The sharp spike in metal prices and signs of recovery in economy has pushed up average daily turnover in MCX Metldex futures nearly tripling to ₹171 crore in May against ₹59 crore logged in January. Open interest in Metldex also jumped substantially to 47,177 lots in May from 17,246 lots in January.
Turnover in the June contract touched a new high of ₹226 crore last Thursday with the index gaining 460 points.
The index component includes base metal futures -- Aluminium, Copper, Lead, Nickel and Zinc -- contracts traded on MCX.
Ajay Kumar, Director, Kedia Commodities said retail interest in Metldex has been gaining steadily as the margin to trade in index contracts are very less and it can cover all the price movements of entire base metal complex.
If an investor has to trade in copper then he has put in higher margin as the copper prices have doubled to Rs 800 a kg over the last few months, he said.
This apart, he added Metldex is a cash settled contract and investors need not worry about taking or giving delivery of commodity, he added.
Like in any other commodity, domestic base metal prices are dependent on demand and supply in China. Earlier, the price of base metals had fallen sharply after the Chinese government said it will take action against speculators who are pushing up metal prices artificially. However, it clarified that it is comfortable with the current price levels.
Moreover, Chinese Yuan had rallied to over three-year high, making dollar-priced metals cheaper in China. Recent rally in global equity markets including that of India has raised hopes of demand in metal demand.
The excess liquidity in the global markets has been driving metal prices as the US and European economy show signs of recovery from Covid pandemic impact with the vaccination driving pace. However, the domestic demand remains suppressed due to resurface of fresh Covid cases and state-specific lockdowns.