Stability likely to return, trend determination may be underway

Mumbai: The markets witnessed a higher turnover week as trader participation rallied with the volatility. MCX weekly volumes rose 4% and the turnover gainers were almond, cardamom, gasoline, gold, lead, natural gas, platinum, refined soya oil and tin. Open interest gainers were cardamom, chana, crude oil, gold, lead, mentha oil, platinum, soybean, steel (GZB), tin and wheat. The market-wide open interest was down 12% on a week-on-week basis as many contracts approached expiry in the prompt series. The volatility caused by the Dubai World imbroglio impacted the dollar peg versus most currencies and upset the calculations of many momentum traders. Worldwide, investors were seen converting to cash as risk appetite contracted. This week is likely to witness stability returning to the markets and trend determination may be underway. Agri-commodities Chana has seen an extension of the previous week's gains as the rising tops and bottoms formation continues. It is important for the bulls that the counter trades above the Rs 2,650 levels consistently, if the momentum is to remain positive. Market internals indicate a 38% decline in turnover and an 11% increase in open interest. Mentha oil continued on its bullish trajectory as the winter season demand is the most robust from the pharmaceutical industry. The Rs 575 level will now be a floor support that will find buying emerge, in case the market witnesses a corrective fall. The lower turnover as compared to the previous week is a mild concern. Market internals indicate a 13% decline in turnover and a 1% increase in open interest. Refined soya oil has witnessed a bar reversal on the weekly charts. The higher traded volumes are indicative of a churn as profit sales are likely at the Rs 510 levels. Unless this hurdle is overcome forcefully, avoid fresh buys. Market internals indicate a 15% increase in turnover and a 32% decline in open interest. Metals Aluminium has seen an inside formation. A breakout past the Rs 95 level is needed to trigger a fresh buy. Market internals indicate a 14% decline in turnover and a 12% decline in open interest. Copper has seen a higher 'tops and bottoms' formation on the weekly charts, though the closing was lower than the previous weekly close. The counter remains above a rising trendline. Fresh buying maybe considered as and when the counter trades forcefully above the Rs 325 levels. Market internals indicate a 12% decline in turnover and a 17% decline in open interest due to the impeding expiry. Gold continued to its weekly gains, though the closing was way off the weekly highs as the US dollar regained lost favour as a currency of choice after the Dubai debt crisis. The downsides are likely to witness cushions from bear covering cum value buying. Bulls may hold their longs and brace up for some volatility as the price tests the $1200/ounce mark. Market internals indicate a 38% increase in turnover and a 1% increase in open interest. Nickel continues to decline as the lower 'tops and bottoms formation remains in force. The Rs 700 level is a logical fibonacci target where buying support is likely.Bulls should avoid fresh buys till the Rs 800 threshold is overcome forcefully. Market internals indicate a 17% decline in turnover and a 4% fall in open interest. Silver has witnessed a bar reversal. The lower turnover indicates a loss of buying momentum as the bulls lack conviction at higher levels. It is important that the bulls manage a close above the Rs 27,500 levels to keep the counter buoyant. Market internals indicate an 18% decline in turnover and a 26% decline in open interest. Zinc remains in consolidation mode as the weekly chart indicates a support at the Rs 98 levels. A consistent trade below this threshold will witness fresh weakness and bearish build up. Buying is suggested above the Rs 107 levels if the upthrust is on forceful volumes and open interest build up. Market internals indicate a 9% decline in turnover and a 17% decline in open interest. Energy Crude oil has declined as the US non-strategic inventories continued to rise. The Dubai debt crisis also had a bearing on sentiment. Market internals indicate a 1% decrease in turnover and a 15% increase in open interest as bears opened fresh shorts. Natural gas has rallied on anticipated winter demand. The weekly close has been at the threshold of a congestion top at the Rs 240 levels above which the bulls will have to keep prices if the uptrend is to persist. The higher volumes are a sign of optimism. Market internals indicate a 6% increase in turnover and a 46% decline in open interest.