Synopsis: MCX shares were hit with selling pressure following the unfortunate technical situation when trading was stopped for almost two hours. The repeated breakdowns have caused a lot of anxiety about the platform’s stability among the users.
The shares of this leading commodity exchange trading service provider are in focus after facing a technical outage that hinders traders from resuming their practices. In this article, we will dive more into the details.
With a market capitalization of Rs 46,486 crore, the shares of Multi Commodity Exchange of India Ltd reached a day’s low of Rs 9,101.30 per share, down 2.2 percent from its previous day’s closing price of Rs 9,308.65 per share. Over the past five years, the stock has delivered a robust return of 436 percent, outperforming NIFTY 50’s return of 122 percent.
What was the news?
On Tuesday morning, the Multi-Commodity Exchange (MCX), India’s largest commodity trading platform, experienced a major technical glitch, resulting in a nearly two-hour delay in trading. MCX holds a dominant 98 percent market share in India’s commodity futures market.
The exchange, which usually opens at 9:00 AM, kept delaying its start time, first to 9:30 AM, then 10:00 AM, and later 10:30 AM, before it communicated that operations would be carried out from its Disaster Recovery (DR) backup site without indicating the exact time of resumption.
The blackout restricted trading in essential commodities such as gold, silver, crude oil, and base metals; thus, traders were not able to enter or exit positions in these metal markets that were witnessing price spikes in the very first hours of the day.
In fact, on July 23, 2024, a similar incident took place. According to reports, the exchange has been riddled with problems over the past few days, such as trading orders not being confirmed and settlement files being delayed.
The Commodity Participants Association of India, which represents commodity brokers, has been vocal about the platform’s repeated problems and is now demanding a meeting with the MCX chairperson to talk about the platform’s trustworthiness issue.
MCX has returned to its regular trading session at 1:25 pm after being down for a major technical outage for more than four hours. MCX had announced that a special session would be held from 1:20 pm to 1:24 pm, and the regular session would follow immediately at 1:25 pm.
MCX has been experiencing frequent technical glitches, which have made traders doubtful about the platform’s reliability. It is a losing and frustrating situation when trading stops all of a sudden, especially in fast-moving markets like gold or crude oil. In general, such repeated outages can damage the image of MCX and make traders question the safety and stability of its systems.
Nevertheless, being the largest commodity exchange in India with a market share of almost 98 percent, MCX is less likely to be affected by these problems in its long-term growth. The company can still grow and retain its market leadership if it strengthens its technology systems quickly, improves communication during disruptions, and gets back the confidence of traders.
Written by Satyajeet Mukherjee
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