Shares of the Multi Commodity Exchange of India (MCX) experienced a significant drop of over 8% in early trading on Friday. At around 00:20 ET (04:20 GMT), MCX shares were down by 8.30% at ₹1,922.50 apiece on the National Stock Exchange (NSE). This sharp decline occurred just a day after the company's shares had surged by around 9% due to the anticipation of the launch of a new commodity derivatives platform (CDP) scheduled for the following week.
The Securities and Exchange Board of India (Sebi) intervened and instructed MCX to delay the launch of the new platform. MCX responded by informing the stock exchange that it would adhere to Sebi’s directive to postpone the CDP's launch. Sebi announced it would address the matter during an upcoming meeting of its Technical Advisory Committee, underlining that the concerns are centered around technical issues associated with the new platform.
The regulatory decision by Sebi was triggered by concerns raised by the Chennai Financial Markets and Accountability (CFMA), an investor group. CFMA had voiced doubts regarding MCX's readiness in terms of technical support for the new platform. Sebi took note of CFMA's letter dated September 27, which specifically highlighted the technical issues related to the impending launch of the CDP.
In response to these developments, MCX has decided to continue conducting mock tests on the CDP until SEBI provides further instructions regarding the new platform. This ensures that the platform is thoroughly tested and ready for a smooth launch once regulatory concerns are addressed.
On Thursday, MCX had hit a new 52-week high at ₹2,119.65 per share following a significant announcement about this new trading platform. Leading brokerage firm HDFC Securities had assigned a 'Buy' call on MCX with a target price of ₹2,400 (USD1 = INR83.113) apiece, expecting a robust return of up to 15%.
MCX is a midcap exchange and data platform company that facilitates online trading of commodity derivatives transactions. Over the past week, the stock had gained 20.03%, while it had given a maximum return of 204.13% over the past five years.
According to InvestingPro data, MCX has shown significant return over the last week, and is a prominent player in the Capital Markets industry. The company's revenue growth has been accelerating, and it has maintained dividend payments for 11 consecutive years. However, InvestingPro Tips also suggests that MCX's net income is expected to drop this year, despite the company trading at a high earnings multiple. These insights could be crucial for potential investors, and for more such tips, one can refer to the InvestingPro platform here. There are 15 additional tips listed in InvestingPro, providing a comprehensive analysis of the company's financial health and market position.
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