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ZINC

Global Zinc futures had traded bearish in the month of January owing to rising covid-19 cases in the European Union, China and United States which eventually strengthened the US Dollar Index in the global market. However, easing domestic market activities in India has supported MCX Zinc prices from extreme bearishness. Moreover, the global economic experts such as Morgan Stanly and Goldman Sachs have forecasted positive global growth for the year 2021. Fundamentally for the month ahead, we expect Global and MCX Zinc futures to trade mixed after the reports of recovering economic data in the Asian markets and United States. This is expected to increase the demand in the international markets as mining work and refined metal production is expected to rise. However, the US Dollar Index could find further strength that can reduce Zinc imports in the global markets. Moreover, European countries haven't opened up from the lockdown situation and United kingdom in near to complete lockdown amid virus strain. As per ILZSG, global zinc metal production for Nov’20 is reported to have risen to 1203.9 thousand tonnes, higher compared to 1191.0 thousand tonnes of the preceding month. In the case of metal usage of Zinc, it has been reported to be higher at 1186.5 thousand tonnes for Nov’20, compared with 1156.6 thousand tonnes reported during Oct’'20. Recovering production is expected to be positive for the prices, the demand/usage of metals and ores is also forecasted remain strong especially in China and other Asian countries. But then, MCX Zinc Futures could also find capping in the higher side, in incase the economic scenario in the European Union or Latin American's Peru is sluggish with spiking covid-19 cases ona daily basis and eventually disrupt industrial activities in the respective countries.

On the daily chart, MCX Zinc (Feb)  has been trading near its “38.2% Fibonacci Retracement Level” which can act as a strong resistance in the near term. Also, price has been trading below its “Ichimoku Cloud” which signals that the counter can face pressure at the upper levels. Additionally, price has sustained below its 20*50 Days “Simple Moving Average” which confirms bearish bias in the counter. Moreover, RSI (14) has sustained below its 50 level which confirms negative momentum. So, based on the above technical structure one can initiate a short position in MCX Zinc (Feb) future at around 213.20 and up to 214 levels for the downside target of 200. However, the bearish view will be negated if MCX Zinc (Feb) closes above the resistance of 220.20.

RM SEED

NCDEX Mustard Seed Future price had traded higher during the first half of January owing to reports of higher exports of mustard oil and rapeseed meal in the global markets. Butt then easing supply concerns in vegetable oil market brought down mustard seed prices in the second half of the last month as the competitive mustard oil demand had also shown cooling in the Indian market. Lower stock reports help revive the RM Seed prices during the first week of February. By 4th February, NCDEX Mustard Futures has closed higher by 1.01% at Rs.5876/quintal compared to Rs.581 7quintal reported on 31st December. For the month ahead, we are expecting NCDEX Mustard seed futures to trade bearish as we are estimating higher production this year by 8-10% at 98.5-100 lakh tonnes compared to 90-91 lakh tonnes compared to the previous year. Favorable winter weather conditions is expected to eventually support yield of the standing crops. As per Agricoop data, all India Rape-Mustard Seed sowing has been completed and the acreage has been reported at 73.94 lakh hectares till 29th January 2021, higher by 7.03% compared to 69.08 lakh hectares of the corresponding period last year. Rise in sowing has been majorly witnessed in the major states of Madhya Pradesh, Rajasthan and Haryana states. Rajasthan has completed sowing of 25.24 lakh hectares, higher by 11.48 % compared to 22.64 lakh hectares. Madhya Pradesh has completed sowing of 7.82 lakh hectares, higher by 11.07% compared to 7.04 lakh hectares of the previous year. In the case of Haryana, sowing of 6.1 lakh hectares, higher by 8.93% compared to 5.6 lakh hectares. Currently market is witnessing lower stocks in the domestic market before the harvesting period starting from March month onwards, which can limit extreme bearishness in prices. Madhya Pradesh and Haryana is expected to begin harvesting in March month while Rajasthan is likely to begin harvesting by April month. Hence, we expect bearish trend in NCDEX Mustard Futures for the month ahead.

On the daily chart, MCX Zinc (Feb) has Seed (Apr) has been trading below its “Parabolic SAR” which indicates that the bearish trend is still intact. Moreover, price has sustained below its 50*200 Days “Simple Moving Average” which indicates weakness in the counter. Furthermore, price has sustained below its “Ichimoku Cloud”, which confirms bearish control. Also, RSI (14) has sustained below its 50 level which signals negative momentum. Moreover, Super Trend (7,1) indicator has given a sell signal which indicates bearishness. So, based on the above technical structure one can initiate a short position in NCDEX Mustard Seed (Apr) future at around 5300 and up to 5350 levels for the downside target of 4500. However, the bearish view will be negated if NCDEX Mustard Seed (Apr) closes above the resistance of 5700.

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