Shares of the Multi-Commodity Exchange (MCX) surged in Monday’s trading session on reports that a stake sale in rival, the National Commodity Derivatives Exchange (NCDEX), took place at a premium to an earlier sale by the same investor about a month ago.
After rallying to R523.3, the Multi Commodity Exchange of India Ltd (MCX) stock closed the session at R512.95, up R76.25 or 17.5%.
The stock recorded its highest daily gain in a year after it emerged that Jaypee Capital Services, previously the anchor investor of NCDEX, sold 5.3% of its stake in the exchange to Oman India Joint Investment Fund (OIJIF) at R192 a share. The deal took place at a 2.1% premium to another transaction by the same parties in which 4.7% of NCDEX stake changed hands at R188 per share.
Traders said that the higher valuation of NCDEX, regarded as the second-biggest commodity derivatives exchange, prompted buying interest in MCX, the most profitable commodity exchange of India. MCX is considered the leader in non-agri commodity offerings while NCDEX is considered stronger in the agricultural segment.
“The NCDEX transaction has brought back trading interest in MCX, which until three months ago was regarded as the undisputed leader in the commodity derivatives exchanges. Investors are also acknowledging the changes in the exchange's board while the removal of additional margin on certain commodities in early November is also seen as a positive,” said an analyst tracking the stock.
Industry experts said that while the imposition of Commodity Transaction Tax (CTT) -largely applicable to non-agri commodities - since early July weighed on the market valuation of MCX, the R5,600-crore scam at group entity National Spot Exchange (NSEL) and the additional margins of 5% on some commodities for a period of two months since September 2013 brought down its valuations quite significantly.
During the three months to September, in which the exchange's trading volume dipped by more than 45%, it reported a y-o-y fall of 67% in its net earnings to R27.1 crore. Since July, MCX has lost 35% or R2,616 crore or of its market capitalization, about one fifth of which was eroded after the settlement crisis at NSEL emerged on August 1. At the time of listing on the exchanges in March 2012, MCX commanded a market cap of R6,600 crore, which peaked to R8,131 crore in November last year.
Experts said that while market participants have turned cautious on their dealings with MCX due to its links to Financial Technologies (FTIL), they have no substitute for MCX that accounts for the large portion of the total commodity derivatives trade.
While FTIL owns nearly 100% stake in NSEL, it holds 26% in the MCX as an anchor investor.