Nidhi Sharma The Economic Times
Mumbai - 01 May, 2008
The long-awaited Abhijit Sen Committee report is out but market participants still seem to be apprehensive of trading in commodity futures. Experts feel volumes at the exchanges can only pick up once the contents of the report are discussed thoroughly at political level and a clear view emerges.
Although the report mentioning that the rise in wholesale and retail prices of farm commodities cannot be attributed to futures trading, the supplementary note by Mr Sen said the ban on trading in four sensitive commodities — urad, tur, wheat and rice — should continue. He has also called for a discussion regarding futures trading in edible oil and sugar.
“There is a dilemma in the mind of traders whether they should enter the market. The report, per se, has nothing negative about commodity futures trading apart from the personal note by the chairman of the committee that has left traders indecisive,” Angel Commodities head Naveen Mathur said. He feels market sentiment might improve once a clear view emerges.
Agri-commodity volumes have declined on the exchanges. However, edible oil complex rang in good volumes, especially in the January-March period this year following the strong upside in international markets. During the same period there was also a bull run in the metals counter and crude oil that increased the overall volumes on the domestic exchanges compared to the corresponding period last year.
High volumes in soya oil, soybean and rape-mustard seed may not have gone unnoticed by the committee as Mr Sen made special mention of it in the report. He called for more discussion on the hedging benefits that processors derive from futures markets, and accordingly take a decision regarding edible oils and sugar.
“There is a dilemma in the mind of traders whether they should enter the market. The report, per se, has nothing negative about commodity futures trading apart from the personal note by the chairman of the committee that has left traders indecisive,” Angel Commodities head Naveen Mathur said. He feels market sentiment might improve once a clear view emerges.
Agri-commodity volumes have declined on the exchanges. However, edible oil complex rang in good volumes, especially in the January-March period this year following the strong upside in international markets. During the same period there was also a bull run in the metals counter and crude oil that increased the overall volumes on the domestic exchanges compared to the corresponding period last year.
High volumes in soya oil, soybean and rape-mustard seed may not have gone unnoticed by the committee as Mr Sen made special mention of it in the report. He called for more discussion on the hedging benefits that processors derive from futures markets, and accordingly take a decision regarding edible oils and sugar.
Earlier, high inflation figures and government measures thereafter to control prices had also triggered negative sentiments and affected trading on the futures counter. Government slashed import duties of various edible oils, imposed stock limits on food grains and pulses and banned export of non-basmati rice.
Religare Commodities head Jayant Manglik feels volumes would pick up once the discussion on the Abhijit Sen Committee report are completed. “Agri-commodities volumes have especially been affected and they will reach higher levels once the debate on the report gets over,” he added.
Even Shyamal Gupta from Kotak Commodity Services agrees all is dependent on how the contents of the report are interpreted. “If there is clarity of communication in policy making and the way futures market needs to be taken forward there would not be confusion in the minds of market participants,” Mr Gupta said.
Religare Commodities head Jayant Manglik feels volumes would pick up once the discussion on the Abhijit Sen Committee report are completed. “Agri-commodities volumes have especially been affected and they will reach higher levels once the debate on the report gets over,” he added.
Even Shyamal Gupta from Kotak Commodity Services agrees all is dependent on how the contents of the report are interpreted. “If there is clarity of communication in policy making and the way futures market needs to be taken forward there would not be confusion in the minds of market participants,” Mr Gupta said.
