I have always wanted to buy MCX before this NSEL crisis, and for the past one week have been reading a lot and debating whether this is a right time and whether this constitutes an investment given the current issues with promoter integrity. I have decided in its favor and here I share some reasons:
1). the prices in nsel of contracts used for financing scam, have had a very particular pattern. I tried to find similar patterns in all contracts of MCX, but did not find any.
2). MCX has no exposure NSEL.
3). The volumes in MCX remain normal if one believes online data and although no guarantee, there are some reasons to believe that the online data is not completely off.
4). Even if promoters are liars, cheats, MCX is regulated by FMC. For e.g. in wake of this crisis, FMC has ring-fenced MCX, preventing it from giving any loans or diverting funds to other companies. It is very likely that the 800cr cash is still on books, although this is not the sole reason for investment.
There are many if's here. But the price is such that lot of ifs are discounted.
Will the market cap go to zero if promoters mess up badly? The bet here is not on the promoters honesty, but on their intelligence. They are mainly into exchange business and they will be the biggest losers if MCX does not survive.
The main reason for taking MCX seriously is the easily scalable business model which has network advantage, comparable to ebay amazon etc. Such companies are very hard to find as I read in a book by PAT DORSEY.
am I on my way to paying tution fees to the market? I could never know it in advance.