MCX-SX equity debut fails to shine

The first session of equities trading on MCX Stock Exchange (MCX-SX) on Monday saw subdued response, with a turnover of only Rs 12.5 crore.

Launched in 1994, rival National Stock Exchange (NSE) had recorded a turnover of Rs 9 crore on the first day of trading. On Monday, Reliance Industries was the top volume generator on MCX-SX. Other large-cap stocks such as State Bank of India (SBI), Tata Steel and Cipla were among the most traded counters. In the cash equities segment, MCX-SX recorded trade worth Rs 69 lakh, while the rest was recorded on the derivatives side. Owing to a glitch in the MCX-SX website, data couldn’t be loaded. Stock brokers said at the beginning of the trading session, they couldn’t receive the price broadcast. The exchange said there was rush in the morning, and this might have overloaded the website.

In the coming days, MCX-SX would offer the SX 40, its flagship equity index, similar to the BSE’s Sensex and the NSE’s S&P CNX Nifty. SX 40 is a free-float-based index of 40 large-cap stocks. MCX-SX has said the index is based on ICB, a leading global industry classification system from global index provider FTSE.

The exclusion of SBI and the real estate segment from SX 40 has surprised many in the market.

SBI, India’s largest public sector bank with market capitalisation of about Rs 1.53 lakh crore, is used by large institutional investors to bet on India’s banking sector and the economy, experts say.

Siddarth Bhamre, head (derivatives), Angel Broking, said, “For traders, the absence of SBI will not make any major difference because index compositions do not impact short-term trades. But for investors, it could be a bit of a problem because they structure their large-cap portfolios on the basis of indices. If they do not see SBI in the index, they would look at other options. Also, hedging such a portfolio would result in more transactions.”

SBI has 3.72 per cent weight in the 30-share Sensex and 3.16 per cent in the 50-share Nifty.

MCX-SX did not respond to a query on SBI’s exclusion. Experts say for an index, it is only important to see a sector is well-represented. MCX-SX has said SX 40 would help structure passive investment vehicles.

The criteria SX 40 follows for selecting stocks include positive net worth for underlying security, free-float of at least 10 per cent. It also seeks inclusion within the top 100 liquid companies. The index has a cap at 20 per cent for a specific sector or industry. Stocks in SX 40 that do not form part of the Sensex or the Nifty include United Spirits and Titan.