Multi Commodity Exchange (MCX) shares rose over 4% on Thursday after the Securities and Exchange Board of India (Sebi) approved commodity derivative trading for foreign portfolio investors (FPIs).

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The stock reached a high of Rs 1,324 on the BSE, up 3.82%, before trimming gains to 0.42% and trading at Rs 1,280.75.

“FPIs will be allowed to trade in all non-agricultural commodity derivatives and select non-agricultural benchmark indices. To begin with, FPIs will be allowed only in cash-settled contracts,” Sebi said after a board meeting.

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According to the regulator, FPI engagement in Exchange Traded Commodity Derivatives (ETCDs) is intended to increase liquidity and market depth while also promoting efficient price discovery.

Sebi has previously permitted institutional investors to engage in ETCDs, including Category III AIFs, portfolio management services (PMS), and mutual funds.

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“MCX, being one of the top commodities exchanges in non-agro space, will get direct advantage of the FPI participants,” said Tapan Patel, senior analyst (commodities), HDFC Securities.

MCX is one of the most popular financial services stocks among Dalal Street experts, despite falling along with the market. It is presently down roughly 40% from its 52-week highs.

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Many analysts feel that now is a good time to acquire the stock at a lower price. The average analyst target predicts a 37% increase in the stock, with some of the top targets predicting a 65% increase.

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The company’s net profit in the March quarter fell 3% to Rs 37 crore from Rs 38 crore at the same time last year, owing primarily to a Rs 20 crore write-off on software development for the spot market. Income from operations grew by 9% to Rs 106 crore. In the third quarter, EBITDA increased by 22% to Rs 68 crore. The board of directors had recommended a final dividend of Rs 17.40 per equity share.