03/01/2011 (Daily News & Analysis) - The markets witnessed a minor resurgence in the traded turnover as the buying conviction returned at the fag end of the calendar year.

The MCX recorded a 7% increase in market-wide turnover and a 17% decline in market-wide open interest as the expiry of the December series across many counters witnessed bull unwinding.

The weekly turnover gainers were cardamom, crude oil, crude palm oil, gold, mentha oil, natural gas, potato, refined soya oil, silver and zinc. The open interest gainers were aluminium, cardamom, chana, crude oil and potato. The US non-strategic petroleum reserves fell by 1.3 million barrels to the 339.4 million barrels, but failed to buoy crude oil prices. The nervous outlook on the US greenback coupled with improved economic outlook saw the industrials strengthen on bulls enhancing their commitments.

Traders should hold longs on base metals and probably enhance commitments if signs of follow up buying emerge this week.

Agri-commodities
Chana has witnessed a consolidation as the traders seem to be losing interest on this once favoured agri counter. The weekly chart indicates an inside formation and a breakout / drawdown beyond the `2,490 / `2,375 levels respectively need to be watched before initiating fresh trades in either direction. Market internals indicate a 94% decline in turnover and a 13% increase in open interest.

Mentha oil has risen smartly as the harsher than expected winter spurred demand. The Rs1,145 level needs watching as an immediate support in case of declines. Bulls may continue to hold existing longs, but refrain from fresh buys for now. Market internals indicate a 12% increase in turnover and a 24% decline in open interest.

Refined soya oil has risen for the second week in a row as the agri commodity complex, especially the edible oils segment encountered bullishness. Hold all existing longs with a stop loss at the Rs628 levels on a closing basis. Market internals indicate a 148% increase in turnover and a 5% decline in open interest.

Metals
Aluminium has rallied in tandem with its base metals peers and is likely to run into some profit taking at the Rs113 levels which needs watching. If the bulls manage to overcome and then defend the Rs113 levels, an accelerated upthrust may result from bear covering.

On dips watch the Rs108 level as a momentum support. Market internals indicate a 20% decline in turnover and a 16% increase in open interest as bulls enhance commitments.

Copper has rallied for five weeks in a row and may see some profit sales if the bulls are unable to keep the Rs433 levels on a consistent closing basis. If the counter stays above the Rs440 mark, a bear squeeze may occur. Hold longs for now. Market internals indicate a 7% decline in turnover and a 4% decline in open interest.

Gold has risen as the safe haven buying resumed after a brief hiatus. Should the yellow metal trade above the Rs21,000 levels on good volumes, a bear squeeze can occur that will see Rs20,500 become an immediate floor for long positions. Maintain a bullish bias for now. Market internals indicate a 10% increase in turnover and a 7% decline in open interest.

Nickel is back to its winning ways as the metal has rallied strongly as compared to its peers. Should the bulls manage to overcome the `1,135 levels forcefully, the possibility of testing the `1,150-1,160 levels becomes a reality. Buy once a forceful breakout past the `1,135 levels occurs. Market internals indicate a 24% decline in turnover and a 31% decline in open interest.

Silver notched new highs as the bulls managed to exert themselves into keeping the profit taking pressures at bay. In relative terms, silver continues to out perform gold and the strong performance is likely to persist for some more time. Hold existing long positions till the counter trades above the Rs45,400 levels consistently. Market internals indicate a 20% increase in turnover and a 3% decline in open interest.

Zinc has rallied in a catch-up fashion as the other industrial metals displayed strength. The sizeable paring of longs at expiry shows that the bulls were wary of the sustain ability of the upthrust. In case the bullishness persists, the rally may extend to the Rs115 levels where part profits maybe locked in. Market internals indicate a 1% increase in turnover and a 55% decline in open interest.

Energy
Crude oil fell despite of a dip in the US non-strategic reserves, which is a sign of caution. On the western bar charts, the weekly bar is an outside formation as the weekly range encompasses the previous weeks range.

On the candle charts, the pattern is a bearish piercing pattern which is fortifying the hypothesis that the near-term outlook may be choppy-to-weak. Fresh longs may be considered only above the Rs4,150 levels. Market internals indicate a 5% increase in turnover and a 27% increase in open interest.

Natural Gas has played the alternation role accurately as it rallied in a week when crude oil fell. The Rs180 level will now be a near-term floor below which the counter must not decline if the bulls are to prevail over the bears.

Watch out for some profit sales near the Rs205 levels in case of fresh upmove. Should this hurdle be overcome, Rs212 may be tested. Market internals indicate a 4% increase in turnover and a 36% decline in open interest.