The trading volume on the Ahmedabad-based National Multi Commodity Exchange (NMCE) has hit the highest spot in four years owing to a sharp increase in day-trading.
The daily average volume of trade on the NMCE has hit a record of 19,317 lots with its turnover at Rs 3,398 million in March. This shows an increase of more than 50 per cent over the 13,578 lots with a Rs 2,905-million turnover in February and also a 10 per cent jump over the 17,363 lots with a Rs 2,920-million turnover in March last year.
The level of trading this month was seen last in March 2014, when there were 24,479 lots.
Trading on the NMCE remains relatively calm throughout the year with participation by genuine hedgers. In March, however, the trading volume jumps with the entry of day traders, who square off their positions before the end of the trading session to avoid rollover and also because of the need for delivering underlying commodities in warehouses.
“Traders do not require to keep the stocks of the underlying in warehouses because they square off their positions before the end of the day. Only in the case of carry-over trade do they require to keep stocks of required commodities in exchange-designated warehouses,” said Anil Mishra, managing director, NMCE.
Against the record trading volume, the average open interest on the NMCE remained resilient. The average open interest across all contracts, however, surged to 4,729 lots in March, showing an increase of around 10 per cent from the 4,218 lots and 4,546 lots in February and January, respectively. Normally, the growth of any exchange is determined by open interest, which denotes the participation of serious hedgers.
Meanwhile, NMCE members have reported a rubber inventory of 2,862 tonnes in exchange-recognised warehouses of India as of March 21.
The exchange offers futures trading in a host of commodities including coffee and isabgul seed, which have seen a sudden revival in trading in the past few months, despite remaining illiquid throughout the year. Those trading in other commodities, however, square off their positions to avoid delivery pressure.
Experts say traders are allowed to set off their profits or losses in commodities against their proportionate business dealings in other derivatives transactions under the Income Tax Act.
Mishra, however, attributes the sudden increase in traded volumes because the number of registered members has risen. The exchange has added 10 members over the past one year, taking the number of registered members to 44 from 34 about a year ago.