Initiate fresh trades with a long bias

The markets witnessed a lower turnover week as bullion traders eased off their momentum trades and relied on buy-and-hold strategies. This is brought out by the lower turnover and higher open interest. The MCX turnover gainers during the week were almonds, aluminium, gasoline, mentha oil and potato. The open interest gainers were, cardamom, copper, crude palm oil, gold, lead, mentha oil, natural gas, nickel, potato and silver. The US non strategic crude oil inventories rallied by 1 million barrels to the 358.3 million barrel mark. The safe haven buying in bullion may continue in concurrence with fresh interest in base metals in the coming week. Traders are advised to nurse a long bias and initiate fresh trades in smaller quantum.

Agri Commodities
Chana has witnessed a rebound as the bulls managed to support prices at the anticipated levels in a pull back fashion. The 2225 level will be a near term resistance which needs watching in the coming week/s. A breakout above this threshold will confirm a sustainable uptrend. Market internals indicate a 48% declines in turnover and a 17% decline in open interest.

Mentha oil has continued its ascent in line with bulls’ expectations and the cyclical demand factor has kept the buoyancy intact on the counter. The higher tops and bottoms formation continues and existing longs maybe held. Market internals indicate a 17% increase in turnover and a 2% increase in open interest.

Refined soya oil has witnessed a sharp rally as the bulls did not let the counter test the 465 levels. The momentum support will be at the 495 levels above which the bulls will have to keep prices to maintain a bullish outlook. Market internals indicate a 1% decline in turnover and a 31% decline in open interest.

Metals
Aluminium has overcome a resistance level and close above the 100 mark, thereby closing at it’s highest weekly level after week ended April 17, 2010. These are bullish indications for momentum players. Hold longs for now. Market internals indicate a 32% increase in turnover and a 2% fall in open interest.

Copper has closed at it’s highest weekly close after week ended July 05, 2008 which is a bullish indicator in the near term. The 366 levels will be an area to watch, as a sustained close above this mark will see fresh buying impetus and a possible retest of the May 2006 highs. Market internals indicate a 1% decline in turnover and a 21% increase in open interest.

Gold has closed with mild losses over the previous week and logged an inside formation on the weekly charts. A fresh breakout past the 19275 level will be required to indicate a fresh bullishness in the near term. The 18800 levels will be a near term floor to watch out for. Market internals indicate an 11% decline in turnover and a 5% increase in open interest.

Nickel has retraced some of it’s recent gains and is likely to witness some support at the 1005 levels. Should the bulls manage to defend the 1005 levels on declines and take the price past the 1065 levels, a fresh upthrust may be expected. Market internals indicate a 4% decline in turnover and a 20% increase in open interest

Silver has managed to out perform gold as the counter managed to gain week-on-week even as the yellow precious metal witnessed some profit sales. The rising tops and bottoms formation continued and existing longs maybe nursed for now. Market internals indicate a 9% decline in turnover and a 7% increase in open interest.

Zinc has bounced off it’s trendline support and will need to surge past the 104 levels forcefully to resume it’s rally. The 96 level will be a technical support in the coming week which the bulls will need to defend actively. The bias remains optimistic and some follow up buying will be required to trigger another upmove. Market internals indicate a 10% decline in turnover and a 15% decline in open interest.

Energy
Crude oil has witnessed a mild pullback even after a marginal increase in the US non strategic petroleum reserves. A sustained trade above the 3600 will be required on a closing basis to indicate a fresh bullishness. Market internals indicate a 1% decline in turnover and a 43% decline in open interest.

Natural gas has witnessed a profit taking bias as the counter has approached the 172 floor support. Bulls will need to defend this threshold pro actively to retain a likelihood of an upthrust, which will be confirmed only above the 192 mark. Market internals indicate an 8% decline in turnover and a 35% increase in open interest.

The columnist is the 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 exposure to any commodity recommended above