The ban on futures trading in seven agriculture commodities had a telling effect on National Commodity and Derivatives Exchange (NCDEX) as its turnover fell 19 per cent in February to ₹24,980 crore against ₹30,800 crore logged in the same period last year.

The exchange’s turnover was down 12 per cent to ₹30,243 crore in December when the government banned futures trading on paddy (non-basmati), wheat, chana, mustard seeds and its derivatives, soya bean and its derivatives, crude palm oil and moong. In January, NCDEX turnover slipped further to ₹26,477 crore, according to data sourced from the exchange’s website.

Naveen Mathur, Director, Anand Rathi Shares and Stock Brokers said the sudden ban on seven agriculture commodities has created a negative sentiment and NCDEX was the worst hit as it was largely an agriculture-focussed exchange.

Two months after the ban, there is still a lingering negative feeling among investors though there are no empirical evidence to prove that futures trading is stoking up spot commodity prices, he said.

Once investors move out of investing in commodities it is very difficult to get them back and it is going to be a long haul for NCDEX, he added.

Trading volume on NCDEX shrunk 37 per cent in February to 36.57 lakh lots against 57.81 lakh lots logged in same period last year. The trading volume has fallen from 47 lakh lots in December to 41.51 lakh lots in January.

MCX rides on Metal volatility

MCX turnover, which dipped six per cent year-on-year in December to ₹637,908 crore, recouped to ₹664,444 crore in January and further to ₹821,995 crore in February.

The recovery in MCX turnover comes back on sharp rise in gold, energy and other metal prices.

MCX trading volume increased about four times to 8.21 crore lots against 1.79 crore lots logged in February, 2021 due to volatility in metal and energy prices post Russian invasion on Ukraine. It increased sharply from 1.30 crore lots in December to 6.64 crore lots in January.

The recovery in trading volume in MCX was a recent phenomenon as it was hovering around 1.50 crore lots in most part of last year.

Ajay Kumar, Director, Kedia Commodities said, though many investors are concerned over high upfront margin, they are comfortable dealing in metals as there are no fear of ban.

However, the ban on mini metal contracts (except for gold) has kept away retail investors who have turned to equity investing, he said.

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