Silver continues to outperform gold; watch out for Rs19,250 support level in near term

The markets saw a higher turnover week as the traders participated in the volatility that ensued over Egypt, the economic data and weather-related supply shortages.

The week-on-week market wide turnover on the MCX rose by 19%. The market wide open interest fell by 5%.

The MCX turnover gainers were aluminium, cardamom, chana, copper, crude oil, gold, lead, mentha oil, natural gas, potato, refined soya, silver and zinc. The open interest gainers were copper, crude, iron ore, natural gas, nickel, potato and refined soya.

Agri commodities
Chana remains listless as the traded volumes have all but dried up. The previous week has seen a quantum jump in volumes on a very small base and the bulls are likely to prevail over the bears only above the Rs2,700 levels. Defer fresh buys for now.

Mentha oil has seen a sharp decline as the winter is seen retreating and the demand contraction is likely to follow. The possibility of a minor pullback cannot be ruled out, but advances will run into selling pressure as overhead supply builds up. Market internals indicate an 85% rise in turnover and a 27% fall in open interest.

Potato has seen a consolidation as agri commodities saw a profit taking bias at higher levels. Only a sustained trade above the `695 levels will attract fresh buying and traders should defer fresh longs till a forceful breakout is seen. Market internals indicate an 80% increase in turnover and a 2% increase in open interest.

Refined soya oil has seen an inside formation and a mild gain on the weekly charts as the commodity saw profit sales at higher levels erode initial gains. Await a forceful breakout above the Rs675 levels before initiating a fresh buy on the counter. Market internals indicate a 37% rise in turnover and an 11% rise in open interest.

Metals
Aluminium rallied strongly along with its peers and that too on higher volumes. The rising tops and bottoms formation remains in place. If the bulls are to prevail over the bears, the metal should stay above the Rs112 levels on a sustained closing basis. Hold existing longs for now. Market internals indicate a 12%rise in turnover and a 28% fall in open interest.

Copper has led the rally in the base metals segment from the front and the bulls are in command at the moment. As long as the counter remains above the Rs448 levels on a closing basis, dips will be bought into and ample support will be seen. Hold longs as of now. Market internals indicate a 4% increase in turnover and a 34% increase in open interest.

Gold has seen some profit sales on advances as the US economy picked up some momentum as the job data was positive. Silver continues to outperform the yellow metal and the Rs19,250 level is a support in the near term that needs watching. Market internals indicate a 9% increase in turnover and an 18% decrease in open interest.

Nickel saw a sharp rally and the counter has been one of the strongest in the base metals pack. As long as the bulls manage to defend the Rs1,275 levels in case of dips, the momentum will remain positive. Hold existing longs for now.

Silver has witnessed a strong surge as the white metal outperformed its yellow peer once gain. Unless the Rs42,900 levels are broken, the bulls are likely to prevail over the bears in the near term. A sustained trade above the Rs44,800 levels will trigger a bear squeeze.  Market internals indicate a 20% increase in turnover and a 3% decrease in open interest.

Zinc has rallied in tandem with its peers and a mild congestion is likely at the Rs116 levels. Once this hurdle is effectively overcome, the counter is likely to rally on the back of bear covering and fresh buying. Hold existing long positions.

Energy
Crude oil has witnessed profit sales as the 2.6 million barrel increase in the US non-strategic petroleum reserves coupled with a steady dollar saw some bull unwinding. Fresh buys are recommended only above the Rs4,250 levels on a sustained closing basis. Market internals indicate a 53% increase in turnover and a 22 % increase in open interest.

Natural gas has remained subdued as the counter closed near its support at the Rs195 levels. As long as this level holds, there is a possibility of the commodity witnessing some upsides. Market internals indicate a 3% rise in turnover and a 19% rise in open interest.

The columnist is author of A Traders Guide to Indian Commodity Markets and invites feedback at vijay@BSPLindia.com or (022) 23438482.

Mandatory disclosure: The analyst has no expo-sure to commodities recommended above.