Silver surged 170% in 2025, while gold rose more than 60%. Momentum spilled over into 2026, with silver rallying more than 70% in two months before a sharp recovery from its January 29 close of Rs. 4.20 lakh, down 42% from a record high. Gold also Rs. 1.93 lakh has dropped 20% from the peak to cool.
The sharp reversal triggered higher margin requirements aimed at curbing volatility. After nearly a month of volatility and large price swings, MCX and NSE withdrew an additional 7% and 3% margin on silver and gold contracts, respectively, starting February 19. Sentiment eased slightly, with shares of MCX rising by x% on BSE today.
But after a 113% run-up, the key question is: Is the stock outperforming fundamentals?
During FY21, when crude oil prices turned negative amid the Covid shock, MCX sharply increased margin requirements on crude futures. Its immediate effect was seen in Vol. Average daily turnover (ADTV) in crude futures in February 2020 was Rs. 17,200 crore in April 2020 to Rs. 3,300 crores.
Crude options premium ADTV increased as volatility increased. Premium turnover as a share of notional turnover increased from 2.2% in February 2020 to 3.9% in March 2020 and 8.3% in April 2020. Over the next few years, the partnership shifted structurally to alternatives. Crude options premium ADTV in FY21 is around Rs. 5.5 crore in FY25 to Rs. 2,120 crore and from FY26 to date Rs. 2,400 crores had expanded.
Since the start of February 2026, gold prices have fallen about 10%, while silver is down about 33%. In response, average margin requirements for silver futures rose to 72% in February 2026 from 15% previously. For gold futures, the margin increased from 10% to 30%. As a result there has been a sharp contraction in futures activity. Gold futures ADTV fell 41% month-to-date from February 2026 to Rs. 33,600 crore, while Silver Futures ADTV fell 58% over the same period to Rs. 22,700 crores.
However, reflecting the crude episode of 2020, options activity has picked up. Premium turnover as a share of overall turnover in gold and silver options increased in late January and February 2026, indicating a change in trader preference rather than an absolute decline in participation.
Do multiples really stretch?
CME (Chicago Mercantile Exchange) is the world’s largest commodity derivative exchange by open interest. According to ICICI Securities, between 2004 and 2007, the CME saw an exponential growth in volume. Traded options contracts increased from 48 million in CY04 to 107 million in CY07. Futures contracts doubled from 211 million to 432 million over the same period.
The surge in activity was accompanied by sharp re-ratings. CME’s trailing P/E multiple widened from 24.62x in January 2004 to a peak of 49.31x in November 2006. Notably, the stock traded above 40x trailing earnings for the 24 months between September 2005 and August 2008.
Outlook
The local brokerage has an Ad rating and per share at Rs. 2,780 is the target price. That suggests an upside potential of 19% from current levels. MCX Futures Average Daily Traded Volume (ADTV) for 9MFY26 was Rs. 55,800 crore and from January FY26 to date Rs. 1,09,700 crores. Based on the current trend, futures ADTV in FY26E is Rs. 66,500 crore is estimated, rising to Rs. 80,000 crore and in FY28E Rs. 90,000 crore is estimated. These estimates are for the remaining three months of FY26 at Rs. 98,700 crore indicating a run-rate.
In the options segment, at the prevailing run rate, options premium ADTV is estimated at Rs. 6,200 crore, in FY27 Rs. 8,100 crore and in FY28 Rs. 9,500 crore, which in the final quarter of FY26 is estimated at Rs. 9,200 crore indicates.
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