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Nickel

LME and MCX Nickel futures mainly traded bullish during the month of July, as demand has witnessed incline in US and the European countries. This has also increased the raw material/output demand in the manufacturing sectors from Philippines and Indonesia for its electronic vehicles car manufacturing sector. However, rising US dollar index with reports of positive economic data has capped upside movement on the base metal prices. By 2nd August, MCX Nickel prices inclined by 7.20% closing at Rs.1118/kg.

Fundamentally for the month ahead, we are expecting LME and MCX Nickel futures to witness uptrend with reports of higher demand from the battery sector in United States. European economy is starting to recover with some delta virus concerns again witnessed along with China which is feeling a major heat of the same.. LME's nickel stocks continue to slump which has seen to reflect rising demand for the metal used in batteries.

Rising demand from alloy-makers at spot market of India is expected to support uptrend in this month. Moreover, the stock to open interest scenario in MCX exchange indicate for bullish movement in prices with South America’s civil protests that could last longer than we think. BHP Group Ltd said last week that it would build two solar farms and a battery storage system in partnership with Canada's Trans Alta Renewables Inc. at its nickel project site in Western Australia.

The global miner said the project will help reduce carbon emissions by 12% compared with 2020 levels at its Mt Keith and Leinster operations, where power is currently being generated through diesel and gas turbines. The proposed solar farms will also help produce sustainable low-carbon nickel used in electric-vehicle batteries, BHP further added, for which the company signed a supply agreement with Tesla Inc.

On the daily chart, MCX Nickel (Aug) future has been trading in a Bullish channel from last couple of days. In addition, the price is trading above the Ichimoku Cloud & 50 Exponential Moving Averages, which indicate a bullish trend in the near future. However, the price has reversed from upper band of channel & the indicator MACD also suggested negative crossover which indicate some correction in the counter till the level of prior demand zone. Furthermore, In LME division Nickel has strong support of 18700. Hence, based on above technical structure we are recommending buy on dip strategy in MCX Nickel (Aug) around 1440 or a fall in the price till 1436 levels, that can be used as buying opportunity for the upside target of 1479. However, the bullish view will be negated if MCX Nickel (Aug) future close below the support level of 1420.

CPO

MCX CPO prices majorly traded higher during the month of July, as there had been increased buying in the domestic market for vegetable oils including Mustard and Refined Soy Oil. Although prices also witnessed a roller coaster ride due to US FED's interest rate worries and other global events, but then the price continues to remain firm over the last month.

According to Solvent Extractors Association (SEA), India’s June edible oil imports fell 17.01% year to year to 9.69 lakh tons from 11.68 lakh tons in June 2020. Palm oil imports rose 4.44% year to year to 5.87 lakh tons from 5.62 lakh tons in June 2020. CPO imports rose 2.31% year to year to 5.76 lakh tons from 5.63 lakh tons in June 2020.By 2nd August, MCX CPO generic futures closed at Rs.1118.09/kg, higher by 7.28% compared to Rs.1042.9/kg reported on 30th June.

Fundamentally for the coming month, we expect MCX CPO futures to be bullish as steady demand from India. Upcoming festive season in India is expected to strengthen the prices of vegetable oil prices. Moreover, the global exports from Malaysia and Indonesia has improved over the month. As per MPOB data, CPO production has been reported at 2,203,408 tonnes for June’21, higher compared to 1,920,599 tonnes reported in May’21.

However, so far in the year 2021 palm oil production in Malaysia has witnessed a fall which is supporting price rise. Malaysia's Jan-Jun 2021 production stands at 8.36 MT which is lowest since 2018 (8.92 MT).According to Indonesia the trade ministry, Indonesia will charge an export duty of USD 93 per ton on crude palm oil for August compared to US$116 in July, whereas the Export levy is kept steady at $175/Tonne.

Reference price of August is set at USD 1048.62 per ton compared to USD 1,094.15 per ton last month. International palm oil Futures price may see some correction in between the August month amid the fall in demand from China with rising delta variant virus cases.

On a weekly chart, MCX CPO (Aug) future has been rising continuously in a bullish channel from the last couple of weeks. The price has reversed from lower band of channel with Three White Shoulder candlesticks and shifted above the 50 Exponential Moving Averages, which confirms the continued bullish trend. In addition, the trend indicator Parabolic SAR & an oscillator Stochastic RSI also supportive for the long position with positive crossover .However, on a four hourly chart an oscillator Stochastic RSI suggested negative crossover, which indicates some correction till the level of 1100 . Hence, based on above technical structure we are recommending buy on dip strategy in MCX CPO (Aug) around 1100 or a fall in the price till 1095 levels, that can be used as buying opportunity for the upside target of 1150. However, the bullish view will be negated if MCX CPO (Aug) future close below the support level Of 1075.

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