Aided by volatile crude and gold prices, the turnover of the country’s largest commodity exchange, MCX, increased 22 per cent to ₹65.91 lakh crore in the financial year ended March, against ₹53.83 lakh crore in the same period last year.
On the other hand, low agriculture commodity prices led to a 39 per cent fall in turnover on the NCDEX to ₹5.29 lakh crore for the reporting period, against ₹5.89 lakh crore a year ago.
After a robust start, commodity derivatives turnover on the BSE fell 17 per cent in the March quarter to ₹14,771 crore, against ₹17,891 crore in the December quarter while that on the NSE went down 33 per cent to ₹1,377 crore (against ₹2,067 crore).
Both the BSE and NSE started commodity derivatives trading last October. In the first six months of their operations, BSE’s turnover was at ₹30,046 crore, while that of the NSE was at ₹3,444 crore.
Volatility hedge
The unprecedented volatility in energy and bullion prices forced may traders to hedge their positions on the MCX platform.
The average daily volatility in crude oil and natural gas hit a three-year high at 21 per cent (against 14 per cent in the year-ago period) and 42 per cent (20 per cent) in the financial year ended March, respectively. In the base metals segment, aluminium volatility was up at 22 per cent (10 per cent).
Naveen Mathur, Director, Anand Rathi Commodities, said turnover on MCX was boosted by volatile gold and crude oil prices. Gold prices jumped from an average of ₹27,000-28,000 per 10 grams in 2017 to ₹34,000 crore last year.
Volumes on the MCX spiked in September and October when the rupee hit a new low, pushing many importers, including bullion and crude oil traders, to run for cover to hedge their open positions, he added.
Agri prices flat
However, agriculture commodity prices remained flat throughout the last fiscal year with edible oil prices hitting new lows, though there was some uptick in volumes, of late, due to the prediction of a weak monsoon, he said.
On the role of the BSE and NSE in the commodity space, Mathur said both the established equity exchanges have to come out with innovative products to attract investor interest to make their presence felt.
New clients
The commencement of commodity market trading at 9 am, against 10 am, in sync with equity market trading, and allowing bank-owned broking entities to offer commodity trading services have helped commodity exchanges attract new clients.
In fact, three bank-owned subsidiaries — SBI Capital, Axis Securities and HDFC Securities — have started offering commodity derivative products to their clients.