Whalesbook
Historic Trading Volume Shift
In a remarkable development, the Multi Commodity Exchange of India Ltd (MCX) has achieved a significant milestone, surpassing the National Stock Exchange of India Ltd (NSE) in average daily turnover (ADT) for futures contracts on a monthly basis for the first time. This unprecedented event occurred in December, driven by robust trading activity in gold and silver futures.
The Commodity Rally
The surge in trading volumes on MCX was directly correlated with the impressive price appreciation of precious metals. Silver prices climbed by 31% and gold prices increased by 8% during December. This rally significantly boosted the ADT of MCX futures contracts to ₹93,929 crore. In comparison, the NSE's stock futures contracts recorded an ADT of ₹72,515 crore during the same period, highlighting MCX's dominance in this specific month.
Silver futures were the star performers, contributing 44% to the overall MCX ADT with ₹41,370 crore, while gold futures accounted for 35% with ₹32,426 crore. Even when considered together, the bullion futures ADT on MCX exceeded the turnover of NSE stock futures.
Driving Factors and Price Appreciation
The upward movement in gold and silver prices was attributed to several global factors. A projected shortage in silver supply, with demand estimated between 1 billion to 1.2 billion ounces against a supply of 800 million ounces in 2026, played a crucial role. Additionally, gold's traditional role as a safe-haven asset gained prominence amidst global economic uncertainty spurred by US tariffs and ongoing geopolitical tensions.
These factors combined pushed the average prices of active MCX gold and silver futures contracts up by approximately 47% year-on-year in the fiscal year ending December 2025 (April-December FY26). The average price for gold active futures reached ₹1.08 lakh per 10 grams, while silver active futures surged to ₹1.29 lakh per kilogramme.
Market Reaction and Expert Outlook
The positive performance in commodity trading led to a significant surge in MCX's stock price. The company's shares touched a 52-week high of ₹2,278 apiece on Friday, marking a substantial 158% increase from its 52-week low of ₹881.63 on March 11, 2025. This performance reflects increased investor confidence in the exchange.
However, financial experts suggest that the exceptional trading volumes seen in December may not be sustainable. Amit Chandra, vice-president (research) at HDFC Securities, noted that the market is not fully pricing in the continuation of December's ADT run rate for future revenue estimations. Street estimates place MCX futures' ADT at ₹51,500 crore for 2025-26 and ₹56,500 crore for 2026-27.
Another broker, speaking anonymously, indicated that even if turnover moderates by 30% from December's peak, MCX's share price might not be significantly impacted, as current valuations may not reflect sustained exuberance. Shekhar Bhandari, president of Kotak Mahindra Bank, forecasts gold returns of 20% and silver returns of 25% for 2026, lower than the recent surge.
Investor Behavior Shift
Narinder Wadhwa, founder of SKI Capital, pointed out that participants might have shifted their focus from relatively flat equity markets during the quarter to gold and silver futures, attracted by the "stupendous" rally. He anticipates that a potential revival in equity markets in 2026 could lead to a moderation in investor frenzy for bullion. For comparison, the Nifty index saw a modest rise of 5.2% to 26,129.6 by December 31, 2025, contrasting sharply with the precious metals' performance.
Future Outlook
While MCX's recent performance highlights the potential in commodity derivatives, the sustainability of its lead over NSE in ADT remains a key question. NSE continues to dominate equity futures, holding a 99.8% share as of November end. MCX's portfolio also includes futures contracts in base metals and energy, offering further diversification.
Impact: This development underscores the dynamic nature of India's financial markets and the growing investor interest in commodities, especially during times of economic uncertainty or high price volatility. For MCX, it represents a significant achievement and potential revenue growth, while for NSE, it signifies the competitive pressures beyond equities. The event encourages investors to monitor trends across different asset classes.
Impact Rating: 7/10.
Difficult Terms Explained
- Average Daily Turnover (ADT): The total value of all trades executed on an exchange in a single day, averaged over a specific period. It's a measure of trading activity.
- Futures Contracts: These are standardized legal agreements to buy or sell a particular commodity or financial instrument at a predetermined price on a specified future date.
- Bullion: Refers to gold and silver in their refined, bulk form, typically as bars or ingots, intended for investment.
- Volatility: A statistical measure of the dispersion of returns for a given security or market index. In simpler terms, it indicates how much the price of an asset is likely to fluctuate.
- Fiscal Year: A 12-month period used by companies and governments for accounting and financial reporting. In India, it typically runs from April 1st to March 31st.
- Active Futures: Futures contracts that have the highest trading volume and open interest, representing the most liquid and currently traded contracts.
- Safe-haven asset: An investment that is believed to hold its value or even increase its value during times of market turbulence or economic downturn.