Vijay L Bhambwani

The markets witnessed a lower turnover on a week-on-week basis as trader participation was limited on the back of high volatility. Profit sales in energy and bullion counters kept retail players at bay as short sellers held their positions and volumes contracted.

The turnover gainers on the MCX were aluminium, crude oil, mentha, natural gas and nickel.The open interest gainers were crude oil, potato and chana. This week may witness continued volatility as energy and metals remain under pressure from a strengthening US dollar.

Agri-commodities

Chana is likely to witness an immediate support at the 2,400 level as the threshold is a multiple support in the shortmedium term. Bulls are likely to return with an upper hand only above the 2575 levels. Market internals indicate a 4% increase in open interest.

Mentha oil continues to remain range-bound and unless the 460 hurdle is overcome convincingly, bulls will remain on the back foot. The 422 level is a support, where short term buyers will emerge to support prices. A decisive close below this threshold will see the bears pressing fresh sales in the near term. Market internals indicate a 46% increase in turnover a nd a 40% decline in open interest.

Refined soya oil has consolidated as the 540 support has held for now. Bulls are likely to encounter resistance at the 595 level, which needs to be overcome convincingly if the uptrend is to resume. Any forceful decline below the 540 level will see fresh declines. Market internals indicate a 29% decline in turnover and a 6% fall in open interest.

Metals

Aluminium is showing signs of stress as the 120 psychological threshold remains inviolate on the upsides. The 113-114 level will be a floor in the immediate futures as short covering-cumfresh buying maybe anticipated at this inflection point. Till then, wait and watch. Market internals indicate a 97% increase in turnover and a 35% decline in open interest.

Copper remains ranged between the 354 and 335 on the short term charts and unless a conclusive breakoutbreakdown is seen beyond these parameters, a directional move maybe elusive. Traders may wait for these points to be overcome before initiating serious trades. Market internals indicate an 8% decline in turnover and a 15% fall in open interest.

Gold has moved lower and made a falling tops and bottoms formation for the third week in a row. The precious metal is moving in tandem with energy and in inverse proportion to the US dollar. This week is likely to witness a support base at the 10,850 levels and resistance emerging at the 11600 levels. Market internals indicate a 20% decline in turnover and unchanged open interest.

Nickel is still under pressure and a forceful decline below the 1,120 level will see an accelerated decline. Unless the 1,200 hurdle is overcome, bulls are advised to stay away from fresh buying. Market internals indicate a 33% rise in turnover and a 12% fall in open interest.

Silver has seen a better relative strength as compared to gold as the immediate support is at the 21,200 levels. Unless this threshold is violated forcefully, the declines are likely to be muffled. On the flip side, any sustained trade above the 22,500 level will see bullishness return on this counter.Market internals indicate a 23% fall in turnover and a 33% decline in open interest.

Zinc continues to remain under pressure as the support at the 86 mark is the critical near term level, below which the metal may weaken. On the other hand, any sustained trade above the 92 levels will see near term bullishness aided by short covering. Market internals indicate a 15% decline in turnover and a 8% decline in open interest.

Energy

Crude oil has seen tremendous pressure on the downside as the stronger US dollar coupled with easing off of the BP supply imbroglio saw some hectic profit sales. The 4,800 level will be a critical hurdle to watch out for in the near term. Unless the current month series trade above this threshold on high volumes and increased open interest, lay off fresh buying.Market internals indicate a 10% increase in turnover and a 1% increase in open interest.

Natural gas has seen profit sales in tandem with crude oil as the weekly chart indicates a bar reversal. The 460 level will be a near term resistance that must be overcome if the uptrend is to resume. The support on declines will be seen at the 408 mark and the possibility of the counter gyrating between these thresholds is fair.Market internals indicate a 25% increase in turnover and a 23% decline in open interest.

Mandatory disclosure - the analyst has exposure to gold futures.

Source : DNA