Column

The markets witnessed a steady last week in terms of volumes and open interest. However, the semblance of calm ended with the market internals.

There was an upheaval in the undertone as the markets factored in the strength of the rupee vis-a-vis the US dollar and profit taking in industrial metals. The market wide turnover on the MCX on a week-on-week basis was lower by 3% and the market wide open interest was up by 1%. I continue to maintain my view that the trend determination process is still underway and traders need to exercise caution.

Agri-commodities
Chana has slid lower as the Rs 2,425 double top resistance specified a few weeks ago remains inviolate. The closing is at its lowest after the week ended January 3, 2009. As long as the counter remains below the Rs 2,170 level, bears will short on rallies.
Mentha oil continues to consolidate in a narrow range as the weekly charts indicate a “doji” formation for the second week in a row. The Rs 525 level will be a support area. Should the counter decline below this threshold, expect fresh selling to emerge.

Potato has seen a mild profit taking at the Rs 960 mark as the Rs 1,000 threshold was approached. The Rs 910 level will be an immediate support to watch out for.

Refined soya oil has encountered resistance at the Rs 520 level which is a multiple inflection point threshold. The Rs 470 levels will act as a support in the near term.

Metals
Aluminium has closed sharply lower in its lowest weekly closing after week ended February 21, 2009.Meaningful support is likely to be seen at the Rs 63.50 levels. Until the Rs 74 hurdle is overcome, no buying should be initiated.

Copper remains under pressure as it seen a lower tops and bottoms formation in progress. The Rs 212 support will be critical to watch.Buying is recommended only above the Rs 226 levels.

Gold has been spooked by the rupee strength, but for which the price would have been above the Rs 15,250-15,500 band. The dollar’s weakness vis-a-vis the euro has seen a hectic buying interest in the yellow metal.

Should the week witness a sustained trade above the Rs 14,750 levels on higher volumes and open interest expansion, expect a fresh buying to emerge on this counter.

Nickel has succumbed to the resistance offered by the Rs 660 levels which is a multiple top congestion area. Unless this hurdle is overcome, fresh buying should be avoided as profit taking is likely.

Silver will continue to remain subdued as long as the Rs 23,000 threshold remains inviolate. Once crossed over, the bears and bulls will buy alike as short covering will be triggered off.

Zinc continued to slide for the second week in a row as the base metals pack succumbs to profit sales. The Rs 66 level will be an immediate hurdle below which the bears may enhance their exposure.

Energy
Crude oil has closed at its weekly highest after the week ended November 8, 2008. The Rs 3,000 cap will be a critical psychological and technical hurdle which needs to be overcome if the upthrust is to continue. Above the Rs 3,000 mark, the bears will be squeezed and bulls may enhance longs.

Natural gas is bucking the trend seen in crude oil and the Rs 166 previous support is likely to be a floor for the near term. Take a fresh view once this area is tested.