Ashish Shah of Sushil Global Commodities, sees crude resistance at USD 64.30-64.50 per barrel and above that at USD 67 per barrel. "Crude should make a strong base in the USD 55-58 per barrel range and it should take a very good bounce from these areas."
Here is a verbatim transcript of the exclusive interview with Ashish Shah on CNBC-TV18. Also watch the accompanying video.
Q: We have seen some support coming in at USD 62 per barrel today in case of crude. How do you see crude prices going ahead?
A: As far as crude oil is concerned, the flavour right now in the market is purely demand destruction and rising dollar and after we saw the US GDP numbers as well as the ISM index, so there is a fear of US economic recession which indicates that demand destruction. Crude is likely to make a short-term potential base around the USD 55-58 per barrel on a boarder picture and also the very strong support zone. I would suggest buying on dips to around Rs 2950-2975 per barrel which is the USD 61 per barrel mark with a stop loss below Rs 2900 and probably a target of Rs 3150-3200 per barrel.
Q: What kind of a resistance or an upside target do you see?
A: In the international front, we will see a resistance at USD 64.30-64.50 per barrel and above that we will see at least USD 67 per barrel. I definitely feel that crude should make a strong base in the USD 55-58 per barrel range and it should take a very good bounce from these areas.
Q: How would play gold? Yesterday we saw some declines happening in gold. It has been trading between that USD 720-735 per ounce kind of range. Do see that range being breached anytime soon?
A: The board range for gold will be the USD 690-765 per ounce on the higher side. As far as my expectation is concerned, it will continue its downward journey to USD 690-665 per ounce in the medium term. The long-term signals are still suggesting of selling to an eventual base of around Rs 10,950-10,500 per 10 gm on MCX front. We can get short-term trading supports at around Rs 11,300 per 10 gm on MCX and the resistance would be somewhere around Rs 11,690-11,820 per 10 gm.
Q: So the current uptick that one is looking at in the markets right now – you would advise investors to sell at these levels?
A: Yes, one can probably look at selling in the rallies to around Rs 11,680-11,700 per 10gm areas for eventual target of Rs 11,480 per 10 gm and Rs 11,430 per 10 gm. Investors will look at buying for short-term bounces near the key support area of Rs 11,300 per 10 gm where one can enter long if someone is looking forward to buying gold. But we have the US election coming up – that’s the reason US dollar will be trading with a bullish bias which will put gold under pressure. So by tomorrow we will get clarity on what's the election decision also.
Q: How would you trade the base metals then because there has been a very sharp decline in the recent days – there is nothing that is supporting the prices even at these levels? How would play copper for instance?
A: Copper is definitely is taking a cue from the global equity markets as well as the dollar. Financial markets are suggesting some improvement in the economy but the data is definitely contradictory to the same. We have seen a decline in automobile numbers as well as the ISM index. But I definitely feel that copper will give a short-term momentary upside to at least Rs 205-206 and will come under pressure from those levels where we will see some selling.
Q: What is the kind of support then are you watching?
A: The boarder term support is the Rs 185 area where we will take a good bounce in copper. In the near term Rs 192-193 is a good support range where even one can look at buying copper.
Q: What is your take in case of silver?
A: Definitely USD 10 per ounce is a very strong area. If we compare silver with gold – silver has been a very good underperformer when it comes to a corrective market. Also copper prices and crude prices are something which is putting a selling pressure on silver but I feel that silver will form a long-term potential base of around Rs 15,575 on the Indian front. On the international level USD 8.20-8.50 per ounce is the best range one can look at a very strong base. A closing break below which will correct sharply to USD 6.5-7 per ounce. Sell on rallies is the current advice even on silver. There is strong resistance at Rs 16,750 to Rs 16,880.
