MC: Support for crude seen at $40/bbl: Bharath Kumar
Bharath Kumar, Global Financial Market sees support for crude somewhere around USD 40 per barrel. According to him, USD 48 per barrel is the immediate resistance level for the market and should be watched very closely.
For gold, he said that USD 930 per ounce is a very good resistance for the market. “Unless it closes below USD 920 per ounce, which happens to be a pivot, we shouldn’t expect much higher ranges in gold for a couple of days.”
Here is a verbatim transcript of the exclusive interview with Bharath Kumar on CNBC-TV18. Also watch the accompanying video.
Q: What is your range on crude for the rest of this week?
A: Crude has very good support somewhere around USD 40 per barrel. Basically we are keenly watching it and the euro-dollar parity. But crude prices are basing out at around USD 40 per barrel plus or minus a couple of dollars. Most importantly, I think the carry-out cost is a major concern for taking any immediate position. I think it will settle over a period of a couple of weeks from now. So, I think around USD 40 per barrel is a very good support for the market.
Q: What are your targets then on the higher side?
A: I think if we see the higher side, it is unable to close beyond the USD 52 per barrel mark. So, around USD 48 per barrel is the immediate resistance for the market. Even on MCX, unless it closes beyond Rs 2,200 per barrel, one shouldn’t expect major rallies on the higher side. So, USD 48 per barrel is to be watched closely.
Q: What is your strategy going forward on gold?
A: We have seen a little bit of inverse correlation in the case of gold and dollar chiefly because there is a lot of strain between the euro and the GBP. That is really concerning the currency market and that is escalating as a hedge for gold. That is the reason we are seeing the inverse correlation.
In the case of gold, I think the long-term trend is very much intact. But for the short-term, around USD 930 per ounce is a very good resistance for the market. Unless it closes below USD 920 per ounce, which happens to be a pivot, we shouldn’t expect much higher ranges in gold for a couple of days.
But on the lower side, we are around USD 890 per ounce is an immediate support for the market. For long-term traders, I think USD 870 per ounce should be taken as a long-term support. Even in the case of MCX, Rs 13,950 per 10 gm is an immediate support for the market. The long-term support for the market remains at Rs 13,700 per 10 gm.
On the higher side, it sees resistance around Rs 14,200 per 10 gm.
Q: How would you trade the base metals because we have seen a bit of rally come in the markets today?
A: If you look at copper, lead and zinc they are typically trading in a very narrow range. Base metals are waiting for a cue from either the currency markets or from the energy. That is the reason why base metals are trading in a very narrow range. Unless the market trades beyond either the resistance or support, I don’t see any major thing happening in the case of base metals. Of all the base metals, copper is trading in a very narrow range.
