Asia Press Agency

Tag: MCX

  • MCX to Offer Shorter Duration Futures Contracts

    MCX to Offer Shorter Duration Futures Contracts

    Multi Commodity Exchange of India (MCX) is set to introduce shorter duration futures contracts on select commodities and options on commodity indices, which is expected to have a significant impact on its trading turnover. This decision comes on the heels of obtaining approval from the market regulator to go live on Tata Consultancy Services Ltd’s new commodity derivatives platform, starting from October 16.

     

    MCX is one of the four Sebi-recognized national exchanges that dominate the commodity derivatives segment (CDS), boasting approximately 98% market share. Other exchanges offering CDS include NSE-anchored NCDEX, NSE, and BSE. This recent regulatory approval will pave the way for MCX to launch index options and shorter-duration contracts on benchmark gold and silver futures.

     

    Currently, MCX offers bi-monthly futures contracts for 1 kg of gold and 30 kg of silver. While it does provide gold and silver contracts in smaller denominations, it’s the larger contracts that attract the most significant trading volumes. MCX had initially sought and received approval from the Securities and Exchange Board of India (SEBI) for shorter duration contracts. However, the exchange will approach SEBI once again for the final green light. After the implementation of shorter duration futures contracts, the exchange will also seek approval for index options.

     

    Market experts suggest that the introduction of these contracts will be a game-changer for MCX. These instruments have the potential to significantly increase the exchange’s turnover as they have done with index options in the equity market. Index options hold a 98% market share in derivatives on the NSE, with a turnover of ₹37,380.7 trillion recorded so far in this fiscal year.

     

    MCX’s shift towards a more versatile and dynamic trading platform is long-awaited. The exchange had an eight-year contract with 63 Moons Technologies for its commodity derivatives platform, which expired in September last year. Subsequently, in 2021, the exchange selected Tata Consultancy Services (TCS) as its new vendor, entrusting it with the task of implementing a modern commodity derivatives platform before September 2022. However, multiple delays caused the migration to be pushed back.

     

    The latest contract extension with the old vendor was for six months, set to end in December 2023. But in a recent development, MCX confirmed that it was ready to migrate to the TCS platform, and SEBI gave its approval. This move is expected to position MCX as a more agile, adaptable, and competitive player in India’s commodity markets, and it could well be a crucial step in transforming its future growth prospects.

     

    MCX’s stock performance has also shown positive signs, with a 70% rise from a 52-week low of ₹1,285.05 on May 22 to a 52-week high of ₹2,179.45 on October 11. It closed at ₹2,109.95 on October 13. This upward trajectory is partly attributed to the positive market sentiment regarding the exchange’s potential to enhance its offerings and trading opportunities.

  • Six Stocks Put Under Ban for Trade on October 11, 2023

    Six Stocks Put Under Ban for Trade on October 11, 2023

    The National Stock Exchange (NSE) has imposed a trading ban on six stocks in the futures and options (F&O) segment for Wednesday, October 11, 2023, as they have exceeded 95% of the market-wide position limit (MWPL). However, it’s important to note that these stocks will remain available for trading in the cash market. The affected stocks are as follows:

     

    • Delta Corp
    • Indiabulls Housing Finance
    • Punjab National Bank
    • L&T Finance Holdings Ltd
    • Manappuram Finance Ltd
    • MCX

     

    The NSE updates the list of securities under the F&O ban on a daily basis. When a stock is placed under the F&O ban period, no fresh positions are allowed for any of the F&O contracts related to that particular stock. Traders and investors can only decrease their positions through offsetting positions.

     

    The derivative contracts in these securities have exceeded the 95% threshold of the MWPL, leading to their inclusion in the F&O ban list by the stock exchange. The NSE has reminded all clients and members that any increase in open positions during the ban period will result in appropriate penal and disciplinary action.

     

    Despite these restrictions, the Indian stock indices experienced a strong rally on the previous trading day, with gains in financials, auto, and IT shares. The 30-share BSE Sensex surged by 0.87% or 566.97 points to close at 66,079.36, with 26 of its constituents ending in positive territory. The broader Nifty of the National Stock Exchange also saw a significant increase, rising by 0.91% or 177.50 points to settle at 19,689.85. This rally was driven by gains in stocks such as Coal India, Adani Ports, and Bharti Airtel.

     

    Please note that trading in the cash market for the affected stocks is not impacted by the F&O ban and will continue as usual. Traders and investors should stay informed about updates in the F&O ban list to make informed decisions in the stock market.

  • MCX Stock Surges as It Moves to TCS Platform

    MCX Stock Surges as It Moves to TCS Platform

    MCX (Multi Commodity Exchange of India) saw its stock price surge by 9% to reach an almost two-year intraday high of ₹2,114.40 following the company’s announcement that it would migrate to the TCS (Tata Consultancy Services) commodity derivatives platform by October 3rd. This news was well-received by the market, as it marked the end of a costly vendor contract with 63 Moons that had been a financial burden on MCX.

     

    The cost incurred for extending the software contract with 63 Moons for one year amounted to ₹472 crore, significantly higher than the ₹60 crore per annum that MCX had been paying before the contract expired in September of the previous year. The escalating costs associated with each extension took a toll on the exchange, resulting in a total expenditure of ₹385.6 crore in FY23, representing a 69% increase compared to the previous year.

