Here's Why MMTC Shares Are Gaining In Trade Today

Shares of MMTC Ltd. are buzzing in trade on Monday, gaining up to 10% amid rising trade volumes and confidence among bullion-backed companies.

The stock is currently trading at Rs 69.38, accounting for gains of more than 8%. Earlier in trade, it had reached an intraday hgih of Rs 71.25. This compares to Friday's closing price of Rs 64.24.

MMTC is a government-owned trading company, which is involved in the business of importing and exporting metals, minerals, bullion, fertilisers, coal and agro products.

The company acts as a canalising or a nominated agency for precious metals and other commodities.

The rally in MMTC shares can be directly linked to rising gold and silver prices, with both precious metals reaching record highs in both domestic and international markets.

Higher bullion prices usually lead to increase rupee value and fees or commissions on imports and exports as well as domestic trading.

It also boosts demand for sovereign gold schemes, retail bullion and jewellery trade, where MMTC is also a channel. Overall, it helps in improving margins on existing inventory and can generate trading gains.

The surge in the MMTC share is hardly surprising as the bullion upcycle improves visibility from a very low base.

Currently trading at a relative strength index of 56, which suggests neutral market sentiments, shares of MMTC have given a negative return of 5% on a year-to-date basis.

MMTC is not the only metal-linked stock gaining in trade on Monday, as counters such as Hindustan Copper and Hindustan Zinc also buzzing on account of the broader rally in metals.