Commodity Outlook for the week

Precious metal: Gold prices traded higher on Friday, but gains were expected to remain limited as data on U.S. initial jobless claims released on Thursday pointed to an ongoing recovery in the labour market. Strong data could also prompt the Fed to increase interest rates sooner rather than later, hurting non-interest-bearing bullion. However, minutes from the Fed's latest policy meeting released on Wednesday indicated that the central bank was in no hurry to raise interest rates. 

Over all, MCX Gold February future is in consolidation and sustaining on lower levels from the last week. For the coming week 26500/26200 will act as a major support whereas 27500/27900 will act as a major resistance level in MCX Gold February future. For the next week in MCX Gold, traders can use buy on lower level strategy, if MCX Gold February future sustains above the levels of 27100 then it could test the levels 27300/27500.

Technically, MCX Silver March futures is in consolidation and sustaining on lower levels. So for the coming week 39800/41000 will act as a major resistance levels where as 36000/34700 will act as major support in MCX Silver March futures. For the next week in MCX Silver futures, traders can use buy on lower level strategy, if MCX Silver March futures sustains above 37300 then it could test the levels of 38500/39800. 

 

Energy:- 

Oil prices headed for a seventh straight weekly loss on Friday, with key producers showing no sign of cutting output in the face of a global supply glut. 

U.S Crude futures for February delivery were down 12 cents at $48.67 a barrel despite robust U.S. Economic data that brightened the outlook for demand. Supply concerns remained as Saudi Arabia and its Gulf OPEC allies are showing no sign of considering cutting output to boost oil prices even as demand slows globally.

For the coming week 2700/2500 will act as major supports levels whereas 3200/3500 will act as a major resistance in MCX Crude oil January futures. For the next week, trader can use sell on higher level strategy, if MCX Crude January future sustain below 2980 levels then it could test the levels 2850/2700. 

 

Base Metal:- 

Copper slumped to 20-month low on Friday on subdued demand following weaker than expected economic data from China and Germany and on higher inventories of the metal, Prices fell on weak demand after China's producer price index in December month plunged to five year low its lowest since September 2009. Other metals prices also supported on expectations of upbeat US non-farm payroll data which will boost sentiment of improving labour market in the world's biggest economy. 

Growth in the labour market of the country could prompt the Federal Reserve of United States to raise rates sooner than expectation. Investors are hoping higher rates could improve demand of the base metals, in the world's biggest economy. 

Trend of MCX Copper February future is in consolidation and sustaining in range. So for the coming week 398/420 will act as a major resistance levels where as 350/332 will act as major support in MCX Copper. For the next week trader may follow sell on higher levels strategy, if MCX Copper February future sustain below 377 levels then it could test the level of 365/350. 

Market watch and hot stocks for the week

Markets have opened today on a flat note mixed signals from US markets because of Job data weaker global sentiment could be weighting down on market, we expect buying to occur at lower levels and market is looking to sustain itself at these levels. 

Market Overview for last week: 

Nifty Future opened on a flat note but tumbled from there on to hit its lowest closing level in almost three weeks due to steep slide in global crude oil prices stoked fears about deflation and as the prospect of Greece dropping the euro weighed on global equity markets but in later part of the week witnessed recovery from the lower levels and extended gains on the last day of the week getting help from factors like IT major and index heavyweight Infosys led a rebound, Hindustan Unilever scaled record high, buying seen in Pharma sector from the lower levels. 

In overseas markets, global markets edged higher on expectations that pessimistic Euro zone data could prompt the European Central Bank (ECB) to implement more aggressive stimulus measures. Brent crude futures recovered from the lowest level since April 2009 as investors weighed whether crude's sell-off was excessive amid signs of improving demand in the US. 

Nifty January Future gave closing at 8315.50  with the weekly loss of 142.90 points. 

In near term Nifty is likely to remain volatile as overall breadth of the market was negative having resistance around the levels of 8370 on the upside while having immediate support around the level of 8200.

 

Upcoming Events: 

One should keep an eye on stocks like YES Bank, LIC Housing Finance, TCS, Wipro, Reliance Industries, Axis Banks, M&M Financials as they will declare their third quarter results this week. 

Market movement may depend on the CPI, WPI and IIP numbers to be declared. WPI Inflation will be unveiled on 14th January during market hours while CPI and IIP will be declared on 12th January (Today) post market hours. 

Trend in global markets ,investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar and crude oil price movement will also decide the market trend in near term. 

