Why is commodities exchange NCDEX betting on the equities market as it plots major expansion?

The National Commodity and Derivatives Exchange (NCDEX) is gearing up to launch its mutual fund platform later this month as a part of its plan to become a multi-segment exchange spanning across commodities and equities.

India’s equity market is currently dominated by the NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Why then is a commodities exchange gearing up for an equities play?

Arun Raste, the MD and CEO of NCDEX, pointed out that the exchange already has a reach across India’s hinterlands and a connection with 1.3 million farmers and 750 farmer-producer organisations. While they trade in commodities on its exchange, they could also be interested in investing in equity markets, and NCDEX wants to offer them that opportunity, he said.

“Around 1.3 million farmers have traded on our exchange. They have an investable surplus, which they may be investing in different avenues like gold, buying land or just keeping money at home. If I can connect those people to markets, I will then expand the capital market. Asset management companies (AMCs) are anyway talking about the focus on B30 (beyond 30) and B100 markets,” Raste told Business Today.

Raste feels the farmers or their cooperatives and FPOs can themselves become mutual fund distributors by giving the NISM (National Institute of Securities Markets) examination. They will then get commission from AMCs, in a way getting another source of income.

NCDEX’s mutual fund platform – Nidhi – had received in-principle approval from the Securities and Exchange Board of India in December 2025 and will rival the likes of BSE’s MF transaction aggregation platform StAR MF and NSE’s NSE MF Invest.

These MF platforms help distributors process subscriptions, systematic investment plans (SIPs), redemptions, etc. across asset management companies digitally.

NCDEX Nidhi is being launched on July 29, and the exchange has been in talks with large fund houses to integrate them onto its platform initially, as their brand names will be much more familiar in the smaller markets where NCDEX intends its platform to reach.

The launch of its mutual funds platform will mark the beginning of the commodity exchange’s intention to make a broader push into equity markets.

“As far as equities are concerned, we are already at a systems integration phase. We will start our UID (user-interface development) sometime in September or October; by December we should be ready for the final inspection by Sebi and subject to that inspection, we hope to launch equities in early 2027,” Raste explained.

It will launch the equity cash segment first and follow it up with a foray into equity derivatives six months later.

What gives him the confidence of succeeding in the equities space in the face of already dominant incumbents?

“If you look at data, about 20 million new investors come into equity every year and around 40% are from the areas where we operate. So, the incremental number of investors who are coming into the market is mainly from Tier III, IV and V towns, where we have clear-cut brand recall, and we will be in a position to capitalise on that,” said Raste.

While NCDEX is getting ready for a major equity markets play, it will continue to focus on and expand its core commodities exchange business.

“Our ambition is to become a multi-segment exchange,” said Raste.

Earlier this month, NCDEX relaunched black pepper futures, reviving one of its most historically significant contracts. According to NCDEX, India is among the world’s largest producers, consumers and processors of black pepper, yet there has been no active derivatives benchmark for the commodity.

In May this year, it became the first exchange in India to launch an exchange-traded weather derivative contract – Rain Mumbai. It also plans to launch Rain Chennai later this year.

Raste pointed out that rain not just concerns agriculture, but it was also equally relevant for other industries such as hydroelectric power generation firms, or agri input companies. The derivatives contract on rain enables market participants to manage financial risks arising from rainfall volatility.

Just as Rain Mumbai is based on the rainfall patterns in western India, the Rain Chennai contract will be focused on the rainfall patterns in eastern India. Another weather-related derivative product based on temperature variations is also something NCDEX is exploring.

NCDEX is also working on a product for freight derivatives and is planning to launch contracts in platinum and cotton