Copyright © HT Digital Streams Limited All rights reserved. Amid the gold rush, investors are bullish on shares of MCX—the commodity exchange where the action unfolds. The sparkle of gold and silver extends beyond jewelery counters to the derivatives market well ahead of Dhanteras. (Pixabay) Summary With volumes soaring and profit run rates hitting record highs, MCX is emerging as the stock market proxy for India’s obsession with precious metals. Here’s the why and how behind MCX becoming a market favorite. As gold prices skyrocket and buyers throng showrooms, a silent but sure rush is unfolding on trade displays this Dhanteras. The Multi Commodity Exchange of India (MCX) has become an unlikely festive favorite, mirroring gold and silver’s rally as retail traders pile into gold options and futures. With volumes soaring and profit run rates touching records, MCX is emerging as the stock market proxy for India’s obsession with precious metals. Shares of MCX have risen 64.56% in the past six months and closed 9,332% on Friday compared with the 25.73% rise in shares of BSE Ltd., which runs that Bombay Stock Exchange. National Stock Exchange Ltd is not listed. Domestic gold prices rose nearly 10% month-on-month in October as festive consumption added to its safe-haven appeal amid looming global uncertainties, while silver rose more than 20% on rising industrial demand. Traditionally, Dhanteras marked the start of the gold buying season in India – a cultural and emotional anchor for long-term wealth preservation. But the glitter of gold and silver extended beyond jewelery counters to the derivatives market well ahead of Dhanteras, as their price and volatility spiked in September. Both metals accounted for nearly 80% of MCX’s total futures volumes since September 2025, compared to 75% in H1FY26, ICICI Securities said. Trading activity rose further in October. The brokerage reported that MCX’s average daily futures turnover (ADTV) rose 76% month-on-month to ₹98,400 crore in October, while option premium ADTV rose 44% to ₹6,800 crore. Swapnil Aggarwal, director at VSRK Capital, a wealth management firm, expects bullion dominance to continue, supported by steady demand from manufacturers, jewelers and exporters. “This adds resilience but also makes MCX more sensitive to price fluctuations (in gold and silver),” Aggarwal said. A festive boom? The festive season accentuated that sensibility. Silver imports nearly doubled from last year, ETF inflows firmed, and retail participation in commodity derivatives soared as investors, taking a break from equity derivatives, sought action in commodities. Retail participants currently contribute up to 40% of the trading activity in MCX. They mostly participate in options trades, which are less capital intensive compared to futures contracts. In fact, options now contribute 60-65% of MCX’s operating income, compared to around 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 expiration dates. “The move to monthly expiry has worked like an acceleration (for retail investors),” said Santosh Meena, head of research at Swastika Investmart, a listed brokerage. More frequent expirations in times of higher volatility mean traders roll over positions more quickly, increasing the exchange’s transaction revenue, he noted. “MCX’s trading volume is primarily driven by market volatility. Unless volatility drops significantly, we are unlikely to see a significant decline in volumes, despite the latest margin increases,” he added. Bullion ride MCX recently increased the minimum initial margin requirement on gold futures by 100 basis points (bps) to 7% and on silver futures by 150bps to 12.5%, in response to increased volatility in precious metals. (A bps is one hundredth of a percentage point.) Experts expect this move to deter only short-term or highly leveraged participants, with limited long-term impact on the exchange’s trading volumes. Nevertheless, ICICI Securities expects MCX’s FY26 annual profit to cross ₹1,500 crore if its current trading volumes and profitability continue for the rest of the year. HDFC Securities expects the boom in gold to propel MCX’s profit margin above 55% in the third quarter – well ahead of NSE’s estimated 35-45% and slightly above BSE’s 45-50%. Looming risks While MCX enjoys a near monopoly on commodity derivatives with high operational leverage, a subtle challenge lurks beneath the glitz. As MCX’s trading mix has shifted to real estate, its premium-to-earnings (P/N) ratio – a key indicator of income yield – has trended lower. HDFC Securities notes that gold and silver options have P/N ratios of 0.5-0.6%, compared to 1.6-2.8% for crude and natural gas contracts. Crude oil and natural gas contracts typically have longer expirations and are more volatile than gold and silver, resulting in higher option premiums. But as bullion trade takes over, the blended ratio is projected to fall to 0.9% by FY27, from 1.63% in FY25. This matters because MCX earns transaction fees on premium turnover, not notional value. Since lower-yielding gold contracts dominate, this would mean that despite more trades, the exchange would earn less revenue per trade. Raj Gaikar, research analyst at SAMCO Securities, warns that this could temper medium-term optimism. “MCX is trading at premium valuations relative to peers, reflecting optimism about rising volumes, expanding margins and platform stability,” he says. “But unless income growth accelerates further, the upside from current levels may be limited.” MCX is up nearly 49% so far this year and trades at around 73 times its FY26 earnings, a 9% premium to BSE, according to Swastika Investmart’s Meena. MCX stands out among its peers because of its product specialization, lower regulatory overhang and volatility-linked revenue model, notes Jateen Trivedi, vice president of commodity and currency research at LKP Securities. “The continued boom in gold has created a positive market sentiment for MCX,” he added. Experts note that MCX presents a unique Dhanteras play for investors – a stock that reflects the glamor of gold and silver, but with the scalability of a platform business. “While more volatile than NSE or BSE, it is also better positioned to benefit from increasing global uncertainty,” VSRK’s said. Nevertheless, experts cautioned that sustained double-digit volume growth and institutional traction will remain key to justifying MCX’s current valuations. Get all the commodity news and updates on Live Mint. Download the Mint News app to get daily market updates and live business news. more topics #MCX Read next story
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