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ShareThe markets witnessed a higher turnover last week as the trader participation spiked on the base metals complex and energy contracts. The holiday-laden week failed to dampen the sentiments and participation levels were robust. The week-on-week turnover gainers on the MCX were aluminium, chana, copper, crude oil, lead, natural gas, nickel, wheat and zinc.
The open interest gainers were crude palm oil, gold, mentha oil, silver, steel (GZB), wheat and zinc. The US non-strategic petroleum reserves increased by 1.3 million barrels to the 339.1 million barrels and that curbed the bullishness on the oil counter. This week will see trends emerging on the hard asset complex based on the economic data and the US dollar/euro peg. All things remaining constant, the industrials may gain further.
Agri commodities
Chana has witnessed a burst of buying momentum as the bulls have returned with strength. The Rs 2,425 level will now be a momentum-based support on declines, and as long as the bulls manage to defend this threshold the upthrust is likely to hold. Market internals indicate a 59% increase in turnover and a 7% decline in open interest.
Mentha oil has seen a continued decline as the cyclical pre-winter demand has failed to boost prices. The Rs 500 level will act as an immediate short-term support and must be defended by the bulls if the bulls are to have a second chance at price recovery. Market internals indicate a 13% decline in turnover and a 3% increase in open interest as bears stepped up shorts.
Refined soya oil has seen buoyancy as international prices have firmed up on declining yields. With the monsoon vagrancy affecting domestic crops, the prices are likely to remain firm. A consistent trade above the Rs 450 levels will see a fresh upthrust that may test the Rs 458 levels. Take a fresh view above Rs 458. Market internals indicate unchanged open interest and turnover metrics.
Metals
Aluminium is witnessing buoyancy as the base metals complex witnesses resurgent trader demand. The metal is appearing to be poised on the verge of a breakout of a declining channel, which will be confirmed after a consistent trade above the Rs 91 levels. The immediate resistance is at the Rs 94 levels. Once the Rs 94 hurdle is overcome forcefully, fresh upthrust is likely. Market internals indicate a 36% increase in turnover and an 8% decline in open interest due to profit sales and expiry related considerations.
Copper is indicating the optimism in the industrials segment and the Rs 319 previous high appears to be the next logical target. The high turnover is indicating a high participation as the traders ramped up their intraday activities after a long hiatus on this counter. As long as the Rs 304 support holds, bulls may hold their long positions. Market internals indicate a 40% increase in turnover and a 4% decline in open interest.
Gold is showing a rising tops and bottoms formation as the precious metal is poised on the threshold of a breakout above the Rs 16,050 levels which must be overcome on a consistent closing basis for a few sessions. A forceful breakout and constant trade above this hurdle will see a short squeeze as the build-up of shorts will be reversed. The extent of the upmove will depend on the volumes and open interest on such a breakout. Market internals indicate a 1% decline in turnover and a 10% increase in open interest as bulls added longs.
Nickel has seen a two-month highest closing on the weekly charts as the weekly closing was at its highest since August 29, 2009. The Rs 900 barrier will be a near-term resistance which must be crossed on higher volumes and open interest expansion if the bulls are to emerge with force. The Rs 860 level will be a support on declines that needs watching. Market internals indicate a 19% increase in turnover and a 10% decline in open interest.
Silver has seen a buoyancy as the white precious metal is showing signs of a breakout above Rs 27,750 on a consistent closing basis. The rising tops and bottoms pattern is indicating a bullish undertone and the bulls must hold their longs as long as the Rs 26,750 support holds. Market internals indicate a 6% decline in turnover and a 22% increase in open interest as bulls resorted to a buy-and-hold strategy.
Zinc has seen a highest close after March 15, 2009 on the weekly charts. The base metals pack is appearing buoyant and Zinc is outperforming the broader space within this universe. As long as the Rs 100 support holds, the short-term players are likely to remain long. Upsides are likely to extend in the coming weeks.
Energy
Crude oil has indicated a breakout of a trading range that was forming into an ascending triangle and that has bullish implications. The Rs 3,650 level is likely to be the immediate support on declines as the bulls may remain dominant as long as this trend line holds as a support. Long positions may be held as the impeding winter in the West is set to see a cyclical upmove. Market internals indicate a 9% increase in turnover and a 7% decline in open interest.
Natural gas has seen a consolidation pattern as the recent high of Rs 238 is acting as a near-term resistance. The bulls need to overcome this resistance on forceful volumes if a fresh upthrust is to occur. The Rs 200 level will be a near-term support as the bulls are likely to re-emerge at lower levels. Market internals indicate a 6% increase in turnover and an 8% decline in open interest.
The writer is CEO, BSPLindia.com and the author of A Traders Guide to Indian
Commodity Markets. Disclosure - The analyst has exposure to nickel futures
