Riding the bullion run, is MCX a Dhanteras play for equity investors?

With volumes soaring and profit run-rates touching records, MCX is emerging as the equity-market proxy for India’s obsession with precious metals. MCX shares have surged nearly 65% in the past six months to ₹9,332 on Friday, outpacing the 26% rise in shares of BSE Ltd, which runs that Bombay Stock Exchange. National Stock Exchange Ltd is not listed.

MCX’s rally mirrors the festive surge in bullions itself. Domestic gold prices have risen nearly 10% month-on-month in October as festive consumption added to its safe-haven appeal amid looming global uncertainties, while silver has surged over 20% with rising industrial demand.

Traditionally, Dhanteras has marked the beginning of the gold-buying season in India — a cultural and emotional anchor for long-term wealth preservation.

But the sparkle of gold and silver extended beyond jewellery counters to the derivative market well ahead of Dhanteras, as their price and volatility spiked in September. Both metals now account for nearly 80% of MCX’s total futures volumes, noted ICICI Securities.

Trading activity has surged further in October. The brokerage reported that MCX’s futures average daily turnover (ADTV) jumped 76% month-on-month to ₹98,400 crore in October so far, while options premium ADTV rose 44% to ₹6,800 crore.

Swapnil Aggarwal, director at VSRK Capital, a wealth management firm, expects the dominance of bullions to continue, supported by steady demand from manufacturers, jewellers, and exporters. “It adds resilience but also makes MCX more sensitive to price swings (in gold and silver),” Aggarwal said.

A festive boom?

The festive season has accentuated that sensitivity. Silver imports have nearly doubled from last year, ETF inflows have firmed up, and retail participation in commodity derivatives has soared as investors, taking a breather from equity derivatives, seek action in commodities.

Retail participants currently contribute to 40% of the trading activity in MCX. They mostly participate in option trades, which is less capital intensive compared to futures.

In fact, options now contribute 60-65% of MCX’s operating revenue, compared with roughly 30% from futures, according to HDFC Securities. That transition coincided with the introduction of smaller, retail-friendly “mini” contracts and the shift from bi-monthly to monthly expiries, said experts.

“The move to monthly expiry has worked like an accelerant (for retail investors),” says Santosh Meena, head of research at Swastika Investmart, a listed brokerage. More frequent expiries in times of higher volatility mean traders roll over positions faster, increasing the exchange’s transaction revenue, he noted.

“MCX’s trading volume is…