Commodity markets witnessed an expected trend as activity was polarised around energy and precious metals. Rising crude and gas prices kept traders on the edge and flight to safety was seen in the global commodity markets.
Watch the 1,200 support for nickel; protect aluminium longs with a stop-loss at 100
Commodity markets witnessed an expected trend as activity was polarised around energy and precious metals. Rising crude and gas prices kept traders on the edge and flight to safety was seen in the global commodity markets. Market wide turnover (MCX) on a week-on-week basis rose 13% and open interest fell 1%. Volume toppers were silver, zinc, copper and crude oil. Open interest gainers were copper, natural gas and chana. The data emanating from the US housing markets is likely to impact short term trends.
Agri-commodities
Chana has seen profit taking bias as bulls have locked in gains. The commodity is likely to witness a rally only above the 2,440 mark, that too on higher volumes. The market internals indicate 13% jump in open interest, indicating a fresh short selling bias.
Guar seed has seen some selling emerge at the trendline resistance and the 1,775 level will be a major resistance. Unless the level is overcome convincingly, fresh buying is ruled out.
Kapas has seen profit taking at higher levels and bulls may initiate fresh buys only above the 448 levels.
Mentha oil’s falling tops and bottoms formation is continuing. The 505 level is likely to be a stiff resistance point and unless the hurdle is overcome forcefully, keep off fresh buys. Market internals indicate 2% increase in volumes and 18% decline in open interest, indicating squaring up of positions at lower levels.
Refined soya oil is showing signs of resistance at the 512 levels as the previous top at this juncture resulted in a steep decline thereafter. Buy after a forceful breakout. Market internals indicate 17% increase in turnover and a 1% decline in open interest.
Metals
Aluminium is showing signs of perking up on short covering-cum-fresh buying. It must stay above 102 to maintain bullish momentum. All longs must be protected with a stop loss at the 100 mark. The market internals indicate 24% decline in volumes and 18% fall in open interest due to expiry in the October series.
Copper has seen an expected decline as the weekly chart shows a falling tops and bottoms formation. A decline below the 287 will be a conclusive sell trigger. Bullishness is any, will be seen only above the 309 levels. Market internals indicate 17% increase in turnover and a 63% increase in open interest, indicating a fresh build up of short sales.
Gold is showing signs of significant strength. Gloomy housing data in the US will aid bullish sentiments. As long as the metal stays above 10,060, expect the tempo to sustain itself. Stay long.
Nickel is consolidating with a bullish bias. Buy after the 1,370 level is crossed. Stay away from fresh longs as long as the level is not overcome on high volumes. Weakness will set in if the 1,200 floor is violated. Watch this threshold keenly.
Silver has seen buying propulsion in tandem with gold. As long as it stays above 19,000, expect a possibility of 20,000 level being tested.
Zinc has seen a confirmed breakdown after the 114 floor was violated convincingly. The outlook will turn bullish only after the 125 hurdle is overcome on high volumes. Stay away from buying as upthrusts will encounter heavy overhead supply.
Energy
Crude oil has seen a clear breakout past the previous resistance point and as long as it remains above 3,675, expect the bulls to rule the roost. Bulls are preferring to book short term profits, but the outlook remains positive. Hold long positions.
Natural gas has seen strength on the back of convincing buying and as long as it stays above 310, expect the uptrend to test the 350 levels. Fresh longs are building up and that is a sign of underlying strength.
Mandatory disclosure — the analyst has exposure to copper futures.
vijay@BSPLindia.com
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