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Web Special: Evening commodity update

SI Reporter/Mumbai 15 Jun 12 | 06:05 PM

As the week culminates, global shares and commodities were seen rising as market expectation stood high over the possible policy action by the central banks to hold up economic growth. Optimism after reports that central banks of the major economies stood ready to act in the event of any financial turmoil caused by the election in Greece over the weekend lifted the overall sentiments. Spot gold was tad up, rising for the sixth consecutive day as soft economic indicators from the world’s largest economy raised appeal of the yellow metal. Worries over the possible outcome of election in Greece attracted safe haven buying. However, trades remained thin as investors choose a wait-and-see approach before key events. In MCX, precious metals traded mostly flat looking out for cues to take up fresh leaps. In the base metal segment, copper performed best among its peers gaining more than one per cent in LME and Shanghai exchanges. LME copper was heading to post its first weekly gain in seven weeks. Expectations over additional stimulus measures from the US and China lifted the market sentiments. MCX base metal complex moved in tandem with global market too. MCX copper hit its highest levels in nearly two weeks earlier today. Crude oil extended the previous day’s gains backed by OPEC agreeing to keep its output target unchanged for the second half of the year amid expectation over central banks’ policy actions. Next week is expected to be action packed with crucial events including FOMC rate decision and G20 meeting.

Events in Focus

Market mood was buoyed after reports that major central banks and governments have contingency plans ready to counter any volatility in aftermath of Greek elections. With elections in Greece due on Sunday, markets would be hoping for a desirable outcome to rejuvenate their scruffy sentiments. An uncanny outcome of the elections could throw the markets into a state of doldrums and periods of long liquidation. After ditching hopes of a QE3 last week, Federal Reserve is all set to take centre stage with much anticipated FOMC meeting slated for 19th-20th June. The timing of the FOMC meeting follows the outcome of Greece election results and financial markets could be in for a twist. Looking into the twilight session, U.S. industrial production and consumer confidence would be the key economic events and it is more likely to weigh on evening trades. The projections of these data are bleak and could reinstate optimism that the Fed could act in the coming days to bring the economy back on track. On the whole, penultimate week ahead of the Greek elections has seen yields on Spanish and Italian bonds peaking, muddled US numbers and optimism over a Fed action. Gazing into the crucial week ahead, Greece election outcome and FOMC decision are more likely to set the tone for market moves.

Technical Commentary

MCX June

Prices still hesitant to make firm move above 30100-120 region and such failed challenge may crawl down prices towards 29940/830 or even lower towards 29700. But voluminous break above 30100-120 region could be an early indication for a major rally towards 30300/30500.

MCX June

A choppy trading session is expected inside 55350-54000 with mild negative bias. Either side breakout would require to suggest fresh directional moves.


As long as prices stay above 414 expect prices to move higher and find resistance near 417 initially, which if cleared would signal prolonged bullishness towards 421. Conversely, a direct push below 411 could negate the bullish sentiments and drag prices lower.

MCX June

Initial moves could possibly test 925-23 followed by a consolidation and drift prices higher. However, it would be required to break and sustain above 967 to dent out broad bearish expectations.


Prevailing positive bias has to break above 4725-30 region to continue its buying momentum towards 4755-70 levels. In ability to trade above 4725-30 could call for liquidation towards 4670-60 region. Recent moves have failed to pierce 4770 region and if this breach is made, prices could target a close above 4800 region, which could be a sign of a broad trend reversal in favor of bulls.

Source: Geojit Comtrade

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