Commodity review and market for this week

Last week MCX Gold Feb future witnessed bullish movement of more than 1.5 percent and made the high of 28271 during the week. Bullish movement in Gold seen mainly due to buying by jewellers to meet wedding season demand and firming overseas trend. Economic and political uncertainties in the euro zone also pushed euro-denominated gold up to a peak level of 1,126.85 euros, highest since May 2013. 

COMEX Gold future prices breached the psychological level $1,300 an ounce on Wednesday for the first time since August-2014 due to softer dollar, uncertainty over global economy and hopes of stimulus measures from the European Central Bank (ECB) which fuelled demand of bullions. Traders and investors were curious about the ECB policy meeting on Thursday, as it was widely expected by bank to unveil a quantitative easing (QE) programme. As expected, European Central Bank expanded stimulus measures, the bank will buy roughly 50 billion euros of government bonds a month from March until September 2016. Major US economical events released last week like Individuals filing for initial jobless benefit which is increased by 6,000 to 307,000 from estimates of 301,000 and lower than expected Building Permits to 1.03M from 1.06M also supported the Gold prices to trade upside. Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, expanded 1.55 per cent to the highest level since Oct. 29 at 742.24 tonnes on Tuesday. 

Silver tracked the trend of gold and witnessed bullish movement last week. MCX Silver sustained above 39000 for the entire week and showed bullish movement from lower levels with overall gain of around 2.8 percent on weekly basis. COMEX Silver also rebound from lower levels and sustained above its support level of $17.50. 

Commerce and Industry Minister, Nirmala Sitharaman, hinted that Government of India may provide some incentives to the jewellery sector in the upcoming budget. Jewellery industry is one of the most highlighted focusing areas for “Make in India” drive. In pre-Union Budget recommendations, All India Gems and Jewellery Trade Federation (GJF) had urged the government to cut the duty on gold from 10% to 2% to encourage ‘Make in India’ initiative in the gems & jewellery sector. GJF also categorically urged the government to exclude jewellery from all bilateral or multi-lateral free trade agreements (FTAs) buy stating that the government should not encourage jewellery imports at cheaper rates, as it discourage indigenous jewellery manufacturing. Jewellers also want Jewellery manufacturing cluster to be revamped by including common facility centre and skill up-gradation. 

This week, we can expect bullish movement in Gold MCX Feb futures & it can test the levels of 28500 – 28800 till the end of week. Similarly Silver is also looking bullish on the charts and MCX Silver March futures can test the levels of 41000 – 41500 on the higher side. 

For this week, major U.S. like data Core Durable Goods Orders, CB Consumer Confidence, New Home Sales, Unemployment Claims and Advance GDP, coupled with physical demand in Asian region will further provide direction to the bullions.

Market Review and Outlook for the Week

Market Review:

Nifty Jan Future series gave opening on positive note this week and crossed its previous all time high of 8668 in mid of the week and market zoomed after the announcement of bond buying program of worth 60 billion Euros per month by ECB on meeting held on Thursday, 22nd January. European Central Bank would start monetary stimulus from this March until the end of September 2016. Among the emerging markets, India is likely to get the benefit of this stimulus in the form of foreign fund inflow.

Strong quarter three numbers from the blue chip companies, recent rate cuts by RBI added fuel to the investors sentiments and Nifty Future made a life time high of 8875.85 on last day of week and surged 298.95 points more than three and half percent to close at 8834.00.

Market likely to continue its up-trend with the positive bias in near term as overall health of the market is positive. Nifty future having support at the level of 8700 with the breach of this some correction can be seen while on upper side it has resistance at the level of 8900.

 

Current Market: 

This holiday shortened week could see triggers like volatility on Wednesday because of F&O contracts expiry on Thursday, markets have opened on a flat note already, on Wednesday tracking weak global cues as Wall Street went down 1% on account of disappointing earnings report from Industry bellwether like Microsoft showing a disappointing quarter. Another major happening for the week has been anti-austerity Syriza party in Greece polls winning, the presidential election on 25th Jan 2015,  this had the potential of wreaking havoc on finance markets but as Indian markets were closed on account of Republic day, we managed to avoid that. Greece has been a challenge for financial market as the markets are still haunted by the shadows of 2008 globalization crisis. 

When the market opened on Tuesday, market was buoyant with the Obama visit to India, and the market did not disappoint to extend a welcome. Sensex closes at 29,571.00 up 292.20 (1.00%) points, NIFTY closes at 8,910.50 up 74.90 (0.85%)

Market will also have a keen key on FOMC (Federal Open Market Committee) meeting on Tuesday and Wednesday, its first meet for the year 2015, any announcement may have an impact as market opens on Thursday and details from the meeting start coming out by tonight, Wednesday. 

 

Upcoming Events:

·        ·One should trade cautiously ahead of the expiry of derivative contracts in next week, as market may remain volatile.

·         Quarter three result of companies viz. IDFC, Oriental Bank, Titan, Union Bank, Karnataka Bank, Idea Cellular, Ranbaxy, Havells is scheduled to be declared next week.

·        ·Auto companies start unveiling monthly sales volume data for January 2014 from 1 February 2015.

·         FOMC (Federal Open Market Committee) will review monetary policy at a two day meeting on Tuesday, 27th and 28th January,2015.

 

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.