The markets witnessed a lower turnover last week as players preferred to stay with their trades and reduced the churn rate. The week-on-week MCX turnover rose 1% while open interest fell 9%. Weekly turnover gainers were aluminium, cardamom, crude oil, crude palm oil, lead, natural gas, refined soya oil and zinc. Open interest gainers were aluminium, cardamom, crude oil, crude palm oil, natural gas, nickel, potato, refined soya oil and zinc. The US’s non-strategic crude oil inventories fell by 2.8 million barrels to 358 million barrels, which buoyed crude prices. Overall, the optimism was seen in industrials even as bullion witnessed some short-covering. I maintain my view that traders must hold longs in the base metals space, which is likely to be in an uptrend, barring profit sales. Agri-commodities Chana is witnessing a profit-taking bias as higher levels are proving to be unsustainable for the bulls. For a fresh buy to get triggered, the counter must trade above Rs2,240 on a closing basis. Await a confirmed breakout before initiating fresh buys. Market internals indicate a 13% dip in turnover and a 1% dip in open interest. Mentha oil has rallied on the back of a new settlement as well as follow-up buying emanating from short-term players. The bulls must be able to defend the Rs710 level in case of declines for the uptrend is to sustain. Market internals indicate a 51% dip in turnover and a 1% dip in open interest. Refined soya oil has maintained its upward trajectory and may witness some profit sales if the bulls cannot hold the Rs493 level in the near term. Existing longs may be held for now. Market internals indicate a 98% increase in turnover and a 110% increase in open interest. Metals Aluminium maintained its upthrust and the outlook remains positive as long as the price stays above Rs100 on a closing basis. Existing longs may be held for now and a decline below Rs100 may be an early warning of a momentum reversal. Market internals indicate a 35% rise in turnover and a 3% rise in open interest. Copper has also maintained its upward trajectory as the week-on-week close has been positive and the counter is making a rising ‘tops and bottoms’ formation inspite of overhead supply and profit sales from short-term players. Hold existing longs with a stop loss of Rs336. Market internals indicate an 11% decline in turnover and a 9% decline in open interest. Gold has recovered on the back of short-covering as lower levels witnessed profit-taking by the bears. The possibility of some more upsides should not be ruled out, but a sustained rally is doubtful as of now as overhead supply is likely to be sizeable. Market internals indicate a 31% dip in turnover and an 8% dip in open interest. Nickel is one of the stronger counters among base metals and is likely to see some more upsides, barring unforeseen circumstances. The relative strength vis-a-vis its peers is high and existing longs may be held. Market internals indicate an 11% fall in turnover and a 14% rise in open interest as fresh longs were initiated. Silver is moving somewhat in tandem with gold and the relative strength is marginally higher than the yellow metal. Silver is currently at the threshold of a breakout above a congestion level at Rs29,600. A forceful breakout above this hurdle will be a conclusive buy trigger for short-term players. Market internals indicate a 7% dip in turnover and a 5% dip in open interest. Zinc has logged three consecutive bullish closings and that is a sign of optimism for the bulls. Along with Nickel, this counter is one of the strongest in the base metals and further upsides are not ruled out for now. Declines if any are likely to be routine profit sales rather than rend reversals. Maintain hold on existing longs. Market internals indicate a 42% rise in turnover and a 17% rise in open interest. Energy Crude oil has buoyed upwards on the back of a decline in the US inventory as well as the optimism pervading the industrial commodities. The Rs3,850 level will be an important hurdle to watch for momentum trades as a breakout above this level will be required if the bears are to get squeezed. The higher tops and bottoms formation remains in place and the outlook is optimistic. Market internals indicate a 3% rise in turnover and a 14% rise in open interest. Natural gas has witnessed a bar reversal on the weekly charts and a bearish engulfing pattern on the weekly candle charts. Unless the weekly top is overcome forcefully, fresh longs are not advisable for now. Market internals indicate a 22% rise in turnover and a 141% rise in open interest. The columnist is the author of A Traders Guide to Indian Commodity Markets and invites feedback at vijay@BSPLindia.com or (022) 23438482. Mandatory disclosure-the analyst has no exposure to any commoditiy recommended above.

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