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Markets witnessed a lacklustre week in terms of traded volumes which fell 15% on the MCX on a week-on-week basis. Market-wide open interest declined 7% as January crude contracts expired. The base metals segment witnessed weakness as was expected and bullion firmed up towards the end of the week as currency pegs and weak economic data resulted in a flight towards safety.

The coming fortnight will be critical for short-term trend determination and aggressive traders may find profits harder to come by, in the absolute near term. Aluminium crude, mentha oil and refined soya oil saw maximum attrition in volumes and potato was the noticeable gainer. Openinterest spiked higher innatural gas, nickel, potato, refined soya oil, silver and zinc. The Israeli ceasefire will provide tradingopportunities in the first half of the week.

Agri-commodities
Chana made an abortive attempt to rally and test the 7-week high congestion levels. The Rs 2250 level will be a litmus test for bulls as this marks a gap down level after re-listing. For a sustained upmove, the counter must trade above the threshold on a consistent basis. Market internals indicate 1% increase in open interest.

Mentha oil declined for the second week in a row and is likely to witness support at the Rs 515 level in the immediate future. Sustained bullishness will be seen only above the Rs 565 level, that too on higher volumes. Market internals indicate 33% decline in turnover and 2% decline in open interest.

Refined soya oil reversed the previous week’s gains as profit sales at higher levels coupled with fresh shorts caused a major bar reversal. Fresh longs may be contemplated only above the Rs 520 level, that too on high volumes. Market internals indicate 22% decline in turnover and 27% increase in open interest.

Metals
Aluminium fell as per recent guidance and is likely to test the Rs 67-68 band if selling persists. Upsides will meet selling pressure near the Rs 75 level. The decline on lower volumes makes the fall less significant, though not meaningless. Outlook remains weak. Market internals indicate 40% decline in turnover and 5% decline in open interest.

Copper shows an “inside” formation as last week’s range was within the previous week’s range. The weekly close was below the open and that makes the bias marginally weak. Bulls are likely to have an upper hand once the metal trades above the Rs 175 level on forceful volumes. Expect a weak outlook if the Rs 153 support is violated. Market internals indicate 7% decline in turnover and 4% decline in open interest.

Gold has fallen on a week-on-week basis for a fortnight and only the weekend spike saved the precious metal from a steep fall. The weakness in the dollar vis-a-vis the euro saw a re-alignment in the bullion markets, but pressure remains on advances. Bulls are likely to be in business only above the Rs 13350 level on high volumes. A consistent trade below the Rs 12750 level will weaken near-term sentiment. Market internals indicate 13% decline in turn-over and 1% decline in open interest.

Nickel fell in tandem with other base metals and as long as the metal stays below the Rs 655 level, pressure will remain. Watch the Rs 465 level for signs of near-term support. If violated, the outlook may weaken further. Market internals indicate 13% decline in turnover and 49% increase in open interest.

Silver remains under pressure, in line with the outlook for gold. Intraday upthrusts are visible, but are marred by a lack of buying conviction on advances. A consistent trade below the Rs 17500 level will weaken the outlook further andcompromise the bulls. Consider the trend to be bullish above the Rs 18875 level only. Market internals indicate 14% decline in turnover and 12% increase in open interest.

Zinc showed higher relative strength compared with its peers. The metal will be weak below the Rs 59 level, if the decline is on higher volumes. A bullish breakout will be seen above the Rs 65 mark only. Market internals indicate 16% decline in turnover and 20% increase in open interest.

Energy
CER fell to an all-time low on the MCX and trader interest is on the wane. Bulls may consider buying only above the Rs 900 level as and when the upthrust occurs. Market internals indicate 4% decline in turnover and 76% decline in open interest.

Crude oil displayed a bullish reversal, albeit on poor volumes. Bulls are likely to be in charge as long as the “black gold” consistently trades above the Rs 2175 level. The cessation of hostilities in West Asia and US inventories will have an immediate bearing on prices in the near term. Market internals indicate 25% decline in turnover and 46% decline in open interest.

Natural gas prices fell the sharpest in percentage terms in six weeks as traders pressed shorts. Upsides are likely to be laboured and overhead supply will hound bulls. Market internals indicate 14% decline in turnover and 120% increase in open interest. With the imbroglio between Russia and Ukraine over, the international commodity markets heaved a sigh of relief as supply-side constraints eased.

The author is a Mumbai based investment consultant and invites feedback at vijay@BSPLindia.com Mandatory disclosure — the analyst has no exposure to any commodity recommended above.