International portfolio investors can now trade in commodity derivatives, MCX stock up 4%

SEBI has already permitted institutional investors participate in exchange-traded commodity derivatives, including Category III alternative investment funds, portfolio management firms, and mutual funds.

June 30, 2022 11:42 IST | India Infoline News Service
After the market regulator Securities and Exchange Board of India (SEBI) permitted foreign portfolio investors (FPIs) to trade in commodity derivatives, shares of Multi Commodity Exchange (MCX) increased by almost 4% on Thursday.

The stock increased by 3.82% to a high of Rs1,324 on the BSE before losing ground and trading at Rs. 1,291.

All non-agricultural commodities futures and a few non-agricultural benchmark indices will be available for trading by FPIs. Following a board meeting, Sebi announced that FPIs would initially only be permitted in contracts with cash settlements.

The regulator stated, “It is anticipated that FPI participation in Exchange Traded Commodity Derivatives (ETCDs) will increase liquidity and market depth as well as support effective price discovery.”

Portfolio management services (PMS), mutual funds, and Category III AIFs have previously been given permission by Sebi to participate in ETCDs.

According to media reports, although it has faced selling along with the rest of the market, Dalal Street analysts favour MCX as one of their top financial services stocks. The current price is currently 40% below 52-week highs.

Many others think this might be a chance to purchase the shares at a bargain. The average analyst objective for the stock predicts an increase of 37%, as stated in the report, with some of the top projections predicting gains of over 66%.

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