Traders may up the ante on MCX’s metals index contracts

Mumbai: Traders wanting to punt or hedgers wishing to cover their commodity price risk could take exposure to MCX’s metal index futures called Metldex, which the bourse launched on October 19.

“These contracts are cheaper and better diversifiers of risk than trading a stand-alone futures contract on , say, copper or aluminium,” said Rajesh Palviya , technical head of Axis Securities whose clients have evinced “keenness” in the new index futures.

For instance, to trade one copper futures contract the current margin to trade is Rs 1.23 lakh against around Rs 49,000 to trade the Metldex.

Also , the new index contracts offer a more holistic view for traders when complemented with the MCX’s bullion index called Bulldex which was launched on August 24.

“If bullion index is rising , I am aware of , say, a risk -off sentiment and therefore I could short the Metldex,” said Naveen Mathur, director at Anand Rathi Share and Stock Brokers Ltd.

The indices are cash settled unlike their individual constituents — copper, aluminium , lead, zinc and nickel— which are of compulsory delivery.

“It’s like having an advantage to trade Nifty futures over a single stock futures making up the index , which may carry greater risk,” added Hormuz Maloo, director , AFco Investments .

A minimum of three monthly contracts run concurrently with expiry timed a day before rollover of the Index’s constituent futures contracts .

The Metldex on Oct 19-20 notched an average daily turnover of Rs 89.8 crore . Analysts expect a steady growth in indices trading . The Bulldex average daily Turnover since launch has been Rs 247.2 crore.

MCX, Which runs the largest commodity derivatives Segment, posted ADT of Rs 31037 crore in the fiscal year through October 20.

Trading of Metldex is available from 9 am through 11:30 pm daily and 11:55 pm daylight saving time.