CTT brings down sentiment in commodity futures

Overall turnover down by a staggering 37.86% in first fortnight of levy

The Finance Ministry’s levy of the transaction tax (CTT) on commodities, has pulled down the overall sentiment in commodity futures market, if the turnover recorded in this segment is an indication.

Data compiled by the regulator, the Forward Markets Commission (FMC) showed that agri commodities have lost around half (48.44%) of business in the first fortnight of the levy (between July 1 and 15, 2013). In contrast, the targeted segments - bullion and energy- lost 44.71% and 25.38% of turnover respectively during the period under consideration.


The data showed that total value of commodity trade has declined a staggering 37.86% to Rs 4,08,440.39 crore between July 1 and 15 of the current year as compared to Rs 6,57,296.47 crore in the corresponding period last year.

Value of agri commodities’ traded plunged to Rs 55,179.59 crore from Rs 1,07,015.46 crore. Similarly, bullion business has recorded a total turnover of Rs 1,56,565.25 crore from Rs 28,3154.60 crore. Energy trade turnover too fell to Rs 1,19,635.69 crore from Rs 1,60,329.15 crore.

After the Finance Minister P Chidambaram’s announcement of 0.01% of CTT levy in the Union Budget 2013, the definition of agri commodities was a bone of contention between the and the food ministry.

But, effective July 1, the Finance Ministry through a notification implemented CTT in agri commodities which, according to trade sources, drove away business of commodity exchanges. The list which the Finance Ministry categorizes as agri commodities continues to remain a matter of discussion which the Food Minister leaves for his Finance counterpart.

Originally, CTT was meant for non-agri commodities. But, the list entails many such processed agri commodities which cannot be traded on commodity exchanges without direct linkages with their respective underlying farm output.

Consequently, farmers take the benchmark of processed commodities for underlying agri produce to take a decision on sowing during the next crop year. Such commodities are sugar, refined soya oil, etc. to name a few.

Exchanges and commodities markets participants showed disagreement with the Finance Minister’s categorization of agri commodities in the notification.

A commodity analyst said that agri commodity's future turnover was down because of CTT levy which kept day traders out of the market.

image
Business Standard
177 22
Business Standard

CTT brings down sentiment in commodity futures

Overall turnover down by a staggering 37.86% in first fortnight of levy

Dilip Kumar Jha  |  Mumbai 



The Finance Ministry’s levy of the transaction tax (CTT) on commodities, has pulled down the overall sentiment in commodity futures market, if the turnover recorded in this segment is an indication.

Data compiled by the regulator, the Forward Markets Commission (FMC) showed that agri commodities have lost around half (48.44%) of business in the first fortnight of the levy (between July 1 and 15, 2013). In contrast, the targeted segments - bullion and energy- lost 44.71% and 25.38% of turnover respectively during the period under consideration.




The data showed that total value of commodity trade has declined a staggering 37.86% to Rs 4,08,440.39 crore between July 1 and 15 of the current year as compared to Rs 6,57,296.47 crore in the corresponding period last year.

Value of agri commodities’ traded plunged to Rs 55,179.59 crore from Rs 1,07,015.46 crore. Similarly, bullion business has recorded a total turnover of Rs 1,56,565.25 crore from Rs 28,3154.60 crore. Energy trade turnover too fell to Rs 1,19,635.69 crore from Rs 1,60,329.15 crore.

After the Finance Minister P Chidambaram’s announcement of 0.01% of CTT levy in the Union Budget 2013, the definition of agri commodities was a bone of contention between the and the food ministry.

But, effective July 1, the Finance Ministry through a notification implemented CTT in agri commodities which, according to trade sources, drove away business of commodity exchanges. The list which the Finance Ministry categorizes as agri commodities continues to remain a matter of discussion which the Food Minister leaves for his Finance counterpart.

Originally, CTT was meant for non-agri commodities. But, the list entails many such processed agri commodities which cannot be traded on commodity exchanges without direct linkages with their respective underlying farm output.

Consequently, farmers take the benchmark of processed commodities for underlying agri produce to take a decision on sowing during the next crop year. Such commodities are sugar, refined soya oil, etc. to name a few.

