Zinc broke the resistance levels of 181 INR and 196 INR in this week itself before settling at 197 INR with a huge green bar on the weekly chart which is considered to be very bullish.
Last weekend i had analyzed the metal in this article.
Question still broadly remains where will the rally dry up ? Technically chart shows resistance at 208.3 INR with Dollar index expected to rise even higher due to the Rate hike in December by U.S Federal Reserve now a certainty on consensus polls.
Currently both the dollar and zinc are in an uninterrupted bull run even though both are inversely related on the prices, taking into a higher dollar which is hugely negative for commodities is having no impact on this metal price rise.
A take down of 196 INR signals the strength of the rally till its next resistance level of 208.3 INR after which some profit taking interest might emerge.
Probability of making new highs is not ruled out either if the metal sees more buying interest above 208.3 INR.
From above, its still not clear whether the metal makes new highs on the chart or will attract profit taking thus making a trading call on it very tricky after it reaches 208.3 INR.
One can take a positive view to participate in the bull run for another 9 points, after which global factors will decide the fate of the price movement in coming weeks.
Friday, day after the monthly expiry of November contract saw massive buying pulling nifty above 8100 during close. Nifty had started the week opening above 8000 but fell to as low as 7910 during the week testing the earlier low of 7920, expiry day as it generally pans out was extremely volatile with traders getting trapped on both sides of the short and long positions, but today such buying took everybody by surprise causing many short positions to cover thus propelling nifty even higher.
Though it can be still said, Nifty was unable to test its 200 DMA at 8150 due to lack of participation by the banking sector in the upmove still creating doubt over the longevity and stability of the ferocious rally.
Mostly all sectors had participated in the uptrend baring Autos and select Bank stocks.
Stand out sector was IT on weaker rupee/stronger dollar with most stocks gaining over 5%
Pharma stood second to IT in the large pullback.
Week on week, even with such volatile moves nifty managed to close in positive after long time.
It can be perceived that nifty still remains range bound between 8150-7900 levels, but a breakout on either side would cause a big move as nifty is in expansionary phase.
Zinc has been in a bull market for more than 6 months, will a higher dollar cap its run is a question asked by the aggressive move in dollar index post the U.S presidential election day.
The metal is perhaps into a bull market of its own at the moment while the gains in other base metals are paused due to a higher dollar.
On daily chart zinc broke its long term trend line at 177 INR and massive resistance at 173 INR five days back but a wave off profit taking and global cues pushed the prices back below the 173 mark. On friday, the metal finally closed at 173.25 INR above its resistance level thus resuming the uptrend even on the back of 14 yr high dollar index.
Now remains the task of breaking the long term trend line which if it does in coming days will take the price higher to 181 INR which is perceived to be yet another resistance on the chart.
While month on month , Zinc clearly broke the trend line in the start of the month.
Being a Friday, a minor pullback was anticipated after a week long sell-off in mostly every sector, but a higher dollar index dismissed the hopes as market continued to see selling pressure on any intraday pullbacks.
Again a gap-up opening was instantly sold into dragging the index below 8100 levels, any tries to reach the 200 DMA was used to short. Index was in choppy waters throughout the day with even a 10-20 point rally being sold into closing at 8074 with a minor cut of 6 points.
Index tested the long term support of 8040 which was seen as a buying opportunity by many investors, while on the up side it managed to reach 8128 but failed to go above 8130 which now acted as a key resistance.
Most of the sectors were in the red excepting select pharma and bank names. Metals saw deep gashes on account of a higher dollar which was comfortably trading at 14 yr highs.
Metals and banks which was considered to be trading on a positive note a day back saw cuts firming a break down across all sectors caused due to domestic issue of demonetization and a higher dollar which is seen a a key negative for emerging markets.
Among metals on Hind Zinc saw a flat closing due to higher zinc prices on the commodities front and Sun Pharma was the clear leader in Pharma sector with more than 2% points uptick.
Thursday, an extremely volatile day on account of bank nifty weekly expiry today helped the index to close above its day low.
Nifty saw a massive selling pressure starting from the day’s gap up open till the last 30 minutes before the close on account of demonetization. The gap-up open was sold into within minutes and selling continued whenever there was a small rally on the upside, bulls tried hard to protect the 200 DMA at 8130 but sentiments both domestic and global were not kind enough thus failed decisively in the last hr of trading where the nifty touched intraday lows of 8060 before bouncing back to close at 8079. Sectors hit were consumer goods, pharma, realty, auto and IT. Banks traded mixed due to the weekly expiry which elevated nifty from its lows during close. Metals surprisingly outperformed even in such a down day after a steep correction earlier this week.
The trading showed buying interest at lower levels with index unable to break the 8000 mark. It can be perceived that index shows bottoming out at 8000 levels and probably a reversal can be on the cards which might take the index to 8200-8250 levels.
Sectors to watch – Banks and Metals
Stock in focus today was Hind Zinc up over 5% garnering a buying interest with technically closing above the resistance of 248.
