Column

The markets witnessed a lower turnover week as the higher volatility and a domestic holiday impacted participation levels. Week-on-week turnover on MCX declined 14% and marketwide open interest gained 4% as traders willing to take an overnight view of the market initiated trades.

The turnover gainers were mentha oil, natural gas and zinc, whereas the open interest gainers were aluminium, gold, natural gas, nickel and silver. The volatility in the dollar has seen inflows into bullion and the news of Iran converting a part of its foreign exchange reserves into gold holdings also buoyed sentiment. Should oil prices stabilise or rally, gold may firm up. The falling rupee is particularly helpful to bullion bulls. Base metals may see some buying if economic news is neutral to positive.

Agri-commodities
Mentha oil is likely to witness short-term support at the Rs 462 level and resistance at the Rs 495 levels. A fresh upmove will come only after sustained trade above the Rs 495 mark with high volumes. Till then, avoid fresh longs. Market internals indicate 8% increase in turnover and 3% decline in open interest.

Metals
Aluminium has seen a semblance of support near the Rs 92 levels. Bulls are likely to get a respite only above the Rs 96 levels, that too with higher volumes and open interest expansion. Market internals indicate 23% drop in turnover and 13% increase in open interest, indicating fresh short build-up.

Copper has closed marginally higher than its opening levels and volumes have been higher than average. Bulls will have to defend the Rs 179 level support if the counter is to rally. They are likely to enjoy improved odds above the Rs 189 levels, provided turnover and open interest keep up with the price rise. Market internals indicate 29% decline in turnover and 7% decline in open interest.

Gold has defied many a bearish prediction in the last fortnight and has been helped by the economic uncertainty, falling rupee and Iranian buying. The Rs 11,150 level remains a short-term support. Bulls will have the upper hand above the Rs 11,825 level, provided volumes and open interest participate in the upthrust. Market internals indicate 9% decline in turnover and 22% increase in open interest, indicating a buy-and-hold approach on fresh longs.

Nickel has seen some bullish attempts as the metal has relatively held up in the base metals segment. The immediate support will be at the Rs 515 mark and the resistance at the Rs 595 level. A sustained trade above this level will see a revival in near-term sentiments. Market internals indicate 19% decline in turnover and 2% increase in open interest.

Silver is showing signs of relative weakness compared with gold and a forceful decline below the Rs 16,000 mark will see an accelerated fall as the longs get unwound on system-based stop losses. Bulls will get in the drivers seat only above the Rs 17,750 level. Market internals indicate 12% decline in turnover and 28% increase in open interest.

Zinc has respected the advocated the Rs 52 level support and shown signs of bullishness. These will be confirmed above the Rs 61 level, provided volumes and bullish commitments increase. High-risk appetite buying can be contemplated above the breakout. Curb the tendency to short this counter. Market internals indicate 5% increase in turnover and 35% decrease in open interest as short-term players unwind longs.

Energy
Crude oil is likely to get more choppy as the news flow is likely to keep the sentiments fluid. The emergency OPEC meet, Asian market stability and US economic data will keep oil traders on the edge. Domestic players will have to contend with the rupee/dollar parity as well. Declines may test the Rs 2,575-2,625 band and advances will have Rs 2,900-2,950 as possible target. Market internals indicate 14% decline in turnover and 22% decline in open interest.

Natural gas has violated theRs 315 support and that too on higher volumes and enhanced open interest - signs of fresh short sales. The Rs 320-325 band will now act as a resistance in the near term and declines may see the Rs 275 level being revisited. Market internals indicate 51% increase in turnover and 31% increase in open interest.

Mandatory disclosure: The analyst has exposure to gold futures
The author is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com