NCDEX Revives Agriculture Index with Guar and Spices Derivatives

NCDEX Set to Revive Agricultural Indices with New Derivatives Offerings

The National Commodity and Derivatives Exchange (NCDEX) is poised to reintroduce agricultural indices, focusing on derivatives linked to guar and spices, as part of its broader strategy to diversify its offerings.

New Indices to Enhance Market Participation

The proposed Guardex index will include derivatives such as guar gum, seeds, and korma, while the Spicedex will track key spices like coriander, turmeric, and cumin. This move is expected to attract a broader range of participants, including value-chain players and investors, thereby enhancing liquidity in the agricultural derivatives market.

The revival of the overall Agridex, which previously tracked ten agricultural commodities, hinges on the lifting of a ban on derivatives trading for seven key agricultural products, including non-basmati paddy and wheat. This ban, extended by the Securities and Exchange Board of India (SEBI) until March 2026, has limited the exchange’s ability to offer a comprehensive agricultural index.

Strategic Diversification Plans

NCDEX’s plans for diversification extend beyond agricultural indices. The exchange is also targeting entry into the equity cash segment by January next year, pending final approval from SEBI. This move is part of a broader strategy to enhance its market share and attract new participants.

The exchange has already secured ₹770 crore in funding from prominent investors and brokers, including Radhakishan Damani and Zerodha, to support its expansion into new business segments. Additionally, NCDEX has launched a mutual fund transaction platform and weather derivatives earlier this year, further broadening its product offerings.

Market Implications and Future Outlook

The introduction of cash-settled indices like Guardex and Spicedex is expected to stimulate participation from end-users in the agricultural ecosystem, as they provide a more accessible trading avenue compared to physical delivery options. This could lead to increased trading volumes and a more vibrant market.

Sunil Katke, national head of commodities at Kotak Neo, emphasized that the revival of an agricultural index could deepen market volumes and broaden participation, which is crucial for the evolution of the agricultural derivatives ecosystem. As awareness grows, the market is likely to see enhanced adoption and engagement from various stakeholders.

Key Highlights

• NCDEX plans to re-launch agricultural indices, including Guardex and Spicedex, within two quarters.
• Guardex will focus on guar derivatives, while Spicedex will track spices like coriander and turmeric.
• The revival of Agridex is contingent on lifting the ban on derivatives for seven key agricultural commodities.
• NCDEX is also targeting entry into the equity cash segment by January next year.
• The exchange has raised ₹770 crore for expansion into new business segments.

Investor Note: The revival of agricultural indices by NCDEX could provide a significant boost to market participation and liquidity in the agricultural derivatives space, especially if the ban on key commodities is lifted. Investors should monitor these developments closely as they may present new trading opportunities in the evolving commodity landscape.