MCX Shares Surge 3% on SEBI Reforms; HDFC Sets ₹3,600 Target

MCX (Multi Commodity Exchange) shares surged over 3% in early trade on Thursday, recovering from previous losses due to significant buying interest. The stock was trading 1.85% higher at ₹3,028.00 apiece on the BSE by 9:55 AM, extending its nearly 15% gain over the past two weeks.

This upward momentum is largely attributed to recent measures proposed by the Securities and Exchange Board of India (SEBI) aimed at deepening India’s commodity derivatives market, positioning MCX as a primary beneficiary.

Regulatory Catalysts Fueling Gains

• SEBI proposed allowing Foreign Portfolio Investors (FPIs) to participate in non-agricultural index derivatives and deliverable contracts.
• Plans also include rationalizing the master-circular framework.
• Eased margin and Settlement Guarantee Fund (SGF) requirements are also on the table.

These proposals directly address key constraints within the market: expanding the participant base, broadening product offerings, and reducing the cost of capital. HDFC Securities highlighted that FPIs currently account for only about 3% of MCX’s trading volumes, a stark contrast to their 16% participation in equity exchanges, primarily due to restrictions on cash-settled contracts.

Analyst Outlook and Valuation

Allowing FPIs into deliverable contracts is expected to significantly boost bullion and metals options volume, potentially leading to a 20-25% premium accretion for MCX. Additionally, the reduction of margins on crude, gold, and silver is seen as a positive lever for market activity.

Despite a 13% decline over the past three months, MCX shares have surged almost 84% in the last year. The stock currently trades at approximately 37 times its estimated FY28 earnings.

HDFC Securities maintains a ‘Buy’ rating on MCX with a target price of ₹3,600 per share. The brokerage noted that MCX has historically traded at a 15% premium to equity exchanges due to its growth potential and lower regulatory risk, a premium it believes can be re-established.

Technical Trajectory and Key Levels

The ‘Buy’ recommendation is underpinned by rising volumes, a stable technology platform, favorable regulatory tailwinds, and a pipeline of new products. Technically, MCX share price has been consolidating between ₹2,578 and ₹3,038 since June.

A decisive and sustained breakout above the ₹3,038 level would provide further directional cues for the stock. MCX continues to trade above key moving averages, with the Relative Strength Index (RSI) indicating a bullish bias.