     

    The first extension from October to December of the previous year cost MCX ₹60 crore, followed by a six-month extension from January to June that cost ₹162 crore. The latest six-month extension through December 2023 saw costs rise to ₹250 crore. Consequently, the company’s profit for Q1FY24 declined by 53% year-on-year to ₹19.7 crore, while expenditure surged to ₹139.5 crore from ₹65.3 crore a year ago.

     

    Analysts are optimistic about MCX’s stock performance following the migration to the TCS platform, with some believing that the share price could surpass its previous record high of ₹2,135 apiece in the near future. The market has reacted positively to the news since September 19th, driving the stock price up by nearly 20% until Thursday’s closing at ₹2,092.

     

    While the stock has already seen significant gains, the potential cost savings from the migration and the expectation of increased trading volumes are expected to further support MCX’s stock performance. The new arrangement with TCS involves a fixed cost structure, unlike the previous contract with 63 Moons, which had a variable component linked to exchange turnover.

     

    Despite the stock’s strong performance, some analysts believe that the cost-saving benefits of the migration may already be priced into the stock. However, the market will likely closely monitor MCX’s trading volumes and financial performance in the coming quarters for additional cues on the stock’s direction.

  • Russia’s Relaxation of Fuel Ban Keeps Oil Prices Steady

    Russia’s Relaxation of Fuel Ban Keeps Oil Prices Steady

    Despite Russia’s recent relaxation of its fuel export ban, global oil prices remained relatively steady on Monday. The markets continued to grapple with concerns about demand, given a tighter supply outlook and ongoing uncertainty surrounding high-interest rates.

     

    Russia’s move to ease certain restrictions on fuel exports was seen as a significant development. The country lifted some constraints on fuel used for bunkering certain vessels and on diesel with high sulfur content. However, it’s essential to note that these restrictions remain in place for all types of gasoline and high-quality diesel, as reported by Reuters.

     

    Brent crude futures, a key benchmark for global oil prices, inched up by 0.18%, equivalent to 17 cents, ultimately settling at $93.44 per barrel on Monday. This came after a slight 3-cent decrease in the closing price from the previous Friday. In parallel, U.S. West Texas Intermediate (WTI) crude recorded a modest gain of 7 cents, constituting a 0.08% increase, and closed at $90.10.

     

    On the Multi Commodity Exchange (MCX), where Indian traders engage in crude oil futures, contracts set to expire on October 19 were trading at ₹7,466 per barrel. This was slightly lower than the previous close of ₹7,483 per barrel.

     

    Market analysts have been closely monitoring these developments. Tony Sycamore, an analyst at IG Markets, commented, “The market continues to digest Russia’s temporary ban on diesel and gasoline exports into an already tight market, offset with the Fed’s hawkish message that rates will stay higher for longer,” speaking to Reuters.

     

    The key factor contributing to the market’s concerns has been the U.S. Federal Reserve’s recent adoption of a more aggressive monetary policy stance. This decision sent shockwaves through global financial markets and raised questions about future oil demand.

     

    The previous week saw a decline in crude oil prices, marking the end of a three-week period of consistent price increases. During those weeks, crude oil prices had surged by over 10%. These increases were largely driven by the decisions of major oil-producing countries, such as Saudi Arabia and Russia, to limit oil production by extending production cuts until the end of the year.

     

    While Russia’s relaxation of its fuel export ban provided some relief, the market’s focus on the broader economic landscape and monetary policies continues to influence oil prices. Ongoing uncertainty regarding interest rates, coupled with supply and demand dynamics, will likely dictate the trajectory of oil prices in the coming weeks.

  • Silver Expected to Outperform Gold by December 2023

    Silver Expected to Outperform Gold by December 2023

    The gold-silver ratio has recently dropped below the 80-level, suggesting that silver is likely to outperform gold in the near future. Analysts anticipate that silver prices could reach ₹90,000 per kilogram by December 2023.

     

    At the beginning of August, the ratio stood at around 85, but it has since decreased to approximately 79.1. The gold-silver ratio is a key metric used to gauge the relationship between the values of gold and silver. It reveals the number of silver ounces required to match the value of one ounce of gold.

     

    A lower gold-silver ratio implies that silver prices are expected to outperform gold prices. Historically, the ratio has not sustained levels above 82-82 and is now returning to its average range.

     

    Ajay Kedia, Director of Kedia Advisory, explained, “The ratio has fallen to 79.1 now. This suggests that silver prices will outperform gold going forward.” Since March 2023 lows, gold prices have risen by approximately 5%, while silver prices have surged by about 20% since their March lows.

     

    Several factors contribute to the bullish trend in silver prices. These include rising industrial demand, reduced geopolitical tensions, and economic stimulus measures, particularly in China, the world’s largest consumer of metals.

     

    Silver is not only used in jewelry but also finds applications in solar panels, silver oxide, batteries, 5G technologies, and electrical equipment. Economic stimulus measures in China are expected to further boost industrial demand for silver.

     

    In addition, reports indicate that China’s People’s Bank is considering reducing reserve requirements, potentially increasing liquidity in the world’s largest metal consumer.

     

    While analysts expect the US Federal Reserve to maintain interest rates in September, elevated interest rates can weigh on bullion prices. Despite this, the positive outlook for precious metals remains strong.

     

    Ajay Kedia predicts that silver prices on the MCX may rise toward ₹90,000 per kilogram by December 2023. Additionally, gold prices are expected to increase to ₹65,000 per 10 grams by the end of the year.

     

    As silver continues to demonstrate its potential for strong performance, investors and market participants will closely monitor developments in both the precious metals and economic landscapes to assess opportunities in the silver market.