Bullish sentiment on the cards

MARKET OUTLOOK

The commodities prices are likely to rebound this week with traders' intention to pump in money to take fresh positions, especially in the globally benchmarked commodities. Strong fundamentals in metals are all set to offer more attractive opportunities to hedge risk against inflation and appreciating rupee.

Metals and agri indexes on the futures exchanges remained on tenterhooks last week because of declining prices of commodities across the board. On Friday, the multi-commodity exchange (MCX) metals futures index declined 3.66 per cent to 2661.29 against the last week's closing.

The decline was attributed to a dramatic fall in the metal prices in the international markets including the benchmark London Metal Exchange (LME). Taking cue from the futures market, the MCX spot index also plummeted to 2602.48 from 2723.30 on the similar comparison last week.

The MCX agri futures index fell by 3 per cent to 1703.43 from 1756.61, while the spot index was down to 1698.63 from 1727.33. On Ncdex, agri futures shed around 65 points over a week's time to close at 1566.19 on Friday, while spot index marginally went down to 1543.58 from 1571.30.

The decline in the commodities prices worldwide after their recent overheating is largely attributed to profit booking and economic slowdown in the US. In India, the government took a series of measures, including a ban on the exports of several commodities, to control the rising inflation.

These moves resulted in the markets taking bearish turn. In metals, the June copper contract on MCX declined from Rs 337.65 a kg to Rs 320.05, while the August contract fell from Rs 338.30 to Rs 321.35. Profit booking by traders following the recent eleven-month high of $8,039.5 on April 20, brought down the copper price to $7,745 on LME despite the inventory falling by 7,900 tonnes.

In base metals, the markets were down despite strong fundamentals. On the Ncdex, aluminium for May delivery declined to Rs 116 a kg from Rs 120 during the week.

The June contract ended the week at Rs 117.30 a kg, down Rs 3.80 compared with the previous week's close. Stocks in the LME-registered warehouses increased to 829,525 tonnes from 821,650 tonnes, taking the price of aluminium down to $2790 from $2829 during the week.

The repercussion of the all-round decline in gold prices in Europe was felt in India with mini futures on MCX falling to Rs 9001 per 10 gram from Rs 9395 on Friday.

The June and July precious metals contracts closed the week at Rs 9,126 and Rs 9,221 per 10 gram, witnessing a decline of Rs 368 and Rs 349 respectively.

In agri commodities, guarseed for May delivery on Ncdex declined to Rs 1,844 a quintal from Rs 2003, while the June delivery slumped to Rs 1,891 from Rs 2057.