MCX surges 9%, nears record high; stock zooms 32% in one month

A combined around 7 million equity shares, representing 13 per cent of total equity of MCX, changed hands on the NSE and BSE till 3:00 PM

Shares of the Multi Commodity Exchange of India (MCX) hit a 52-week high of Rs 2,115 as they rallied 9 per cent on the BSE in Thursday's intraday trade on the back of heavy volumes, in an otherwise weak market. In comparison, the S&P BSE Sensex was down nearly 1 per cent at 3:15 PM.

The stock was quoting close to its record high level of Rs 2,134.90, touched on October 14, 2021. In the past one month, the market price of MCX has outperformed the market by surging 32 per cent as against 0.67 per cent gain in the benchmark index.

The average trading volume on the counter jumped nearly four-fold today with a combined around 7 million equity shares, representing 13 per cent of total equity of MCX, having changed hands on the NSE and BSE till 3:00 PM.

MCX, vide circular dated September 27, 2023, announced that the Exchange will go live with the new Commodity Derivatives Platform with effect from Tuesday, October 03, 2023.

Analysts at HDFC Securities maintains 'buy' rating on MCX with a target price of Rs 2,400 per share.

"MCX has witnessed impressive growth in options volume but uncertainty around the technology shift has been the key overhang. The commodity exchange, in a press release, has indicated that the technology shift is underway and might happen three months ahead of the deadline. In the last seven days, MCX has conducted mock trading sessions for 14 hours without any glitches," the brokerage firm said in a stock update.

The brokerage believes that post the technology transition, investor focus will shift to product launches, volume growth and improving profitability. Options notional ADTV has increased ~3x YoY and is currently more than Rs 1 trillion (~5x of futures). Options growth is driven by a surge in active UCCs (+126% YoY) and higher activity in crude/natural gas contracts.

The launch of new products like index and mini/weekly options will further boost volumes. The options premium-to-notional ratio will decline gradually but the premium volume will register ~47 per cent CAGR over FY23-26E, it added.