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Last week, there was a slight spike in turnover and open interest as trader interests revived on firm energy prices.

The recovery trickled down to base metals as aluminium, copper, crude and nickel gained on the back sporadic buying on higher volumes following inflationary concerns. The open interest gainers were aluminium, crude oil, gold, silver, natural gas, nickel, zinc and chana. This week might see the action continuing on energy counters with select agri-commodities, especially foodgrains, hogging the limelight in the global commodities mart.

Agri-commodities
Chana has seen a lower top and bottoms formation on the weekly charts and the 2400 level is the immediate support as some bear covering may be seen at this threshold. The 2650 level will act as a hurdle for the short-term players and fresh aggressive longs are to be avoided. Market internals indicate a 17% increase in open interest as fresh longs were opened.

Guar seeds has emerged from the shadows of the bears as the 1880 level is now the immediate support level. Unless the level is violated, the bulls will remain in command. Hold longs for now.

Mentha oil is heading towards its near-term support at the 428 level where some buying/bear covering may be seen. The 460-level remains a major hurdle on the upside and unless a breakout above this threshold occurs, avoid buying. Market internals indicate a 57% decline in turnover. Open interest may remain unchanged.

Refined soya oil has seen support at the 545 level where concerted buying has been seen recently. The weekly chart indicates an inside pattern as the traded range witnesses a consolidation. The probability of a bigger move cannot be ruled out. Market internals indicate a 14% decline in turnover and a 1% fall in open interest.

Metals
Aluminium is showing resilience as the technical bounce will extend as long as the 116 support holds and open interest rallies somewhat. The logical short-term upward target is 125 and one may take a fresh look beyond this threshold. Market internals indicate a 12% increase in turnover and a 25% rise in open interest.

Copper is delicately poised near its critical resistance level of 354 and a rally above this on convincing volumes and open interest will see bulls becoming dominant. Support on declines will be seen at the 335 levels and as long as this threshold remains inviolate, an upmove is likely. Market internals indicate a 34% increase in turnover and a 1% rise in open interest.

Gold is likely to be influenced significantly by the energy prices as well as inflation as global investment capital attempts a flight towards safety. The 11400 threshold is the near-term support and the 12200 is a breakout level above which the bulls are likely to have an upper hand over the bears. Market internals indicate a 9% decline in turnover and a 15% increase in open interest.

Nickel continues to see a lower tops formation as the 1120 is the near term support below which the next support will be at the 1075 levels. The possibility of an upmove is likely only above the 1225 mark and that too on very heavy volumes and open interest addition. Market internals indicate a 4% increase in turnover and a 20% rise in open interest. These are indications of a short build up. Avoid buying.

Silver is likely to be locked in between 24000 on advances and 22500 on declines. A decisive close above the 24000 levels on convincing volumes may see buying emerge.

On a relative comparative basis, silver appears to be stronger than gold in the near term. Market internals indicate a 1% increase in turnover and a 11% increase in open interest as buy and hold bias is seen.

Zinc is seen ranging between 88 and 103 and unless a decisive breakout/drawdown occurs in either direction, traders need to wait and watch. The bias is towards sell on rallies. Market internals indicate a 1% increase in turnover and a 31% increase in open interest.

Energy
Crude oil is near its resistance at the 4500 level and a move above this will see the commodity accelerate rapidly. Ample support exists at the 4000 level for the patient investor. For the momentum players, the 4320 level needs careful monitoring. Market internals indicate a 13% increase in turnover and a11 % rise in open interest.

Natural gas is in a bull grip as the 410-415 band is not likely to hold the bulls back, especially as global demand firms up. The 375 level as a support is established and activated and unless this threshold is violated, the only threat perception to the bulls will be a routine profit-taking bias. Market internals indicate a 1% decline in turnover and a 34% increase in open interest. These are indicators of a buy and hold bias.

Mandatory disclosure: Theanalyst has exposure to gold.
vijay@BSPLindia.com