Chana (gram) and jeera (cumin) futures rose by the maximum permitted level on Wednesday. The four per cent jump in these counters followed market regulator Forward Markets Commission's move to cut the penalty for default in delivery.
The cut in penalty is the first positive news for traders after a spate of harsh measures taken by the market regulator to rein in speculation in the agricultural commodity futures. Last month, the market regulator banned trading in guarseed and guar gum after their prices rallied sharply.
Stiff margins were imposed on commodities such as pepper, chana, soya bean and mustard seed. The open interest was cut in most agriculture commodities.
“The Commission has decided to review the penalty structure on delivery defaults by a seller in compulsory delivery contracts,” said an FMC circular.
Based on the views received from exchanges and market participants, the Commission has decided to reduce the penalty on delivery default by a seller in respect of rape/mustard seed, chana and pepper in compulsory delivery, it said.
The new penalty structure may be made applicable to contracts expiring from this month onwards. The commission will review its directive after four months, depending on market developments.
Mr Sushil Sinha, Country Head, Karvy Commodities, said the cut in penalty boosted investor confidence after a series of rumours that the Government is planning to ban more agriculture commodities.
UPPER CIRCUIT
Near month futures contract of chana and jeera increased to Rs 3,874 (Rs 3,833) a quintal and Rs 12,847 (Rs 12,352) a quintal on Wednesday. These two commodities hit the upper circuit on the NCDEX.
A highly export-oriented commodity, pepper gained one per cent to close at Rs 37,300 (Rs 36,860) a quintal after hitting a day's high of Rs 37,470. However, a fall in mentha oil and few other commodities pulled down the NCDEX turnover marginally to Rs 6,552 crore on Wednesday against Rs 6,596 crore recorded on Monday.