Posts Tagged ‘MCX’

COMMODITY WEEKLY COMMENTARY 11th – 15th October

International gold hit yet another new high and tested $1364 as the US currency slumped to fresh 15-and-a-half year lows against the Japanese Yen. The euro and British pound both neared 8-month highs vs. the dollar after their central banks failed to cut rates or expand their quantitative easing. The shiny metal continued breaching new high records by taking advantageof concerns surrounding global recovery which raise speculations that central banks will add tostimulus to bolster growth. This time domestic gold and silver also rose to their fresh highs on MCX. Base metal prices traded on the mixed note with lead prices ending in red while copper along with aluminium and nickel prices managing to end in the green territory.

.

The base metal prices remained volatile mainly due to weakness in the dollar index and profit taking at highlevels. In energy counter crude oil remained volatile as prices got support by a weaker dollar and investors’ demand for higher-yielding assets. Prices were also under pinned by the drop in motor gasoline and distillates inventories off setting the buildup in crude inventories.Regarding agro commodities, oil seeds and edible oil counter revived on some bargain buying atlower level amid falling dollar index. Strong buying by soyabean millers together with rising soyameal export also encouraged buying in both spot and future market. Fresh arrivals in Haryana and Rajasthan washed out the profit of guargum and guarseed futures. Prices were also discouraged by strong production estimates of guarseed in the current year.

.

Despite tight supply position against strong demand pepper futures closed the week on negative note on profit booking. Turmeric rose on improved demand. Chilli was sideways with upside bias on mixed fundamentals while jeera and cardamom moved southward. Receding stocks in major mandies accompanied with strong export demand by traders and exporters gave terrific rise tothe mentha prices. Even in future market it breached the level of 950 on MCX. Mint exports inApril- August, 2010 surged by 2 percent to `723.95 lacs against 595.57 lacs reported last year inthe same period. Chana appeared shy to breach the resistance of 2300 and it closed down on profit booking at higher levels.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

 

Advertisements

Weekly Update 11th – 15th October 2010

Beside Indian market all global markets closed in green in the week gone by on the expectation of policy easing by developed nations. Central banks resorting to purchase of debt and currency intervention in developedeconomies is flooding markets with liquidity and funds are flowing to Asia for higherreturns. Fed Chairman Ben S. Bernanke has signaled that Fed may announce thepurchase of more Treasuries as soon as their next policy meeting in November in aneffort to boost growth and reduce an unemployment rate.

.

The Bank of Japan said this week it will establish a 5 trillion yen ($61 billion) fund to buy government bondsand other assets. It also cut its benchmark overnight interest rate for the first timesince 2008, dropping it to a range of zero to 0.1 percent. Joining the league European Central Bank President Jean- Claude Trichet too said that ECB policymakers are in the “same mood” as a month ago and for now remain committed tophasing out their unlimited lending program.With the economic activity gaining pace, it is believed that Indian market wouldcontinue to see overseas buying. Moreover Indian government plans to raise $8.9billion in the year ending March 31 selling state assets including Coal India, Steel Authority of India Ltd. and Indian Oil Corp. thereby giving more investment opportunities to investors.

.

While many developed nations are intervening in the currency markets in order tostem the appreciation in the currency, Indian Finance minister is of the opinion thatthe situation has not gone to an extent at which there is a need to restrict portfolio or foreign direct investment. As a matter of fact Indian rupee gained 4.5 percent inSeptember. Finance Minister said “We should try to engage the countries innegotiations and build up a consensus through which the matter can be resolved andit cannot be resolved through confrontation.” The International Monetary Fundraised its 2010 economic growth forecast for India to 9.7 percent from 9.4 percent,citing strengthening local consumer demand.

.

Since we have already seen a huge run up in the broader indices meaning moreparticipation coming from large cap stocks so now going forward we may expectmore activity in mid and small cap stocks. The result season is starting in the comingweek and corporate would give their guidance for the rest of the year which wouldset the future undertone of the markets. Nifty has support between 5950-5870 and Sensex between 19640-19200 levels.What a stunning rally gold has enjoyed recently on fear of inflation. It has hit many records in fewer days.

.