 

Stock Recommendation: 

1. UBL Buy; SL 887, TGT 936/950 

Recently the stock has given breakout of the sideways trend and is forming a continuation pattern in short term. The stock is trading above its 50 and 200 DMA with the RSI of 68. It may show further upside move with the crossing of the resistance level of 912. Traders can expect the targets of 936 and 950 with the strict stop loss of 887. 

 

2. Bhel Future Sell; SL 256, TGT 244/240 

The stock is forming a reversal pattern in short term. The stock may trade with the negative sentiments in near term with the breach of the level of 250 and may test the level of 244 and 240. Traders can initiate the short position in the BHEL future below the level of 250 for the target of 244,One may keep the stop loss of 256 in the stock. 

 

3. Crompton Greaves Buy; SL 184, TGT 200/205 

Overall trend of the stock is bullish and after the recent corrective move it is trading below the falling trend line and facing resistance at the level of 192. The stock may show upside move with the breakout the this level as the stock is sustaining above its 50 and 200 DMA with the RSI of 58. One can expect the targets of 200 and 205 in the stock with the stop loss of 184.

 

Commodity review and market movement for this week

Last week MCX Gold future prices witnessed consolidated movement in most part of the week due to thin volume ahead of new year but in later part of the week, it showed bearish movement and continued its trend. Gold hold its losses in December-2014 and showed gain of 3.5 percent from November-2014 despite bearishness while oil prices fell 20 percent in domestic market. Indian government  is actively considering a proposal under which a unique nine character code will assign all to jewellery for purity and traceability by hallmarking and assaying centres. 

COMEX Gold future also witnessed range bound movement in most part of the week and showed bearish movement in later part of the week. Gold price showed gain of 1 percent in December-2014 month on month basis. Individuals filing for initial jobless benefit increased by 11,000 to 298,000 from estimates of 287,000, lower than expected CB Consumer Confidence form 94.6 to 92.6 kept the prices range-bound in bearish trend of Gold.  Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.25 percent to 709.02 tonnes on Wednesday - a fresh six-year low. 

Silver tracked the trend of gold and witnessed consolidated movement last week. MCX Silver March contract gained more than 4 percent in December-2014. COMEX Silver also could not sustained below its major support level of $15 and showed gain of 1 percent in December-2014 month on month basis. iShares Silver Trust ETF, the largest US Silver ETF, enjoyed a very stable level of outstanding shares, despite weakening Silver prices. Physical demand for the white metal is strong with physical bar and coin consumption reaching a expected 46% of industrial consumption levels. 

According to Minister of State for Consumer Affairs, “The India Government is actively considering a proposal under which all Hallmarking and Assaying centres will assign a unique nine character code to the jewellery for purity and traceability.” In November World Gold Council had recommended to drive standardization of gold for creating faith in buyer and seller in both the quality and price of their products. According to a WGC report published in November-2014, India jewellery demand saw a 60% year on year increase to 183t in Q3 2014, the second highest Q3 on record for the country. Earlier Jewellery industry in India had already urged Prime Minister Narendra Modi to include gems & jewellery in ‘Make in India’ initiative. 

This week, we can expect bearish movement in Gold MCX Feb futures & it can test the levels of 26000 – 25900 till the end of week. Similarly Silver is also looking bearish on the charts and MCX Silver March futures can test the levels of 34600 – 32900 on the downside.

For this week, major U.S. data ISM Non-Manufacturing PMI, ADP Non-Farm Employment Change, Trade Balance, Unemployment Claims and Unemployment Rate coupled with physical demand in Asian region will further provide direction to the bullions.

Market Review for last week and stock recommendation

Market Overview: From start of the week Nifty Future was trading in range bound movement due to festive season for FIIs, but extended gains on the last day of the week, getting help from factors like banking stocks gaining across the board specially private banks hitting fresh highs like Axis bank, Yes bank, Indusind bank and cement sector were in demand following government thrust on infra sector and mid cap stocks also rallied. 

In the foreign exchange market, the rupee edged lower against the dollar on broad strength for the dollar. Brent crude futures edged higher supported by a larger-than-expected fall in weekly US crude stocks. 

Nifty December Future gave closing at 8458.40 with the weekly gain of 184.65 points. 

In near term Nifty is likely to continue its up trend as overall breadth of the market was positive having resistance around the levels of 8540 on the upside while having immediate support around the level of 8350. 

Upcoming Events: 

Trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar, and crude oil price movement will dictate near term trend. 

