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The week on week turnover on the MCX was up 18% and open interest across all commodities rose 26%.

The decline in crude prices was a major trigger and the dollar added to volatility. The base metals pack witnessed resurgence even as bullion declined in tandem with fossil fuels. The volume stars were aluminium, copper, gold, mentha oil, natural gas, silver and zinc.

Open interest gainers were aluminium, copper, gold, mentha oil and silver. I advocate guarded trading in the coming week as the markets may attempt to discount a plethora of news triggers. Base metals still hold promise.

Agri-commodities
Mentha oil remained unsuccessful in overcoming the Rs 640 hurdle that is a pre-requisite for an upmove. Rs 605 levels will be a support that must not be violated if bulls are to have a fighting chance in the near term. Market internals indicate a 26% increase in turnover and a 7% increase in open interest. Await a breakout/breakdown beyond the support/resistance specified before taking a call on this commodity.

Metals
Aluminium has witnessed an upward bias as the weekly chart shows a resistance on the downsides at Rs 115 levels. The momentum players may take Rs 114 as a temporary bottom and trade with that assumption. A sustained trade below this threshold will witness short-term weakness. Market internals indicate a 58% increase in turnover and an 11% increase in open interest. Overhead supply may be expected in the Rs 122-124 band.

Copper has bounced higher from near the previous support area of Rs 302 and should it trade consistently above Rs 328 levels on a sustained basis, the possibility of an upmove is fair in the medium term. The biggest immediate trigger for this commodity will be the dollar/euro parity and should the dollar decline, expect the commodity to appreciate in the near term. Rs 336 levels need watching by the medium- and long-term players as above this threshold, the uptrend is likely to resume in earnest. Market internals indicate a 6% increase in turnover and a 5% increase in open interest.

Gold has fallen to test the recent support level of Rs 11,126 and is likely to remain under pressure in the near term. The fortunes of this commodity are tied closely to crude oil, though it is not the only overbearing factor. Market internals indicate a 24% increase in turnover and a 33% increase in open interest. These are signs of fresh shorts building up as the shraadh paksh (Hindu morning period) commences from Monday. Traditional players consider this period inauspicious and will not purchase. Besides, as long as crude remains under pressure, the yellow metal will also remain weak. Expect relief only above the Rs 11,675 levels.

Nickel is likely to witness support at Rs 830 levels as the near-term bottoms have been made on the hourly and end of day charts. As long as this support holds, expect the bulls to attempt fresh upmoves. Watch the price movement in the other base metals and follow the overall market outlook. Confirmation of a bullish outlook will come from a consistent trade above Rs 935 levels on higher volumes and expanding open interest.

Market internals indicate a 27% decline in turnover and 16% decline in open interest.
Platinum continues to remain an underperformer and an illiquid asset. Avoid this counter for now.

Silver is weak in tandem with gold as the multiple triggers of oil, dollar and economic outlook impact the near-term prices. The Rs 17,400 level needs watching and should this be violated with force, expect a decline to possibly test the recent major support at Rs 16,000 levels. Medium- and long-term players may buy at Rs 16,000 levels in staggered lots. Market internals indicate a 48% increase in turnover and a 60% increase in open interest. These are indicators of fresh shorts on the counter.

Zinc has indicated a swing reversal as per Gann studies and may test Rs 88-91 band if the market sentiments are not adversely hit by some unforeseen news trigger. The Rs 82 level will now be a stop-loss for the short-term bulls and long positions may be held. Market internals indicate a 5% increase in turnover and a 17% decrease in open interest as the short-term bulls unwound longs.

Energy
ATF witnessed no volumes this week and should be avoided.
CER is headed towards Rs 1,230 mark as the Rs 1,485 delta pattern inflection point could not be overcome. Market internals indicate a 57% increase in turnover and a static pen interest. The counter remains shallow and illiquid and traders are advised to wait and watch.

Crude oil has fallen below the Rs 4,760 support and close below this threshold. The commodity continues to weaken in spite of the US inventory remaining below the 300 million barrel-mark. These are signs of bull unwinding even as the international prices have violated the $100/barrel floor. The perceived demand destruction and the ongoing strength in the dollar is witnessing a decline in the bull interest on this commodity.
Await the fallout of the hurricane ‘Ike’ before taking fresh positions on this counter.

Market internals indicate a 5% decline in turnover and a 12% decline in open interest.
Natural gas is attempting to rally against the weakness in crude oil as the Rs 315 level will be a short-term support which needs watching by higher risk appetite short-term bulls.

The Rs 366-375 band is likely to be a stiff resistance in the near term and I expect overhead supply as the prices approach this threshold. Market internals indicate a 13% increase in turnover and a 22% decline in open interest as the bulls unwound longs.

Mandatory disclosure: The analyst has exposure to gold futuresrecommended above. The author is a Mumbai-basedinvestment consultant and invites feedbackat vijay@BSPLindia.com