Email
Print
ShareThe markets witnessed a higher turnover week as trader participation rallied on industrial counters in line with expectations. The recovery expectations in the real economy, coupled with Chinese demand, lifted prices. The US dollar weakened vis-a-vis the euro to settle at 1.4255, where defensive buying in hard assets has been triggered as per empirical evidence.
Week-on-week turnover on the MCX rose 10% and the market-wide open interest fell 3% as expiry in the metals segment saw routine unwinding. The volume gainers were aluminium, crude oil, gold, mentha oil, nickel, refined soya, silver and zinc.
Open interest gainers were chana, copper, crude oil, gasoline, lead, natural gas, platinum and refined soya oil. Bullion remained weak in relative terms due to the strong rupee, which ended the weak at 47.82 vis-a-vis the dollar. If the rupee remains firm, gains in overseas markets are unlikely to accrue to the domestic traders. Maintain a positive bias on industrials for now.
Agri-commodities Chana has remained under pressure and will turn bearish in the near term as long as it remains below the Rs 2,400 levels. The increase in open interest is a cause for concern as bears press fresh shorts. Bullishness maybe expected only above the Rs 2,525 levels. Market internals indicate a 3% increase in open interest.
Mentha oil has seen a bar reversal that maybe construed as a bullish trigger provided the price remains above the Rs 480 levels on higher volumes and open interest expansion. Watch the 460 support as a critical swing support for now. Market internals indicate a 32% increase in turnover and a 14% decline in open interest.
Refined soya oil has established and activated a support at the Rs 435 levels and as long as this level holds, expect the bulls to have a fighting chance to push prices higher.
A sustained trade above the Rs 465 levels will be a fresh buy signal provided the volumes and open interest rally in tandem. Market internals indicate a 54%turnover growth and a 19% increase in open interest.
Metals
Aluminium has surged for the third week in a row and the same has been on better volumes. The open interest was lower due to the expiry of the July series. The momentum is likely to remain positive as long as the price remains above the Rs 86 levels. Market internals indicate a 56% increase in turnover and a 12% decline in open interest.
Copper has recorded the third consecutive week of higher closes and that is a sign of optimism. The uptick in perceived Chinese demand for base metals has seen renewed trader interest. As long as the price remains above the Rs 266 levels, bulls are likely to remain in control. Market internals indicate a 1% decline in turnover and a 2% increase in open interest.
Gold has eased on the back of a strong rupee and improved economic prospects. The Rs 14,250 levels will need watching as the August series draws to a close. A sustained decline below the Rs 14,250 levels will be bad news for the bulls. Buy only above the Rs 14,950 levels. Market internals indicate a 29% increase in turnover and a 18% decline in open interest.
Nickel has rallied as per expectations as the supply side concerns remained in place. The lower open interest is due to the expiry of the July series. The turnover was higher in the mid-month futures, which indicates the bulls taking a higher risk, buy and hold approach. As long as the price remains above the Rs 800 levels, maintain longs.
Market internals indicate a 7% increase in turnover and a 11% decline in open interest.
Silver has remained under pressure in tandem with gold and should be bought only above the Rs 22,900 levels on a sustained closing basis. The outlook will be weak below the 21650 levels and fresh longs should be avoided for now. Market internals indicate a 26% increase in turnover and a 7% decline in open interest.
Zinc has activated a rounding bottom formation recently and is witnessing strength thereafter. The upward momentum will remain intact as long as the price remains above the Rs 80 level in the near term. Maintain longs. Market internals indicate a 3% increase in turnover and a 33% decline in open interest due to the July series expiry.
Energy
Crude oil has made a "long-legged doji" on the Japanese charts and the bulls have made clear their intention to support prices on declines. The overseas prices have closed the gap left on the downsides. The strengthening rupee has kept the domestic prices subdued.
A breakout past the Rs 3,360 levels on high volumes and open interest expansion will be a positive trigger for the markets. Market internals indicate a 6% increase in turnover and a 5% increase in open interest.
Natural gas has been unsuccessful in holding the upward momentum and bulls should consider initiating longs only above the Rs 200 mark, that too if the volumes and open interest improve. Till then, avoid longs. Market internals indicate a 26% decline in turnover and a 22% increase in open interest
The columnist is the author of 'A Traders Guide to Indian Commodity Markets'