Copper on Friday touched its peak of its long term trend line at $2.717 on over 6% gains during Asian trading sessions which was followed by massive selloff due to profit taking and risk off trades during American session of trading where it saw cuts of above 8% from its morning highs resulting in a negative close of about 2%.
Point to notice here is even when its peak in negative territory , it failed to go below the strong technical level of $2.501 which it had broken on the upside a day earlier suggesting clearly the metal was not wanting to break on the down side even in such volatile market scenario where everything was under severe selling pressure.
Obviously the candle stick formed was bearish as the price retreated from very high levels.
Trading on the next day was expected to be on the down side which happened but case here was opposite where the metal rose from its day’s lows which broke the key technical level but to close in flat-negative zone way above the level forming a bullish candle firming the sentiment that it was not wanting to go into a bearish market again which it could have had it closed below the $2.501.
On the bullish front, it needs to close above the next resistance of $2.570 to continue the upside and in some time break the long term trend line to stay in a very powerful bull market of metals.
Today, Copper rose above the resistance of 2.570 during Asian trading session but yet again retreated from it as the European markets opened. Final movement of the day will happen when the American markets open later in the day either on the bullish or bearish side.
It is anticipated the metal will continue its uptrend as the markets globally are trading on sharps gains with commodities not seeing the selloff it did on Friday.
Stocks in Focus during Indian trading session would be Hindalco and Vedanta.
On Friday, Nifty lost over 200 points ending below 8300 while the sensex lost over 650 as risk off trades re-spurred. Most the the selling was majorly due to demonetization which the Government ensued just a day before U.S election result to curb black money.
Sectors which saw a good crack were IT , Financials, Auto, Oil and Gas, Consumer goods and Realty.
Pharma was again the top performing sector with Metals not falling much due to Trump’s policies over Infrastructure spends and Biotechnology.
Point to notice – Nifty again reversed from its 8600 levels from where the initial fall had started thus pointing that the expansionary movement is set to be on the down side. It failed to hold 8360 mark which was one of the crucial supports only broken intraday on the extremely volatile election day.
On such a down day , Pharma sector was still battling for the bulls, with metal stocks supporting by not falling much due to metal prices trading at high levels fueled by sentiments from the election result on the commodities front.
From above it can be perceived that a retest of 200 DMA near 8100 levels might be on the cards yet again after the unexpected global rally on the upside.
9th November , day of major political drama where Donald Trump was elected as President over Hilary Clinton taken to be totally surprising as polls indicated a clear Clinton win along with the pain coming from another big move by the Indian Prime Minister to curb black money.
Nifty futures indicated healthy cuts during pre-open as globally all the indices were down about 3-5% on the news that Trump was leading the electoral race.
On opening, cuts deepened enough to make the index nearly touch its 200 DMA. Early trading hrs were extremely volatile as the see saw-ing vote counts gave edges to both bulls and bears with the index covering 50% of its losses when the count showed Clinton ahead.
The short covering was led by value buying through DIIs and some bullish positions created by brave traders. Going ahead, picture was getting clearer about Trump winning which in turn impacted IT stocks and gave Pharma and Banking sectors a bit of relief thus averaging out the cuts allowing the index to keep its retraced position from the lows it made during the early hrs of trading.
Through the respective speeches by the candidates about their policies it was clear that a Trump win would benefit Pharma and pressure IT and with Clinton vice versa.
As the election counting headed for the last stage, it showed Trump winning not only the presidential post but Republicans clean sweeping the House and the Senate. Pharma led relief rally gained momentum with European markets opening with lesser cuts than what the futures were indicating earlier. Cuts lessened to 1/3rd from half with majority of index heavy weights along with bank names going into the positive due to incremental buying and short covering where the index finally closed.
In short, the early hiccup with a damaging downturn was converted into a mere 100 point cut during close but index failed to touch 8500 when it was trading in its highs closing below 8450 which can be perceived only as value investing and covering of short positions initiated at higher levels not a trend reversal as uncertainty still looms about how American markets will react later in the night.
FBI clearing Hilary Clinton sparked global rally, basically a broad relief rally as hopes of Clinton victory strengthens.Asia traded higher with India having a gap up opening above the crucial 8500 mark.
Nifty traded higher throughout the session on short covering but failed to take out 8550 on the upper side which could have changed the whole perception until last 30 mins where fresh shorts or selling pushed the index back below 8500 testing the support of 8480 finally closing at 8497.
After the large gap up , no incremental buying was visible which created doubts over the longevity and stability of the pullback.
Uncertain global scenario still maintains a cloud over the direction of the market with American election results due within 48 hrs which may create a knee jerk reaction on either side with large gaps.
America opened higher and extended gains aiding European Markets to have a strong closing.
This week nifty broke its contracting stint with a large gap down which was more or less anticipated as U.S elections garner the heat with the candidates going nearly head to head according to recent polls.
The gap down was followed by more incremental selling pushing the index to test its support signaled by the short term trend line which it held on week’s closing basis.
Coming week, a massive whirlpool of events might either push the index towards its 200 DMA or a significant pullback to its trading range which it was enjoying from past many days.