17th March 2018

News & Development

MCX Zinc Futures which had been inclining in the past couple of days due to strong demand by topconsumers in the market. However, prices slipped on 16th March owing to higher inventories beingreported in LME warehouse. Stocks of zinc in LME warehouses has picked up nearly by 60 % since thebeginning of March month to 207,775 tonnes. The amount of cancelled warrants - material earmarked fordelivery and which is not so available to the market - account for about 8 % of stocks, down from nearly 50% at the start of March.

This indicates that the amount of stocks available for delivery and industrial usage is higher compared toprevious month. Though zinc metal production for the year 2017 is lower by 3.6% (495K tonnes) as perInternational Lead and Zinc Study Group, higher inventories for the current period is estimated to furtherpressurize prices.

On the daily chart, MCX Zinc April future has given “Rising Wedge” breakdown and sustained below it forlast couple of the days. On the other hand, Price has also given breakdown of “Double Top” formation ondaily chart; which is a bearish reversal pattern and witness of downward trend. Moreover, It has sustainedbelow 100 day SMA; which indicate bearish movement in the counter for medium term. In addition, Amomentum indicator RSI (14) & MACD is in bearish mode with negative crossover. So based on the abovetechnical structure and indicators, one can initiate short position in MCX Zinc (April) future at CMP 212.45 oron rise in prices till 216 levels can be used as selling opportunity for the downside target of Rs. 196 levels.However, reversal in the bearish view can be seen if Zinc (April) prices sustain above the resistance of Rs.221.Overall, we maintain our bearish view in Zinc for one to two months.

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News & Development

NCDEX Mustard Seed spot price has witnessed sideways to bullish trend from the start of year 2018 and closedat Rs.4092.1/quintal by 15th March. Lower sowing was reported in the state of Rajasthan for 2017-18 which ledto gradual incline in prices in the market. As per Rajasthan’s second advance estimate, RM seed sowing of 2125thousand hectares has been witnessed for current year. It is lower by 15.1% compared to 2016-17 acreage of2503 thousand hectares. Since the weather conditions in Rajasthan were unfavorable for the standing crop; weare expecting decline in production for 2017-18. State Agriculture of Rajasthan has estimated production of3188 thousand tonnes for current year, down by 16.28% compared to previous year.

However, initial harvest pressure in the major states of Rajasthan, Madhya Pradesh and Haryana is expectedto keep prices weak for the coming weeks. The PVOI (Price Volume Open Interest Analysis) for the above pricetrend showcases lower volumes and open interest forming a short covering. Basis (Spot- April Future) iscurrently trading negative which indicates greater selling in Active April futures as compared to spot price. Alsothe domestic demand for mustard seed and exports for mustard meal to global buyers has not shown anymajor improvement for the current period. All these above factors clearly points out for a bearish outlook onRM Seed futures for next 1-2 months and we recommend selling on rallies.

On a weekly chart, NCDEX RM Seed (April) future retreated form upper band of “Bollinger Band” formationand sustained below it; which act as immediate resistance level for the prices. In addition, price has pulledback after testing a falling trendline on weekly chart; which act as a third point reversal and suggestdownward move for near term. Moreover, Volume has been decreasing against the prices on monthly chart;which intimate mixed view among the traders. So based on the above technical studies and indicators, onecan initiate short position in NCDEX RM Seed (April) future at CMP 4160 or on rise in prices till 4230 levels canbe used as selling opportunity for the downside target of Rs. 3670 levels. However, reversal in the bearishview can be seen if RM Seed (April) prices sustain above the major resistance of Rs.4410. Overall, wemaintain our bearish view in RM Seed for one to two months.

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Commodity LTP WoW (%) MoM (%) Open Interest (weekly)

LME Zinc ($/tonne) 3260 -0.51 -8.81 -81.32K

Shanghai Zinc($/tonne)

3927.23 0.20 -5.77 -21.66K

MCX Zinc (Rs./kg) 212.2 -1.00 -3.1 20076K

NCDEX RM Seed(Rs./quintal)

4103.2 -1.98 2.68 5200

LME Zinc Inventories

Commodity Country Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

India

EU-27

Canada

China

Sowing

Growth

Harvesting/ Arriva ls

RM SEED

Seasonality Chart

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