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The markets witnessed a marginally higher turnover as the rally in bullion spurred hectic trader participation.

The week-on-week turnover on the Multi Commodity Exchange was higher by 2% whereas the open interest fell marginally due to the impeding expiry across some hard commodities. The turnover gainers were gold, mentha oil and silver. The open interest gainers were aluminium, copper, crude oil, gold and mentha oil. The risk aversion levels skyrocketed, sending bullion to new highs in the domestic markets on the back of weakness in the rupee. The overseas markets too witnessed a rally as the psychological threshold of $1000 was breached. The new week is loaded with triggers that may influence near-term trends in commodity markets.

Agri-commodities
Chana witnessed a swing reversal as the Rs 2,275 support was violated. The daily charts indicate a lower tops and bottoms formation. As long as the Rs 2,400 resistance remains inviolate, avoid fresh longs. Market internals indicate a 53% decline in open interest as longs were unwound.
Mentha oil appears to be under pressure as the Rs 500 psychological level, which also doubles up as a technical threshold, was violated. The lower tops and bottoms formation remained in force for the third week in a row. Bulls must refrain from fresh longs till the Rs 510 level is overcome on high volumes. Market internals indicate a 26% increase in turnover and a 9% increase in open interest. These are indicators of fresh short sales.

Refined soya oil is trading at 12-week lows, which is a sign of weakness. Bullish positions must be avoided till the counter trades above the Rs 470 levels consistently. Market internals indicate a 27% decline in turnover and a 5% dip in open interest.

Metals
Aluminium has slid to levels that had acted as a support in the week ended January 31, 2009. Should the prices tank below the Rs 63 threshold on higher volumes, expect a fresh round of weakness. The US home sales data continues to remain weak and exert downward pressure on base metals prices. Bulls should refrain from fresh longs till the metal trades above the Rs 68 levels.

Market internals indicate a 5% decrease in turnover and a 7% increase in open interest as fresh shorts were initiated.

Copper has slid to test the Rs 153 level, which will be a litmus test for the bulls. Should this support be violated on higher volumes and open interest expansion, the bears may get more aggressive. Buying momentum will not return till the counter trades above the Rs 163 levels. Market internals indicate a 20% decrease in turnover and a 9% increase in open interest, signs of fresh shorts being initiated.

Gold has surpassed the Rs 16,000 hurdle and closed below this psychological threshold. The weakness in the rupee and faltering economic data are likely to keep the prices of bullion buoyant. The bias is likely to be “buy on declines” as the global investors are preferring a flight towards safety. Market internals indicate a 14% increase in turnover and a 4% increase in open interest as fresh longs were added.

Nickel has slid lower towards the Rs 455 levels advocated last week. Should the metal trade consistently below this level on higher volumes and open interest expansion, a fresh round of weakness may occur. Much will depend on the economic data. If negative data emanates, base metals may remain weak. Market internals indicate a 35% decline in turnover and a 4% fall in open interest.

Silver has remained above the Rs 21,250 level on higher volumes and open interest expansion. The Rs 22,000 level will be a momentum support in the coming sessions and as long as this level holds, expect a positive outlook. Market internals indicate a 22% increase in turnover and a 16% decline in open interest. These are indications of bull unwinding at advances.

Zinc is near its last mile support at the Rs 52 level, below which a rapid and sharp decline may occur if the breakdown is on high volumes. Bulls must stay away till it trades above the Rs 56 levels. Market internals indicate a 31% fall in turnover and a 7% dip in open interests.

Energy
Certified Emission Reductions (CERs) has seen a feeble upthrust. The trend may reverse only above the Rs 630 level. There must be a rally in traded volumes and open interests for the upthrust to gain momentum. Till then, wait and watch. Market internals indicate a 54% decline in turnover and a 22% fall in open interest.

Crude oil has seen a profit-booking bias at higher levels. It needs to trade above the Rs 2,100 level for the bulls to show more commitment. Watch the Rs 1,875 level as a near-term momentum floor, below which the short-term players will press fresh shorts. The 0.20 million barrel decrease in the US inventory is unlikely to be a major trigger for bulls or bears. Market internals indicate a 29% decline in turnover and a 63% increase in open interest.

Natural gas has breached the Rs 200 level as the US cuts back on consumption due to recessionary trends. The near-term outlook is weak as the Russian supply constraint fears have eased and market players expect a temporary glut situation. Market internals indicate a 43% decline in turnover and a 13% dip in open interest.