Combined open interest position drops steeply
Pratim Ranjan Bose
Kolkata, Sept. 26
In the beginning, there was only intra-day volatility. Now, there is also month-to-month price volatility so much so that prices have dropped by 30-35 per cent in 20 days.
The underlying situation has presumably made the natural gas contracts at MCX a perfect hunting ground for jobbers, squaring up deals on a daily basis without taking any position.
Fund managers and commodity brokers are unanimous that the extremely US centric fundamentals have made natural gas a very risky commodity to take position.
The situation is reflected in a sudden drop in open interest position (OI) in the natural gas futures.
As against a combined OI position (in near, mid and far month) of well over 1 crore contracts early this month, the combined OI has dropped to 15-16-lakh contracts. "The volatility of the commodity forces investors to square up deals resulting in a fall in OI position," said one source. "There is no recommendation for investors at this juncture," he added.
Meanwhile, heavy rain and the resulting flood in the West Bengal beginning last week has brought cheer to the Kufri Jyoti potato futures market. October prices, which were ruling at below Rs 500 per quintal, has now moved up at around Rs 530 mark on MCX.
The trading volumes have increased to Rs 5-7 crore per day. According to one source, the rains may delay sowing of new crop, which was expected to begin within a month.
This and the festive season demand, which would continue till end November, are likely to keep the prices at Rs 525 to Rs 540 range.