Comments
After witnessing a sharp dip in turnover during April-May amid uncertainties triggered by Covid-19 outbreak, commodity exchanges in India have shown a sharp recovery with average daily turnover (ADTV) gaining by about three times and reaching pre-Covid levels.
The National Commodity & Derivatives Exchange Ltd (NCDEX) saw ADTV recovering from the lows of ₹587 crore in May 2020 to ₹1,245 crore in September so far. Similarly, Multi Commodity Exchange of India (MCX) saw its ADTV trebling from ₹15,658 crore in May to ₹43,261 crore in August and ₹33,052 crore in September.
Experts and broker sources attribute this recovery to the revived investor sentiment.
Commodity analyst Biren Vakil of Paradigm Commodities, told BusinessLine : “Volumes had fallen drastically in commodity exchanges between March and May due to coronavirus-triggered panic and uncertainty. However, in last three-four months, normalcy has returned. Liquidity infusion in countries across the globe has fuelled rally in equities, metals, crude and commodities and brought back investor participation”.
Bullion, agri-comms
Commodities that contributed to rise in turnover at the comexes were bullion and agri-commodities such as chana and RM seed, said Vakil.
On MCX, the ADTV in bullion had tumbled to ₹7,945 crore in April 2020, which was more than half of ₹16,728 crore seen in preceding month. However, the volumes started improving gradually and hit ₹29,856 crore in August and ₹17,888 crore till September 22.
For NCDEX, trade sources revealed that the volumes were supported by sharp increase in volumes of agri-commodities including chana, RM Seed, guargum, guarseed and soyabean and soya oil.
In 2019, in April, May and June months, the exchange saw an ADTV of ₹2,515 crore, ₹2,200 crore and ₹2,110 crore, respectively. In the current year, however, in the same three months, the turnover was ₹698 crore, ₹588 crore and ₹860 crore, respectively. Now, in the last four months, the ADTV has recovered and is around ₹1,100-₹1,200 crore.
Investor sentiment
Ajay Kedia, Director of Mumbai-based Kedia Commodity, said, “During April-May, there was a rush towards equities because the valuations turned very attractive. So commodities lost their sheen. But soon after the government announced stimulus package of 10 per cent of the GDP, there was a revival in the investor confidence and volumes on commodities started improving. What also has helped commodity volumes is the entry of a new set of investors who are trading on commodities from home by using their time at home to explore new trading avenues…”
It needs mention here that while MCX and NCDEX had regained their lost volumes, Indian Commodity Exchange Ltd (ICEX) is still struggling. Its steel and diamonds contracts are witnessing thin volumes now.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.