Silver was not behind, it made life time high of `34898 on MCX and breached the mark of `35000 in spot market. Talk of quantitative easing by US and rate cut by BoJ are creating anxiety over currency devaluation and long-terminflation is keeping gold and silver on remarkable run up. After witnessing the bigswings of both side, we can say that trend of crude oil is little bit in indecision mode.However, bias should be on upside. Michigan Confidence, CPI and advance retailsales data of US may further provide the direction to metals and energy. Industrialmetals which have made upper trading range last week, are likely to trade up onweakening dollar index.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

 

COMMODITY WEEKLY COMMENTARY 4th – 8th October

Once again international gold prices tested their new highs last week as prices breached the psychological level of $1300 and silver marked the 30 year high on COMEX division. However local gold prices were mostly remained sideways during the week amid stronger rupee and profit booking which limited the upside in prices.

.

Nevertheless, silver once again overshadowed gold movements and surged high to claim 33000 mark on MCX. In base metal pack copper along with nickel, zinc and lead started the week with positive energy but dull economic data from U.S and Europe economies pressurized the prices in later part. However improved Chinese  manufacturing data once again underpinned the prices and supported copper and nickel to end the week in green zone.


.

Earlier, shanghai copper dropped to its lowest in more than a month last week as China’s move to curb property prices dented sentiment, but losses were limited by improving demand prospects and ongoing weakness in the dollar. In energy counter crude oil settled up last week helped by data showing a drop in U.S. crude and product inventories.


Further fall in dollar index also helped the prices to move up. U.S. crude stocks fell 475,000 barrels last week, data from the Energy Information Administration showed. U.S. distillate inventories fell by 1.27 million barrels in the week to Sept. 24, counter to analyst expectations for a 300,000 barrel build.


.

In agro commodities spices pack witnessed see saw moves during the week and remained volatile. Pepper futures ended the week with negative impression amid weak exports and low trading activity. As per Spices Board data, pepper exports from India have gone down by 5% in volume term during April-August 2010 as compared to same period last year. Jeera futures also traded on a negative note during the week on extended selling pressure backed by weak domestic and export demand. Expectations of rise in acreage under jeera crop this season have also supported the down side.

.

In oil seeds section soya bean and mustard remained under pressure as factors like bumper soya crop expectation and pick up in fresh arrivals to the spot market led the market to show a negative trend. The chana futures traded on a positive note for most part of the week retreating from previous losses on fresh buying from retail sector.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

Weekly Update 4th – 8th October 2010

Global markets closed on a mixed note in the week gone by, with Indian markets closing in positive on weekly basis. To send a message to China to raise value of its currency, the U.S. House of Representatives this week approved a bill that would let domestic companies petition for duties on imports from China to compensate for the effect of weak yuan. U.S. Treasury Secretary Timothy F. Geithner said he is confident that tensions over China’s currency, the yuan, won’t lead to escalating trade sanctions or feed into a broader global currency conflict.

.

.

European confidence in the economic outlook unexpectedly improved this month. An index of executive and consumer sentiment in the 16 euro nations rose to 103.2, the highest since January 2008, from a revised 102.3 in August. The European Commission forecasted a more “moderate” expansion in the second half of the year as governments from Ireland to Portugal step up spending cuts to push down deficits. ECB President Jean-Claude Trichet said that there is “continuing uncertainty” about the outlook.

.

China’s manufacturing expanded at the fastest pace in four months in September. According to China’s logistics federation and statistics bureau, the purchasing managers’ index rose to 53.8 from 51.7 in August. The data is viewed very positively by the market as it shows that China’s economic momentum may counter weakness in the global recovery. It is believed that growth may be further aided in coming months as government plans to speed the completion of stimulus projects and boost public housing construction.

.

In Japan, the jobless rate fell to 5.1 percent from 5.2 percent. After intervening few days back in the foreign exchange market in order to stem the yen appreciation, Japan’s Finance Minister reiterated that Japan is ready to keep intervening after selling yen for the first time in six years last month.

.

Core infrastructure industry that account for 26.7 percent of industrial output in India slowed to 3.7 per cent in August, as compared to 6.4 per cent in the same month last year. Going forward we expect the markets would remain firm as it is supported by strong portfolio investments. The best strategy to ride the tide would be stay invested. Nifty has support between 5940-5870 and Sensex between 19640-
19200 levels.

.

