Ashok Mittal of Karvy Comtrade sees the USD 48 per barrel support holding for crude. However, he was quick to add that there is a lot of volatility on expiry days, which will continue. “Once this expiry is over, crude could see good support between USD 46 and USD 47 per barrel. It could then head back to above USD 50 per barrel."
Here is a verbatim transcript of the exclusive interview with Ashok Mittal on CNBC-TV18. Also watch the accompanying video.
Q: Crude is due for expiry today and that’s why there is jitteriness in markets, do you think USD 47/bbl or USD 48/bbl will hold on lower side?
A: Ideally we are believing that USD 48/bbl should hold as a good support level. However we are seeing a lot of volatility on the expiry days. So that will continue and once this expiry is over, we should see good support somewhere between USD 46/bbl to USD 47/bbl and then maybe back to USD 50/bbl plus.
Q: It’s down 4% even now and the US markets are not even open, so what kind of range are you watching during the day and today in the evening?
A: If USD 40/bbl breaks then we might see a downside of about USD 1/bbl or USD 2/bbl. So the risk for the downside is still there when the US markets open.
Q: So would you be a buyer on those levels?
A: I think yes because its not much of a change fundamentally. We will see that inventories are a little lower and there is some risk. But I think we will expect the prices to go up on the medium term.
Q: What are the kinds of levels you are watching on the MCX for the same?
A: For MCX may contract, Rs 2,480 should be a good support level. We should see a bounce back from there close to around Rs 2,620 or Rs 2,640 levels.
Q: Gold overall has been continuing to be on the lower side, we have seen negative closings as long as four weeks, are you a buyer at USD 870/oz or do you think there is some more downside left?
A: For gold we have been expecting about USD 880/oz to USD 890/oz should have been a good support. It has been broken and have been staying for quite a long time. A support should be around USD 865/oz to USD 860/oz further. I will expect the downside from here should be limited and not too much because there will still be concern on the equity market. The US Economy and FOMC has also indicated that, they are not seeing an early revival. So the levels are good and we can expect USD 14,200 to USD 14,260 levels from current levels also for the MCX June contract.
Q: Today is a day where we are seeing profit taking in base metal prices, but base metals in the last 4-5 weeks have actually done much good, so would you buy at these levels and do you think it’s an opportunity to buy or are we finally getting into that profit taking mode?
A: This is an area where there is no confusion because its looking as if base metal prices are showing an upside. There has been a lot of upside movement in the last couple of weeks. However we haven’t seen any kind of a correction so it seems that we are a little bit in on the overboard zone. We may see some profit booking on these levels and maybe for example if you see copper April contract, we may see about 228-230 levels before we see a further upside, definitely not a buy at these levels.