A major trigger for the markets in the near term is Q3 results of Companies. Earnings season starts from second week of January 2015 and ends in second week of February 2015. IT major Infosys kicks off Q3 results season on Friday, 9 January 2015. 

The Ministry of Finance on 24 December 2014, said that Prime Minister Narendra Modi will interact with bankers during two day Bankers Retreat called ‘Gyan Sangam' to be held in Pune on 2nd and 3rd January 2015 to prepare a blue print of reform action plan for banking sector. The objectives of this retreat are to create a platform for formal and informal discussions around the issues which are important for banking sector reform. 

 

Stock Recommendations: 

BUY BFUTILITIE IN NSE CASH ABOVE 688.50 WITH SL OF 638.50 TGT 738.50,775 

The stock is trading sideways in long term charts and is trading above its 50 and 200 DMA with the RSI of 59. The stock is likely to show an uprally with the crossing of the resistance level. Traders can initiate the long position in the stock above the mentioned level and can expect the target of 738.50 with the strict stop loss of 638.50. 

BUY AUROPHARMA IN NSE CASH ABOVE 1140 WITH SL OF 1120 TGT 1160/1180 

The primary trend of the stock is bullish , after showing correction from the highs it is trading below the crucial resistance mark of 1140 and is sustaining above its 50 and 200 DMA, it is likely to continue its uptrend in near term with the crossing of the level and can test level of 1160, if it manages to trade above the support of level of 1120. 

BUY GAIL IN NSE CASH ABOVE 450 WITH SL OF 441 TGT 458/465 

The stock is sustaining with the positive bias and sustaining below the resistance mark of 450 after showing correction recently, it is likely to continue buying momentum above the resistance mark of 450 as the stock is sustaining above the level of 200 DMA with the RSI of 47. One can expect the target of 458 with the strict stop loss of 441 in it.

Market open on a weak note due to weak global economy

After last week consolidation Nifty Future fell sharply amid weakness in Asian and European markets hitting its lowest closing level in almost six week, as market breadth indicating the overall health of the market was weak, leading sectors which drifted market on the down side were specifically IT, Metal and Infrastructure sector and also Indian rupee edged lower against the dollar on speculation an improving US economy will strengthen the dollar and damp demand for emerging-market assets.

In overseas markets, European stocks edged lower before the European Central Bank reveals take-up of its lending auction, which could provide clues on the central bank's policy decisions. US stocks suffered their worst declines in about two months in this week as a renewed slump in oil prices slammed energy companies while investors fretted that a stunning drop in oil prices signals a more worrisome global-economic slowdown.

Nifty December Future gave closing at 8276.90 with the weekly decline of 305.65 points.

In near term Nifty is likely to continue its correction as overall breadth of the market is negative and having resistance around the levels of 8380 on the upside while having immediate support around the level of 8200. Market may remain in negative zone on Monday as IIP seen negative growth at 4.2%, while CPI has seen a slight easing.

 

Upcoming Event:

    The government will release the inflation data based on wholesale price index (WPI) for November 2014 on Monday, 15th December 2014.

    All eyes will be on the outcome of the Federal Open Market Committee (FOMC) monetary policy review and snap election in Japan and Greece's presidential elections.

    Developments in ongoing winter session, movement of rupee against dollar, trend of investment by FII and global market can affect market movement in near term.

 

Stock Recommendations:

BUY KOTAK BANK IN NSE CASH ABOVE 1255 WITH SL OF 1235 TGT 1275,1295

Overall trend of the stock is bullish and is trading in range with positive bias from the last few trading sessions. It is trading above its 50 and 200 DMA , it may continue its uptrend with the crossing of the resistance level of 1255, traders can expect the target of 1275 and 1295 with the strict stop loss of 1235 in stock.

 

BUY GLENMARK IN NSE CASH ABOVE 843 WITH SL OF 794 TGT 892,932

Primary trend of the stock is bullish and now it is trading in range from the last few weeks, It is sustaining above its 50 and 200 DMA. The stock may continue major bullish trend with the crossing of the resistance level of 843, where long position can get accumulated for the targets of 892. Support of 794 should be placed at strict stop loss for the stock.

 

SELL ZEE FUT BELOW 362 WITH SL OF 370 TGT 354,350

The major trend of the stock is bullish, it is accumulating at the higher levels and is trading below 50 and 200 DMA. The stock may show correction if it breaches the support level of 362. One may sell the future below the level of 362 and keep the target of 354 with the strict stop loss of 370.