Equities boom takes a toll on MCX as commodity volumes fall

For MCX, India's greatest commodity alternate, a revival in fairness markets has come as a bane. With the shift of native cash against buying and selling shares and buying mutual funds, volumes on MCX have declined with the aid of over 20% on the grounds that November 2016, the month when demonetisation was once introduced.

The alternate was once anticipating an enormous increase to its volumes as soon as the regulator allowed options trading in commodities. however consultants say trading volumes may not shift to commodities until inventory markets saw a significant crash. MCX, which deals buying and selling in both agri and non-agri commodity futures, has over 80% market share.

the common monthly turnover in relation to number of contracts traded on MCX stood at 9.forty eight lakh in November is right down to 7.54 lakh in may. For your entire 2016, selection of contracts traded on an average month-to-month foundation on MCX used to be extra 9.2 lakh with an exception for the month of October 2016 when on a standard 7.sixty three lakh contracts had been traded on MCX.

The selection of contracts traded on an ordinary month-to-month basis in 2017 up to now has no longer been better than 7.fifty four lakh. the average month-to-month turnover on the subject of price is down to round Rs 18,000 crore in could so far compared to Rs 25,000 crore value in November 2016 on MCX.

“it's clear that trading volumes in commodity have shifted to other asset lessons like equities that have seen a sharp appreciation because the starting of 2017," stated Harish Galipelli, head of commodities and currencies, Inditrade Derivatives & Commodities. “The decrease liquidity has further pushed out arbitrageurs from commodity markets and this is usually a pattern until there is dramatic price movement in world commodities.”

There was once a bull run in commodities globally till 2015 as chinese speculators and dollars piled into buying metals, crude and different agri objects growing an arbitrage possibility. but a slowdown is naturally visible now. China, with a specific amount of inevitably has completely stalled its commodity buying spree. trading in each base and treasured metals has taken a beating. Crude futures too will not be attracting higher interest with oil costs refusing to maneuver up sharply on anticipation of a oil market glut in coming years.

the share price of MCX has taken a beating too. It fell 37% from its fifty two-week high of Rs 1,420 to touch a low of Rs 884 on Tuesday. the online revenue of the bourse halved all the way through the March quarter in 2017 to ?22 crore from ?forty four crore logged in the same duration last year.

VISIT - Gold Crude Research