MC: See strong support for crude at $60/bbl: Commtrendz
T Gnanasekar, Director, Commtrendz Research and Fund Management, said a weaker dollar, the China stimulus package, and the G-20 meeting are all providing a lot of support for crude. "One could buy it on dips for a target of USD 70 per barrel with USD 60 per barrel acting as a strong support."
Here is a verbatim transcript of the exclusive interview with T Gnanasekar on CNBC-TV18. Also watch the accompanying video.
Q: Do you think USD 60 per barrel on the lower side is a strong support for crude?
A: Yes, even in the charts it looks like it is a strong support for crude and a lot of fundamentals are supportive for some kind of a bottom at these levels. It looks strong for a pullback up to USD 73-75 per barrel. A weaker dollar, the stimulus package and the G-20 meeting are all providing a lot of support for crude. We believe we could buy it on dips for a target of USD 70 per barrel.
Q: How would you play gold?
A: Gold is going to consolidate for some time till it gets a clear direction on the dollar, and crude. So, USD 735-740 per ounce would be some kind of a zone where it will continue to find support and then break out for a possible target of USD 775-780 per ounce.
Q: How would you trade copper?
A: Copper seems to be a little dicey, because the economic outlook still remains weak and there are no clear signs of a bounce. So, it is going to play on copper on the upside. There is going to be a lot of upside pressure.
But at the same time, the package in China would definitely add a lot of support to copper in the near-term. It will be difficult to see big selling coming through on copper now. So, it is better to buy on dips, and then look for a target of around USD 4,200 per tonne on the LME.
Q: Among all the base metals, where do you think you would get the maximum correction from hereon?
A: Nickel is something that looks like it could bounce much higher the way it has fallen. It has been falling continuously even in the last six months compared to the other metals.
So, I believe nickel and possibly even in zinc we could see some kind of a decent pullback compared to the other metals in this space.
Q: Would you say that in the medium or longer-term it is safe to buy and keep it holding for such a long time?
A: No, I don’t think so. Most of the moves are on either short covering or profit booking. It is a short-term phenomenon. I don’t think there are clear signs on the fundamental side, because the stock build-up continues in most of the base metals. So, it is only going to be a relief rally and short lived.
Q: Do you think the Chinese stimulus package has enough strength to hold base metal prices up?
A: These measures were only to arrest the fall. I don’t think this is going to turn the market around, because we already saw a similar package in the US coming up and then the market selling off subsequently. So, we need to wait and watch how much of it is going to be absorbed.
