Mumbai, July 13: The markets witnessed a marginal uptick in turnover as the Multi Commodity Exchange (MCX) recorded a 2% increase in turnover on a week-on-week basis. The market wide open interest rallied 3%. The volume gainers were copper, crude oil, gasoline, gold, natural gas, platinum, potato and refined soya oil. Open interest gainers were chana, copper, crude oil, gold, mentha oil, natural gas, nickel, platinum and refined soya oil. There was a bias towards profit-taking at higher levels in industrials and energy counters as the economic recovery is expected to be a long-drawn affair. The contemplation of a second stimulus package also weighed on the industrials.
Bullion perked up towards the fag end of the week as the US dollar slipped mildly vis-a-vis the euro. The decline in rupee versus the US dollar also helped boost bullion prices. Should the rupee slip further, expect appreciation in gold.
Agri-commodities
Chana flared up as the Rs 2,225 support held and the bulls offered a follow-up support above this threshold. The Rs 2,475 level is likely to be a medium-term obstacle as upsides may see some profit sales at these levels. Market internals indicate an 11 % increase in open interest as bulls initiated fresh longs.
Mentha oil has turned distinctly weak as the Rs 500 support has been violated and the traders have added to the short positions. The chart indicates a slide lower rather than a panic sell-off. Much will depend on the volumes and open interest along with price. Market internals indicate an 18% decline in turnover and a 1% increase in open interest.
Potato is retracing its upmove and an immediate support at the Rs 965 levels maybe likely. Should this support not hold, expect a further decline to the Rs 900-910 band. Market internals indicate a 9% increase in turnover and a 14% decline in open interest as bulls unloaded longs.
Refined soya oil is precariously poised at the double bottom support at the Rs 435 level. A decisive decline below the Rs 430 level will see bulls exiting the counter and bears pressing fresh sales. Avoid purchases for now. Market internals indicate a 75% increase in turnover and a 3% rise in open interest.
Metals
Aluminium has continued to decline with the current one being the second weekly close in the decline. Should the white metal trade below the Rs 73 level, expect more trouble for the bulls. A fresh upmove is likely only above the Rs 80 levels. Market internals indicate a 28% decline in turnover and a 14% fall in open interest.
Copper has witnessed some deceleration in the upward momentum as the Rs 244 hurdle is proving inviolate. Unless this hurdle is overcome forcefully, fresh upsides maybe elusive.
Watch the Rs 232 level closely as any decline below this mark may witness more weakness. Market internals indicate an 8% increase in turnover and a 7% rise in open interest as fresh shorts were opened.
Gold must stay above the Rs 14,300 levels if the bulls are to have a fighting chance to lift prices. Momentum will catch on above the Rs 14,875 levels, where fresh buying and short squeeze may lift prices swiftly. The same must be accompanied by higher volumes and open interest expansion. Market internals indicate a 13% increase in turnover and a 3% increase in open interest.
Nickel has seen a sharp decline as bulls unloaded longs with the same ferocity as seen while they built up their positions. The Rs 695 threshold needs watching for momentum players as a decline below this support will only accelerate the fall. Only a forceful breakout past the Rs 800 level will see a resurgent outlook. Market internals indicate a 3% decline in turnover and a 33% increase in open interest as bears ramped up short sales.
Silver, rather than tracking gold, has declined in tandem with the industrials. The Rs 20,800 levels will be the immediate support that bulls need to watch out for. Resistance at the Rs 22,400 level may be expected. Market internals indicate a 16% decline in turnover and a 9% decline in open interest.
Zinc has a support at the Rs 71 level, below which the decline maybe exacerbated by unwinding-cum-short selling. Bulls should avoid this counter for now and await a breakout above the Rs 76 level before initiating fresh longs. Market internals indicate an 8% decline in turnover and a 14% drop in open interest.
Energy
Crude oil is in decline as the US dollar remains steady and the US gasoline inventory triggered profit sales. Longer the black gold stays below the $60 mark, larger is the number of shorts that are pressed. The regulatory action by the US authorities has seen speculators unwinding positions. The immediate support will be seen at the Rs 2,750 level. Market internals indicate a 5% increase in turnover and a 4% increase in open interest as fresh shorts were built up.
Natural gas has plumbed to a new low after listing on the MCX, that too on volume and open interest expansion. That is a sign of weakness. Unless the Rs 160 level holds, expect the bulls to remain under pressure.
Only a consistent trade above the Rs 182 level with higher volumes and open interest addition will see bulls returning to this counter. Market internals indicate a 3% increase in turnover and a 9% increase in open interest.
Mandatory disclosure: The analyst has exposure to gold and copper. The author is a Mumbai-based investment consultant.
–Agencies