuesday evening and its impact was felt in the market on Wednesday, they added.

The market took a further beating in the afternoon on news that some other States were also planning to impose a similar restriction.

Chana recovers

While tur, chana, urad and wheat all opened lower on the backdrop of the stock limit order, chana prices recovered in a small way as there was no news of Madhya Pradesh and Delhi - the main markets - imposing stock limits, said an analyst at Kotak CSL Research.

However, the news that the Governments of Gujarat, Karnataka, Madhya Pradesh, Rajasthan and Andhra Pradesh would impose such stock limits pushed chana prices down by six per cent.

Since Maharashtra is a main producer of tur and urad, the prices of these two commodities kept falling until they hit the lower circuit of six per cent.

Doing the trick?

According to commodity analysts, among the various measures taken by the Government to control the rising prices of essential commodities, the stock imposition limit order seems to have done the job.

The sentiment in the market seems to have been shattered as was apparent from the crash in the prices along with low volumes traded on the exchange.

Analysts said if the decision to impose stock limit and other measures were based on the assumption that the recent increase in prices were artificial, then they would not be effective in the long run if the rising prices are the result of fundamental factors. The Maharashtra Government's stock limit order has created confusion among pulses traders.

Some trade representatives are expected to meet Government officials on Thursday to seek clarifications relating to the imposition of the order on imported pulses and related issues. Importers are also a confused lot wanting to know if the order applies for them

Shortage

Prices of wheat and pulses have run to record highs, mainly on shortage. Initially, the Centre announced imports of these grains duty-free to rein in the prices. But the damage wreaked by the recent rains in Maharashtra, Madhya Pradesh and Gujarat led to sharp rise in the prices of pulses, while wheat gained on a bullish global market.

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