Commodity exchanges' turnover rises 42%

The composite turnover of all commodity exchanges rose by 41 per cent to Rs 1,64,920.40 crore in the second fortnight of July, compared with Rs 1,17,028.78 crore in the previous fortnight. However, the turnover recorded a slight decline from Rs 1,68,139.30 crore in the second fortnight of July 2006.

The Multi Commodity Exchange (MCX) led the growth posting a record 51.55 per cent rise in turnover at Rs 1,24,174.65 crore from Rs 81,936.67 crore. The exchange's expertise in internationally referenceable commodities helped it grow faster than others. Its turnover was Rs 1,03,712.79 crore during the same period last year. The MCX has a market share of above 70 per cent in the commodity futures trade in India.

The National Commodity & Derivatives Exchange (NCDEX) also registered a turnover growth of 18 per cent in the fortnight to Rs 35,044.07 crore from Rs 29,709.53 crore in the previous quarter. During the same period last year, the turnover stood at Rs 51,135.76 crore.

Exchange sources believe that the growth in turnover cannot be termed as a trend as much depends on the cropping pattern and monsoon in agri commodities. Major part of turnover comes from agri commodities.

Although the National Multi Commodity Exchange (NMCE) witnessed a sharp 29.55 per cent jump in the turnover to Rs 774.80 crore in second fortnight of July from Rs 598.09 crore in the previous fortnight, the top line declined by 92 per cent. One of the three national commodities exchange lost much of its business to MCX. The exchange recorded Rs 9,276.68 crore turnover in the second fortnight of July 2006.

The record recovery in the fortnight under consideration resulted in offsetting a major chunk of volume loss during the first four months of the current fiscal. During the period, overall turnover of all commodity exchanges recorded a marginal fall of 6.4 per cent to Rs 1179,000 crore from Rs 12,60,000 crore. In an email response to the querry, NCDEX said that there was no clear mandate about the continuation of the current booming trend.

"There are different entities which are dealing in the two segments and while commodity markets have been guided by demand-supply conditions in different commodities, equities are guided by a different set of factors," the exchange added.

While comparing the development in equity markets, the exchange source said that when equity markets fall, commodities do not really follow suit, and theoretically there can be a strong case of portfolio diversification.