GUAREX to have guar seed, guar gum refined splits, SOYDEX to have soybean, refined soy oil as underlying
MUMBAI, 5 July 2021: National Commodity and Derivatives Exchange Limited (NCDEX), India’s agri-commodity exchange has today launched two sectoral indices in agri-commodities basket namely NCDEX GUAREX and NCDEX SOYDEX.
As the name suggests, GUAREX is a return based index tracking the price movement in the futures contracts of its underlying i.e. guar seed and guar gum refined splits on a real-time basis. Similarly, SOYDEX will follow the price changes in futures contracts of soybean and refined soy oil.
“This is a historical moment for NCDEX, which already has many firsts at its credit. In the indices segment, NCDEX had launched India’s first return based agricultural futures index in agri-commodities. GUAREX and SOYDEX are also the country’s first sectoral indices in the agri-commodities space,” newly appointed NCDEX managing director and chief executive officer Arun Raste said.
Initially, both the indices will be available on the Exchange’s website and will be representative only to gauge the performance of Guar complex and Soy complex. The futures trading in these indices will be launched in due course.
“Launch of sectoral indices is another feather in the Exchange’s cap and I am proud to say that GUAREX and SOYDEX will offer a lot of opportunities to respective value chain participants with respect to trading strategies and risk management exercises,” Raste added.
The weightage of guar seed and guar gum refined splits in GUAREX is 63.43 percent & 36.57 percent, respectively. In SOYDEX, soybean and refined soy oil will have the weightage of 67.92 percent & 32.08 percent, respectively. The methodology document for both the indices is available on the NCDEX website.
Speaking on this development, NCDEX chief business officer Kapil Dev said, "GUAREX and SOYDEX will offer a lot of opportunities to value chain participants with respect to trading strategies and risk management exercise.”
“Launch of futures trade in these indices will provide excellent pair trade opportunities to professional traders and portfolio managers in the areas of arbitrages and spreads. Being cash-settled contracts, GUAREX and SOYDEX become perfect products for hedgers who have been in a constant search of low-cost products. SEBI's cross margin benefit will further sweeten the deal for hedgers in terms of significant reduction in the transaction by using GUAREX and SOYDEX,” Dev added.
In May 2020, NCDEX had launched AGRIDEX, a return-based composite index tracking futures price movement in 10 commodities on NCDEX. The index has given over 40 percent return in its first full year of operations, establishing itself as a benchmark for the commodity market participants.