Bullions may continue to lead the charge in the commodities counter as both silver and gold recently tested life time highs in MCX. The latest boon to the metal has been increasing expectations that the Federal Reserve will further ease monetary policy with measures including the purchase of Treasuries. Jitters about European sovereign debt problems have also supported gold higher as a safe-haven investment. Better jobless claims data and a revised upward GDP in US supported the crude counter which can make further gains in next coming week. Base metals will take cues from LME as China markets will remain closed for a week. In agro counter pulses along with oilseeds may trade in range while spices can get some support from upcoming festive season. Mentha oil firm export demand and low crop will assist the prices to make fresh high in MCX.

NATURAL GAS……….. THE FUEL OF THE 21ST CENTURY

Natural gas has emerged as the most preferred fuel and vital component of theworld’s supply of energy due to its environmentally cleanest, safest and most useful nature, greater efficiency and cost effectiveness among all energy sources.Natural gas is a mixture of hydrocarbon gases. In its purest form, such as the naturalgas that is delivered to your home, is almost pure methane.

.

Growing importance: We require energy constantly, to heat and cook food, and generate electricity. Due to clean burning and lower emission levels of potentiallyharmful byproducts into the air as compared to other fossil fuels, the importance of natural gas in our lives is growing constantly. The demand of natural gas has sharplyincreased in the last two decades at the global level. In India too, the natural gas sector has gained importance, particularly over the last decade, and is being termedas the fuel of the 21st Century.The industrial and electricity sector accounts for the greatest proportion of natural gas use across the world. The US residential sector consuming the second greatestquantity of natural gas.

.

Global Production: According to U.S. Department of Energy, globally total provedreserves of natural gas is 6,254.364 trillion cubic feet (tcf) in 2009 with an increase of0.68% as compared to 2008. Russian federation has largest reserve of 1,680.00 tcffollowed by Iran and Qatar with 991.600 and 891.945 tcf reserve respectively. Russiais largest producer of natural gas with 23 tcf followed by USA with over 20 tcf. Majorexporters of piped natural gas are Russia (154 bcm), Canada (103 bcm) and Norway(93 bcm), the major importers are US (104 bcm), Germany (87 bcm) and Italy (75bcm). The major exporters of CNG are Qatar (40 bcm), Malaysia (29 bcm), Indonesia(27 bcm) and the major importers are Japan (92 bcm), South Korea (36 bcm) andSpain (30 bcm.)

.

Production in India: Natural gas production in India grows at averaging 11.7percent per year. Total production is estimated to grow from 1.1 trillion cubic feet in2007 to 2.7 trillion cubic feet in 2015. Most of the production of gas comes from theWestern offshore area. The on-shore fields in Assam, Andhra Pradesh and Gujarat States are other major producers of gas. Fertilizer (41%) and power (37%) are themajor users of natural gas in India.

.

Factors affecting demand for Natural Gas: There are two primary drivers thatdetermine the demand for natural gas in the short term-Weather and Fuel Switching.Natural gas demand typically peaks during the coldest months for heating homes anddips during the warmest months, with a slight increase during the summer to meetthe demands of electric generators. Hurricanes and severe weather also disrupt the supply.

.

While most residential and commercial customers rely solely on natural gas to meetmany of their energy requirements, some industrial and electric generationconsumers have the capacity to switch between fuels. For instance, during a periodof extremely high natural gas prices, many electric generators may switch from using natural gas to using cheaper coal, thus decreasing the demand for natural gas.

.

Generally the state of the U.S. economy can have a considerable effect on thedemand for natural gas in the short term, particularly for industrial consumers. When the economy is expanding or declining, the consumption of natural gas fromindustrial sectors is generally increasing or decreasing at a similar rate.Long term demand factors reflect the basic trends for natural gas use into the future.The analysis of factors that affect long term demand across all sectors arecomplicated.

.

Probably the most important long term driver of natural gas demand isfuture residential heating applications. Due to the retirement of old nuclear,petroleum, and coal powered generation plants leaves a significant requirement fornatural gas use for electric generation to meet the commercial demand forelectricity generation and transportation.

.

Outlook: Currently the future prices of natural gas in MCX are trading in sidewaysmanner. It has strong support at `170. Seasonal demand from mid oct can support therecovery upto `220 in mid term.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

COMMODITY WEEKLY COMMENTARY 27th September – 1st October

Gold prices hover around its life time highs last week on international as well as on domestic bourses as European stock markets extended their losses and crude oil dropped below $75 per barrel. However domestic silver futures gain reclaimed a new life time high on MCX while U.S silver hit a 30-year high as precious and base metals were further aided by a weaker dollar along with new data meantime revealed a downturn in European services and manufacturing output.

