Derivatives

Understanding new NCDEX guar, soy indices

Akhil Nallamuthu BL Research Bureau | Updated on July 10, 2021

Last week, the National Commodity and Derivatives Exchange Limited (NCDEX) launched two new indices based on the guar and soy complex i.e., NCDEX Guarex and NCDEX Soydex, respectively. These indices are based on the futures contracts of guar and soy traded on the exchange. Guarex will track the price movement of its underlying which are the futures contract of guar seed (GUARSEED10) and guar gum refined splits (GUARGUM5), whereas Soydex will track the price movement of the futures contract of soybean (SYBEANIDR) and refined soy oil (SYOREF).

The weightage of these indices are based on their national production value and their total traded value on the exchange platform. In Guarex, the weightage of guar seed and guar gum refined splits futures are 63.43 and 36.57 per cent, respectively and in Soydex, the weights of soybean and refined soy oil futures are 67.92 and 32.08 per cent, respectively. These are currently representative indices that can be used to gauge the performance of soy complex and guar complex by tracking which the value chain participants can be benefitted.

The exchange is expected to launch futures contract on these indices soon, which will be available for trading and hedging for retail participants as well. The go-ahead of cross margin benefit given by the Securities and Exchange Board of India (SEBI) recently will allow traders and hedgers to take more flexible approach in executing trades.

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Published on July 10, 2021

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