Commodity trading volume falls by 70% after cut in trading time, say analysts

Updated : April 09, 2020 08:10 PM IST

The prices of global commodities like gold, silver and crude oil are synced with international markets, especially the US.

The volatility in the commodity prices has increased and the investors are facing high risks due to the fluctuations in international and domestic prices.

Trading volumes in the commodity market have been drastically impacted due to the curtailed trading time and high risks, analysts said.

“The majority of trading volume, around 70 percent, was witnessed in the evening session. But, after the cut in trading time upto 5 pm, these volumes have been hurt,” said Ajay Kedia, Director, Kedia Commodities.

The stock and commodity exchanges in India had reduced the commodity trading timings to 9 am to 5 pm from March 30 till April 14 due to the nationwide lockdown imposed amid coronavirus outbreak.

The prices of global commodities like gold, silver and crude oil are synced with international markets, especially the US. Traders and hedgers now have a limited window to react to the price changes of these commodities in international markets.

The volatility in the commodity prices has increased and the investors are facing high risks due to the fluctuations in international and domestic prices.

“Investors are facing risks due to the gap-up or gap-down opening. The margin risks have also increased which has led investors keep no open positions in the evening. This ultimately has resulted in lower volumes,” Kedia added.

The move to curtail commodity exchange timings to 5:00 pm has impacted the Multi Commodity Exchange of India (MCX) the most as the majority of its turnover comes from trading in global commodities like gold, silver and crude oil.

Commodity trading volume falls by 70% after cut in trading time, say analysts

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