.

A further decline in U.K mortgage and business lending, plus higher-than-expected U.S jobless claims for last week also supported the bullion counter last week. Base metal prices which were mostly trading lower during the beginning of the week bounced back strongly in the later part as investors moved to buy dollar denominated commodities to take advantage of fall in the dollar index. US equity markets ended lower as data indicated that house prices fell in July marking the eighth consecutive decline. Fed bought $2.07 billion worth of bonds, thereby boosting treasury prices and dollar continued to lose ground. In energy counter crude prices witnessed see saw moves during the week on mixed fundamentals. Crude traded below $75 per barrel as jitters increased due to the rise in U.S inventories highlighting weak demand, in spite of the dollar’s continued drop against its major rivals.

.

Yellow spice turmeric showed wonderful recovery on dip in arrivals amid lower level buying. Domestic demand is expected to be strong during the ongoing festival season. With the same reason of dip in arrival, chilli futures also spurt in both spot and future market. Pepper surrendered its strength on heavy selling pressure, weak export demand in the middle of sluggish spot market. Fresh arrivals put pressure on jeera and cardamom futures and they closed the week on negative note. Fresh buying noticed in chana futures. Indian oil seeds and edible oil futures were moving on their own fundamentals. Fall in dollar index supported the price. Comfortable stocks could not give much impact on the prices. Soyabean and crude palm oil moved northward. Refined soya oil and mustard seed also closed the week on positive note.

.

Fear of yield loss due to excessive rain in producing areas lent support to the guar counter; however upside was limited on lack of aggressive fresh buying. Technical support zoomed up mentha oil. Furthermore, temporary supply propped up potato in both physical and future market.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark

Weekly Update 20th – 24th September 2010

Global market rallied in the week gone by after Japan intervened in the currency market to weaken yen and Chinese and U.S. economic reports raised the confidence of global growth. Stocks rallied in Japan after it intervened in the currency market to stem the Yen appreciation. The yenweakened to 85.85 per dollar after climbing as high as 82.88 per dollar earlier inthe week, the strongest level since May 1995.

.

Continuous reversal in Yen may leadto more investment in exporter companies in the region. The concerns overmoderate expansion in China got erased as the data showed that Industrial Production expanded 13.9 percent in August. The data gave optimism on global growth and led to rally in metals.

Consumer sentiment in U.S. fell to one year lowof 66.6 from 68.9 in August increasing the risk that consumer will cut back on theirpurchases.In India, RBI, in order to anchor inflationary expectations and as a step tocontinue the process of normalisation of the monetary policy instruments raisedborrowing costs for the fifth time this year.

.

It raised Repurchase (repo) Rate to 6percent from 5.75 percent, and the reverse-repurchase rate to 5 percent from4.5 percent. It seems that for now, RBI has done enough to contain inflationarypressures and as the repo rate is the operative policy rate therefore thetransmission from policy rates to market rates has strengthened.

Going forward,we expect that RBI would give due weigh to the macro economic situation ratherthan only inflationary pressures before doing any adjustment in monetary policyinstruments.We expect the market to remain firm as even advance tax numbers were higherthan that of last year. Next week U.S. Federal Reserve is expected to give stimuluspackage in its meeting scheduled on 31st September seeing the worrisomesituation of high unemployment and weakness in construction activity asindicated by the latest Fed Beige book finding.

.

With the positivity from the global front, we are steadily approaching near the alltime high zone and likely to extend the up move in the coming weeks withrequired consolidation for the sustainable move. Nifty has support between 5700-5550 and sensex between 19200-18800.Another round of quantitative easing by the fed amid falling dollar proved supportive to the bullions and once again lovable gold made life time high acrossthe bourses. Though it made life time high on MCX as well but upside was limiteddue to appreciation in local currency. Silver is also rocking on heavy investmentdemand. Even base metals recovered as many central banks maintained low borrowing cost but slow recovery is capping the upside of industrial metals. Evenfalling crude oil is indicating ambiguous trend. This week, bullions may see aconfident move further on fundamental and technical support.

.

Nevertheless,appreciation in currency may lock the price movements to some extent on domestic bourses. FOMC meet regarding interest rate will provide further direction to commodities. Expect a volatile week for agro commodities as expiryof September contract is scheduled on Monday.

.

OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

.

Share/Bookmark