New Delhi: Traders are increasingly buying commodities such as gold, silver and sugar from the top two national bourses Multi Commodity Exchange of India Ltd, or MCX, and National Commodity and Derivatives Exchange Ltd, or NCDEX, giving a fillip to the confidence of the nascent futures market.
Traders, who hedge their price risk in the futures contracts of bullion and agri-commodities, are slowly taking delivery from the exchanges.
With gold being one of the largely traded commodities on the MCX after silver, traders sought delivery of 529kg of the January gold mini contract, which is a record on the exchange. The delivery from the exchange increased from 49.6kg in December to 529kg in January, data showed.
According to experts, high volatility in gold prices led traders to opt for delivery.
“Commodities are delivered only in compulsory-delivery contracts. Otherwise world over, deliveries happen only about 1-2% of the total turnover. A similar situation prevails in India as well,” Delhi-based SMC Global managing director D.K. Aggarwal said.
He said gold, silver, mentha oil are largely delivered commodities on MCX, while sugar, turmeric, chana (chickpea) and steel are traded mainly on the NCDEX.
Many analysts believe these exchanges can help in ensuring delivery in the absence of a national level spot market. “It would be of great help to the user industry if more delivery takes place in the futures platform,” said Vijaya Sardana, managing director, ARPL Agri Business Services.
Of eight commodities delivered by NCDEX, sugar topped the list, followed by turmeric, maize and steel long. On the MCX, there was more demand for other variants of gold contracts in December. Sardana said it would not be useful if futures market are not made delivery-oriented even though they are meant for price discovery as the spot market is still not perfect.