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Weekly Commodity: Depreciation in Indian currency made commodities more volatile

SMC | 22 Nov, 2016  | Follow Author | Add to my Favourites 
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Weekly Commentary

               

With some rebound in energy prices, CRB managed to took support near 180 level. Meanwhile, upside was capped due to massive upside in dollar index. The dollar index hit 13-1/2 year high as against a basket of currencies on bets the Trump administration will adopt inflationary policies, while the yen sagged after a Bank of Japan's bond-buying operation. It surpassed the 101 level last week. Depreciation in Indian currency also made commodities more volatile, which surpassed the level of 68. It seems that the hangover of Trump clear majority came down in industrial metals counter and most of them moved down except nickel, which somehow managed to closed the week with little gain. The election of Donald Trump as U.S. president has added froth to prices for metals and bulk commodities, but the real driver is, and will remain, the outlook for China. Both gold and silver prices nosedived. Gold moved down as it was pressured by a stronger U.S. dollar and expectations the Federal Reserve will raise interest rates in December. Silver followed the footstep of gold. As per GFMS report, Physical silver demand hit a four-year low this year as higher prices and weaker consumer sentiment put people off buying jewellery, coins and bars. A drop in mine output is expected to have kept the market in a physical deficit, but the shortfall is forecast to shrink by nearly 60%. In energy counter, both crude and natural gas prices augmented on fresh buying. WTI too support near $42 and Brent took support near $44. Nevertheless, the upside was limited after U.S. Energy Information Administration data on Wednesday showed a larger-than-expected crude build of 5.3 million barrels in the week to Nov. 11.


In agri counter, ban on 1000 and 500 rupee note halted the activities in physical market. Oil seeds and edible oil counter traded bullish amid thin trade owing to firm trend in the international market. In spices, turmeric, jeera and dhaniya prices flavored up while cardamom prices closed the week in red territory on profit booking. Jeera prices moved up on the back of lower arrival in the mandis, besides expectation of fresh export enquiries. According to trade sources, jeera exports may gain 29% to 58,000 tonnes in April-August compared to last year's 45,000 tonnes. Spot turmeric prices edged up at Erode markets as buyers were keen on fulfilling their local orders though they did not get any upcountry orders.

 


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About SMC
SMC Research, founded in 1990, is India’s leading share and stock broker, provides a wide range of financial services and investment solutions. A blend of extensive experience, diverse talent and client focus has made us the 4th largest broking house in India(Source: Dun and Bradstreet, 2008). Over the years, SMC has expanded its operations domestically as well as internationally. Existing network includes regional offices at Mumbai, Kolkata, Chennai, Cochin, Ahmedabad, Jaipur, Hyderabad, Bangalore plus a growing network of 2100+ offices spread across 425 cities/towns in India.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.



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