Chana contract on NCDEX BANNED with immediate effect by SEBI; What does this mean? Expert DECODES this move by market regulator

Market regulator Securities and Exchange Board of India has banned launch of any new Chana contract on National Commodity and Derivatives Exchange (NCDEX) till further orders. The orders were issued on 16 August and came into force with immediate effect. Expert Anuj Gupta, who is Vice President (VP), Commodity and Currency Research at IIFL Securities said that the move comes as a pre-emptive measure to check price rise. 

With festive season ahead along with the uncertainties around the Coronavirus pandemic, there are fears that the prices could see a spike. 

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“In respect of running contracts, no new position will be allowed to be taken. Only squaring up of position will be allowed,” the SEBI order said. “These directions will be implemented with immediate effect,” it further said.  

The technical analyst said that the prices of Chana have remained flat over the last one months, though and were trading around Rs 5000 per quintal. He further said that the production was also in line with the demand, however, fears of prices hitting the roof cannot be ruled out.     

Gupta said that delisting of agriculture commodities haves happened on previous occasions and commodities like black pepper, sugar and pulses were delisted earlier.  

In another news, NCDEX launched futures contract on NCDEX GUAREX on Monday. NCDEX GUAREX is a price-based index that will track the price movement in the futures contracts of its underlying like Guar Seed and Guar Gum Refined Splits on a real-time basis. 

"I take pride in announcing the launch of NCDEX GUAREX futures. India's first sectoral agri-index futures contract. I am sure the contract will garner interest from all sets of participants, including the physical market participants," NCDEX Managing Director and Chief Executive Officer Arun Raste said and PTI reported. 

Initially, NCDEX GUAREX futures contracts expiring in September 2021 and October 2021 will be made available for trading. GUAREX futures is a cash-settled contract and that includes an entire sector within one product.

The NCDEX had on 5 July launched the indicative or spot contracts for NCDEX GUAREX disseminating the real-time values on its website. 

The weightage of Guar Seed and Guar Gum Refined Splits in the index will be 63.43 per cent and 36.57 per cent, respectively, PTI report said quoting a statement from the exchange

GUAREX Futures is a price-based index and, hence, has immense potential while adopting different trade strategies such as arbitrage and calendar spreads, NCDEX Chief Business Officer Kapil Dev noted.