MCX Share Price Rallies Over 3% In Trade. Stock Up 84% In One Year. More Upside Ahead?

MCX share price gained more than 3% in early trade on Thursday, recovering from the previous session's losses amid strong buying interest. The stock rose as much as 3.25% to Rs 3,069.65 apiece on the BSE.

MCX shares have been witnessing strong upward momentum in recent weeks, gaining nearly 15% over the past two weeks.

The recent strength in MCX shares comes amid a series of measures by market regulator Securities and Exchange Board of India (SEBI) aimed at deepening India's commodity derivatives market. MCX, the country's largest commodity derivatives exchange, is widely seen as the key beneficiary of these regulatory changes.

SEBI has recently issued two consultation papers. The first proposes allowing foreign portfolio investors (FPIs) to participate in non-agricultural index derivatives and non-cash-settled, or deliverable, contracts. The second seeks to rationalise the master-circular framework.

These proposals come alongside measures aimed at easing margin and settlement guarantee fund (SGF) requirements.

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According to HDFC Securities, the measures collectively address three key constraints that have limited the growth of India's commodity derivatives market—participant base, product breadth and cost of capital in the form of margins.

FPIs currently account for only around 3% of MCX's trading volumes, compared with nearly 16% at equity exchanges, and their participation is restricted to cash-settled contracts.

“Allowing FPIs into deliverable contracts will boost bullion and metals options volume. This along with Index options on bullion and metals can drive the next leg of growth — we see ~20-25% premium accretion,” said HDFC Securities.

Additionally, it believes reduction of margins on crude, gold and silver is an additional lever and can partially absorb the impact of banks guarantee-related changes. 

MCX Valuation

Despite the recent recovery, MCX share price has declined around 13% over the past three months. However, the stock has gained nearly 84% over the past year and currently trades at around 37 times its estimated FY28 earnings.

Historically, MCX stock price has traded at around a 15% premium to equity exchanges, supported by its growth optionality and relatively lower regulatory risk. HDFC Securities believes there is scope for this premium to be re-established.

“Rising volumes, a stable technology platform, regulatory tailwinds and the option value attached to a visible pipeline of new products have driven the outperformance to date, and we believe that continues,” the brokerage said.

HDFC Securities has kept its FY28 and FY29 earnings estimates unchanged and maintained its Buy rating on MCX, with a target price of ₹3,600 per share.

Technical Outlook

MCX share price has been consolidating in the Rs 2,578 – Rs 3,038 range since the beginning of June. 

“MCX stock price broke above the upper end of the range in morning trade today but has since slipped below the breakout level. Despite the prolonged consolidation, the stock continues to trade above key moving averages. The RSI has found support around the 60 mark on two occasions during this period, keeping the broader bullish bias intact,” said Sudeep Shah - Head of Technical and Derivatives Research at SBI Securities.

According to him, a decisive and sustained breakout above Rs 3,038 will provide further directional cues.

At 9:55 AM, MCX share price was trading 1.85% higher at Rs 3,028.00 apiece on the BSE.

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