METALDEX

METALDEX is MCX's index of base metals. Its formal name in the workbook is the MCX iCOMDEX BASE METAL INDEX.

It is a sectoral index. It covers one family — industrial metals — not the whole commodity market.

Its constituents are copper, aluminium, zinc and lead. For 2025 their weights are 40%, 30%, 26% and 4%.

Copper carries the largest share. Lead carries almost nothing. Two of the four sit above 30%, and that is permitted, because the 30% cap applies only to a composite index.

The workbook then makes a striking claim for it. If METALDEX rises 10% over a year, that somewhere indicates inflation of nearly 10% in the metals family — subject to adjustments for total return items such as cost of carry on the futures.

So a commodity index doubles as a crude inflation gauge for its own sector.

Where it came from. SEBI's circular dated 18 June 2019 set the construction methodology for commodity indices built on futures prices. Four Indian indices in the workbook were created on that basis: MCX iCOMDEX, a composite of non-agricultural commodities, and three sectoral indices — MCX BULLDEX on precious metals, MCX METALDEX on base metals, and NCDEX GUAREX on the guar family. MCX trades futures on its sectoral indices, namely the MCX iCOMDEX BULLION INDEX, the MCX iCOMDEX BASE METAL INDEX and the MCX iCOMDEX ENERGY INDEX.

Weights for 2025, described by the workbook as more or less similar to 2024:

And the other two MCX sectoral indices for the same year, for contrast: BULLION is Gold 60.119248% and Silver 39.880752%, against 59.425496% and 40.574504% in 2024; ENERGY is Crude Oil around 49.85% and Natural Gas around 50.15%, against roughly 54% and 46% in 2024.

No per-commodity cap. The workbook states flatly that in sectoral indices the limit of 30% per commodity is not applicable. In a composite index each constituent must sit between 1% and 30% under SEBI's rule, and MCX works inside that with its own 2% to 30% band plus a 40% sectoral cap.

The inflation reading, with its caveat. The workbook's own words are that if MCX iCOMDEX Base Metal goes up by 10% over one year, somewhere it indicates that inflation in the metals family comprising the index — aluminium, copper, lead, zinc and so on — is nearly 10%, subject to adjustments of total return such as cost of carry on futures. That caveat is doing real work: the index is built on futures prices, which carry cost of carry, so an index rise is not a pure spot-price rise.

Fixed weights. METALDEX is a price-based index, so once weights are set they stay fixed for the year. They are reviewed and rebalanced at least once a year, and any rebalance must be disclosed at least three months before publication on the new weights.

One spelling point. The workbook prints the name two ways in adjoining sections — METALDEX in section 2.2 and METLDEX in section 2.3. They are the same index, not two products.

Run a year through METALDEX on its 2025 weights.

That is the workbook's own example in reverse. A roughly 10% index rise points, on its reading, to nearly 10% inflation in the metals family — before adjusting for cost of carry embedded in the futures.

Now look at lead. It rose 12%, more than aluminium's 8%, and contributed 0.48% against aluminium's 2.40%. Weight beats move, five times over, because lead is 4% of the index and aluminium is 30%.

Trade it, and use the workbook's own use case. A construction company needing several metals may hedge by buying futures of each metal individually, or by buying index futures relating to metals in general. It buys 6 lots of METALDEX futures with the index at 1,000. The lot is 500 units and the tick is Rs 0.25, so one tick is worth Rs 125.

Contract value at entry = 1,000 x 500 x 6 = Rs 30,00,000

A year later the index is at 1,100.4:

Gain = 100.4 x 500 x 6 = Rs 3,01,200

That Rs 3,01,200 is what offsets the higher metals bill the company actually paid — and it took one trade rather than four, which is the whole reason the workbook offers the index route.

Chapter 2 (Commodity Indices), sections 2.2 and 2.3, where the SEBI-approved Indian indices are listed with their constituents and weights.

Expect a classification and ownership question — METALDEX is MCX's and it is sectoral — and the 2025 weights, of which copper's 40% and lead's 4% are the two extremes. The better question is the inflation-proxy one, because the workbook states it explicitly along with its cost-of-carry caveat. Recognise both spellings: the workbook prints METALDEX in one section and METLDEX in the next.

• METALDEX and BULLDEX are MCX's; GUAREX is NCDEX's. Three sectoral indices across two exchanges, and the ownership is asked.
• Copper 40%, aluminium 30%, zinc 26%, lead 4% for 2025. Copper is the largest, not aluminium, and the two get swapped in the options.
• Two constituents exceed 30%, lawfully. The 1%-to-30% band is a composite-index rule; in a sectoral index the 30% limit per commodity does not apply.
• The inflation reading is approximate and carries a caveat. A 10% index rise indicates nearly 10% metals inflation, subject to adjustments of total return such as cost of carry on futures. It is not a published inflation statistic.
• Weight beats move. A large percentage move in a 4% constituent barely shifts the index, and a question that asks which metal drove an index move is testing exactly that.
• METALDEX and METLDEX are the same index. The workbook spells it both ways in adjoining sections.
• It is built on futures prices, not spot prices, like every Indian commodity index — which is why the workbook treats it as a total return index and why the cost-of-carry caveat exists at all.