Exchanges and commodities markets participants showed disagreement with the Finance Minister’s categorization of agri commodities in the notification.

A commodity analyst said that agri commodity's future turnover was down because of CTT levy which kept day traders out of the market.

RECOMMENDED FOR YOU

CTT brings down sentiment in commodity futures

Overall turnover down by a staggering 37.86% in first fortnight of levy

The Finance Ministry's levy of the commodity transaction tax (CTT) on non-agricultural commodities, has pulled down the overall sentiment in commodity futures market, if the turnover recorded in this segment is an indication The Finance Ministry’s levy of the transaction tax (CTT) on commodities, has pulled down the overall sentiment in commodity futures market, if the turnover recorded in this segment is an indication.

Data compiled by the regulator, the Forward Markets Commission (FMC) showed that agri commodities have lost around half (48.44%) of business in the first fortnight of the levy (between July 1 and 15, 2013). In contrast, the targeted segments - bullion and energy- lost 44.71% and 25.38% of turnover respectively during the period under consideration.


The data showed that total value of commodity trade has declined a staggering 37.86% to Rs 4,08,440.39 crore between July 1 and 15 of the current year as compared to Rs 6,57,296.47 crore in the corresponding period last year.

Value of agri commodities’ traded plunged to Rs 55,179.59 crore from Rs 1,07,015.46 crore. Similarly, bullion business has recorded a total turnover of Rs 1,56,565.25 crore from Rs 28,3154.60 crore. Energy trade turnover too fell to Rs 1,19,635.69 crore from Rs 1,60,329.15 crore.

After the Finance Minister P Chidambaram’s announcement of 0.01% of CTT levy in the Union Budget 2013, the definition of agri commodities was a bone of contention between the and the food ministry.

But, effective July 1, the Finance Ministry through a notification implemented CTT in agri commodities which, according to trade sources, drove away business of commodity exchanges. The list which the Finance Ministry categorizes as agri commodities continues to remain a matter of discussion which the Food Minister leaves for his Finance counterpart.

Originally, CTT was meant for non-agri commodities. But, the list entails many such processed agri commodities which cannot be traded on commodity exchanges without direct linkages with their respective underlying farm output.

Consequently, farmers take the benchmark of processed commodities for underlying agri produce to take a decision on sowing during the next crop year. Such commodities are sugar, refined soya oil, etc. to name a few.

Exchanges and commodities markets participants showed disagreement with the Finance Minister’s categorization of agri commodities in the notification.

A commodity analyst said that agri commodity's future turnover was down because of CTT levy which kept day traders out of the market.

image
Business Standard
177 22

LIVE MARKET

BSE

  ( %)

NSE

  ( %)

More News

  • Engaging India beyond Bunder diamond project: Rio Tinto India MD Engaging India beyond Bunder diamond project: S Vijay Iyer
  • Stocks see second weekly fall as Fed rate hikes odds rise

STOCK WATCH

Company Price() Chg(%)
Trident 56.00 12.45
VST Inds. 2296.20 10.12
GRUH Finance 345.20 9.33
J B Chem & Pharm 336.60 7.90
Century Textiles 709.85 5.92
> More on BSE Gainers
Company Price() Chg(%)
Trident 56.45 13.13
Future Lifestyle 137.65 10.92
GRUH Finance 346.05 9.46
VST Inds. 2284.90 9.22
J B Chem & Pharm 336.50 7.71
> More on NSE Gainers
Company Price() Chg(%)
Welspun India 49.70 -8.64
Shilpa Medicare 553.00 -7.82
Piramal Enterp. 1851.10 -5.41
Jaypee Infratec. 9.21 -4.76
Avanti Feeds 534.10 -4.20
> More on BSE Gainers
Company Price() Chg(%)
Welspun India 49.40 -8.60
Shilpa Medicare 551.70 -7.87
IDBI Bank 70.45 -6.38
Jaypee Infratec. 9.10 -5.70
Piramal Enterp. 1847.10 -5.48
> More on NSE Gainers
Widgets Magazine
Widgets Magazine
Widgets Magazine

Derivatives

Index
Instrument Type
Expiry Date
Option Type
Strike Price

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard