NCDEX Launches GUAREX – India’s First Agri Sectoral Index

India’s first sectoral index in the Agri commodities basket i.e. GUAREX was launched this Monday by the National Commodity and Derivatives Exchange Limited (NCDEX). On the first day the total open interest was recorded at 111 lots while total volume stood at 318 lots.

GUAREX is a price based sectoral index which tracks the movement in the futures contracts of guar gum refined splits and guar seed on a real-time basis. This index product will offer a lot of opportunities to value chain participants in terms of risk management as well as various trading strategies. The Exchange had earlier launched the indicative or spot contracts for NCDEX GUAREX on July 5, 2021, disseminating the real-time values on its website. GUAREX ended the week on a positive note, gaining roughly 500 points from Monday’s closing price.

The demand situation and trade environment of Guar seed and Guar gum has improved noticeably during the second quarter of this year, with exports resuming slowly.

It has been more than two years when the market participants appear to waive a sigh of relief regarding getting better prices this year. Production this year is expected to fall significantly below last year because of erratic monsoons and farmers shifting to other crops as they were unable to get good prices for the last two years.

Sources say that the overall sowing area in Rajasthan is not more than 30-40 percent of previous year’s cropped area till date. Guar and guar gum traded firm trend during the greater part of the day. The week has been bullish for the entire week and on Friday both the commodities established new highs after years. September guar seed made a high of 5518 and closed at 5393 while Guar gum September contract at NCDEX finished at 9066 after attaining a high of 9113.

The Bull Run has started in the guar complex basket; therefore markets are expected to trade with higher volatility. At this juncture the use of GUAREX as a hedging product will be quite effective for the market participants.