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ShareThe markets witnessed a higher turnover week as the trader participation perked up on account of volatility in industrials, agri and bullion counters.
The onset of the monsoon and the bleak forecast thereon prompted a flurry of activity as traders initiated positions on soft commodities, which were expected to be impacted by lower rainfall.
The week-on-week turnover on the MCX was higher by 1% and the market-wide open interest was down 3% as the impeding expiry on select counters saw routine unwinding.
The volume gainers last week were aluminium, copper, gold, mentha oil, nickel, platinum, potato, refined soya and zinc. Open interest gainers were aluminium, crude oil, mentha oil, natural gas, refined soya and silver.
Due to the monsoon triggers, agri- commodities space is likely to witness higher than recent volumes and industrials too stand to gain as trader participation is indicating upward momentum. Should the rupee weaken vis-a-vis the dollar beyond 48.75 levels, expect bullion to receive a fillip too.
Agri-commodities
Chana has indicated an attempt to rally as the weekly chart indicates a gap. The volumes were higher during the week, which is a positive indicator. As long as the counter stays above the Rs 2,180 levels, the outlook is likely to remain positive. Market internals indicate a 2% decline in open interest as short-term bulls locked in partial gains.
Mentha oil has taken support at the previous bottom at the Rs 495 levels. The lower tops and bottoms formation remains in force and unless the Rs 525-530 hurdle is overcome forcefully, do not initiate fresh buys. Market internals indicate a 18% increase in turnover and a 11% increase in open interest.
Refined soya oil has witnessed a resurgence as the closing was at its 3-week high, with improved volumes. International prices are likely to play a role in the near-term outlook as will the rupee-dollar peg. Traders may venture a few longs with a strict 2% stop loss this week. Market internals indicate a 38% increase in turnover and a 1% increase in open interest.
Metals
Aluminium has made a higher top and bottom formation but the closing level remains below the all important Rs 80 mark. The higher volumes and open interest are confidence inspiring and the outlook remains positive, with a buy recommended above the Rs 80 mark, if the market internals are strong. Market internals indicate a 39% increase in turnover and a 9% increase in open interest.
Copper is showing signs of mild optimism but continues to consolidate as the Rs 250 mark remains an elusive hurdle to cross on a weekly closing basis. Should the August series show (the cost of carry is Rs 2.50) a consistent close above the Rs 253 levels on higher volumes and open interest build up, the bulls will get their next long opportunity. The Rs 242 level remains a support in the absolute near-term. Market internals indicate a 7% increase in turnover and a 18% decline in open interest.
Gold is showing signs of life as news of a deficient monsoon exerts pressure on the rupee. The Rs 14,400 level is likely to be an immediate support and the Rs 15,000 mark a trend determiner for the near term. A conclusive and forceful breakout past this hurdle will mean fresh upsides as the short covering itself will push prices higher. Market internals indicate a 19% increase in turnover and a 2% decline in open interest.
Nickel is showing the maximum promise within the base metals segment as the rising tops and bottoms formation remains intact. The Rs 685 level will now act as a de facto support in the near-term and unless this support is violated, longs maybe held. Market internals indicate a 14% increase in turnover and a 15% decline in open interest.
Silver has witnessed a "doji" formation on the weekly charts as lower levels attracted buying. The white metal is showing lower relative strength as compared to gold and may under perform for a short while. The Rs 22,000 level will be a near-term support and a Rs 23,200 level a near term resistance. Market internals indicate a 10% decline in turnover and a 4% increase in open interest.
Zinc is showing a positive bias which will gain momentum after the counter trades consistently above the Rs 78 levels with high volumes and open interest expansion. Traders should maintain a positive bias as long as the Rs 73 level holds as a support. Market internals indicate a 8% increase in turnover and a 16% decline in open interest.
Energy
Crude oil is appearing to buckle under the weight of profit-taking as expectations of supply disruptions due to the hurricane season, are lower this year in the US. The relative steadiness of the US dollar is also prompting some profit sales and bulls should enter fresh longs only after the Rs 3,500 hurdle is overcome convincingly. Market internals indicate a 3% decline in turnover and a 2 % increase in open interest.
Natural gas is showing signs of a rounding bottom formation as the Rs 185 immediate support has held. A breakout past the Rs 210 level with force will trigger off short covering cum fresh buying as the Rs 210 mark is a previous retracement inflection point. Market internals indicate a 22% decline in turnover and a 63% increase in open interest as the traders resorted to a "buy-and-hold" strategy.
