Chana prices set for mild correction

Chana futures on the National Commodity and Derivatives Exchange are expected to be range-bound with a negative bias as there could be a technical correction after a one-sided sharp rise in prices in the last four to five weeks, analysts said.

"We expect a minor correction of 1-2 per cent in prices in the current week but maintain that the major trend still remains bullish," said Hanish Kumar Sinha, research head-commodities, Religare Commodities.

Most-active March contract can fall to Rs 2,550 a quintal (current price Rs 2,601), which can be a good level to buy, with the final target of over Rs 2,800, Sinha said.

Prices have risen one way without any intermediate correction, which has been due for quite some time, he said.

Chana futures have risen nearly 15 per cent in the last five weeks on concerns over output in Rajasthan and Madhya Pradesh due to lack of winter rains coupled with severe cold wave. Stockists' buying across the markets in the country in the past few days have further fuelled the rally.

According to Suresh Mantri, an analyst at Ventura Commodities, "correction is possible in chana futures ahead of expiry in February contract Wednesday.

But it may not extend beyond 1 per cent from the current prices."

As March contract will become the near-month one from Thursday, traders needs to cut positions to conform with lower regulatory limits for the near-month contract.

"Hence, liquidation of long positions, built in the past few days, can shed some gains in March contract," Mantri said.

However, the major trend will remain bullish only, he said agreeing to Sinha's views.

Spot
Spot chana is likely to feel some downward pressure on prices due to likely rise in arrivals in Madhya Pradesh and slowdown of purchase by stockists.

"With receding cold wave, arrivals are likely to rise and spot prices may fall by at least Rs 100 in the short term," said Deepak Shah, a pulses trader at Indore.

Spot chana at Indore fell by Rs 70 to Rs 2,430 a quintal in the last two days as daily arrivals have risen to over 1,000 bags (of 100 kg each) from 300-400 bags in the past few days, Shah said.

At Akola, in Maharashtra, arrivals are expected to rise on slowdown of direct buying by stockists at current high prices, a local trader said.

If prices don't fall immediately, it will surely come down after delivery in NCDEX February futures are completed, he said.