In 2025, silver soared 170%, whereas gold climbed over 60%. The momentum spilled into 2026, with silver rising greater than 70% within the first two months earlier than correcting sharply, tumbling 42% from its January 29 report excessive of Rs 4.20 lakh. Gold, too, has cooled off, slipping 20% from its peak of Rs 1.93 lakh.
The sharp reversal triggered larger margin necessities aimed toward curbing volatility. After almost a month of turbulence and vast value swings, MCX and NSE withdrew the extra 7% and three% margins on silver and gold contracts, respectively, beginning February 19. The easing offered reduction to sentiment, pushing MCX shares up as a lot as x% on the BSE immediately.
However after a 113% run-up, the important thing query is: has the inventory run forward of fundamentals?
Throughout FY21, when crude oil costs turned adverse amid the Covid shock, MCX sharply elevated margin necessities on crude futures. The instant influence was seen in volumes. Common each day turnover (ADTV) in crude futures plunged from Rs 17,200 crore in February 2020 to Rs 3,300 crore in April 2020.
Crude choices premium ADTV rose as volatility surged. Premium turnover as a share of notional turnover elevated from 2.2% in February 2020 to three.9% in March 2020 and additional to eight.3% in April 2020. Over the subsequent few years, participation structurally shifted in the direction of choices. Crude choices premium ADTV expanded from round Rs 5.5 crore in FY21 to Rs 2,120 crore in FY25 and about Rs 2,400 crore in FY26-to-date.
Since early February 2026, gold costs have declined roughly 10%, whereas silver is down about 33%. In response, common margin necessities for silver futures jumped from 15% earlier to 72% in February 2026. For gold futures, margins elevated from 10% to 30%. The consequence has been a pointy contraction in futures exercise. Gold futures ADTV fell 41% month-on-month to Rs 33,600 crore in February 2026-to-date, whereas silver futures ADTV declined 58% to Rs 22,700 crore over the identical interval.But, mirroring the crude episode of 2020, choices exercise has picked up. Premium turnover as a share of total turnover in gold and silver choices elevated in late January and February 2026, indicating a shift in dealer desire slightly than an outright drop in participation.
Is the a number of actually stretched?
The CME (Chicago Mercantile Alternate) is the world’s largest commodity derivatives change by open curiosity. Between 2004 and 2007, CME witnessed exponential development in volumes, in keeping with ICICI Securities. Choices contracts traded rose from 48 million in CY04 to 107 million in CY07. Futures contracts doubled from 211 million to 432 million over the identical interval.
The surge in exercise was accompanied by a pointy re-rating. CME’s trailing P/E a number of expanded from 24.62x in January 2004 to a peak of 49.31x in November 2006. Notably, the inventory traded above 40x trailing earnings for twenty-four months between September 2005 and August 2008.
Outlook
The home brokerage has an Add ranking and a goal value of Rs 2,780 per share. That suggests an upside potential of 19% from present ranges. MCX’s futures common each day traded quantity (ADTV) stood at Rs 55,800 crore for 9MFY26 and Rs 1,09,700 crore for January FY26-to-date. Based mostly on the present development, futures ADTV is projected at Rs 66,500 crore in FY26E, rising to Rs 80,000 crore in FY27E and Rs 90,000 crore in FY28E. These estimates suggest a run-rate of Rs 98,700 crore within the remaining three months of FY26.
Within the choices phase, on the prevailing run price, choices premium ADTV is estimated at Rs 6,200 crore in FY26, Rs 8,100 crore in FY27 and Rs 9,500 crore in FY28, implying Rs 9,200 crore within the last quarter of FY26.
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(Disclaimer: Suggestions, strategies, views and opinions given by the consultants are their very own. These don’t symbolize the views of The Financial Occasions)
