Hot money that has been fleeing the stock market is apparently finding its way to the commodity exchanges, if the volumes in both the markets are compared. Analysts attribute several reasons for the surge in volumes in commodity exchanges, including the record prices of most of the precious metals and oil breaching the $100 a barrel-mark. Gold, copper, nickel are all trading at their peaks.
?At this juncture, the investors are shifting from equities to commodities because return in commodities is much higher and positive, as majority of the commodities are trading at their all-time highs or near that. Agri commodities like rubber, chana guar seed, chilli ect are also bullish. So people are taking fresh positions in these commodities. The investors? interest in commodities will continue for some more time as equity market has yet to recover,? said Alex K Mathew, head (research), Geojit Financial Services.
Between February 25 and February 29, the cumulative volume on the Multi Commodity Exchange alone was Rs 87,193 crore whereas on the National Stock Exchange, it was Rs 66,470 crore. NCDEX, another commodity exchange had clocked a cumulative volume of another Rs 18,190.37 crore during the period.
According to a commodity analyst with a Mumbai-based brokerage house, who does not wanted to be named, the investors? appetite for commodity futures, especially for precious metals and oil, are on the rise which is reflected in the volumes of futures contracts. Since most of equity and index futures in the stock market are in the negative zone. Therefore, many investors find commodity futures as a better option.
He also hinted that more and more investor accounts with brokerages are getting opened everyday suggesting increasing investor interest in commodities.