MCX Copper climbs 3% to Rs 709.5 per kg this week, experts suggest buy-on-dips strategy


Copper prices ended the week with a gain of Rs 19.45 or 2.82 percent on the domestic bourse. The prices jumped in three out of the five trading sessions on the MCX.

However, the commodity price slumped to Rs 709.50 per kg on April 16 as participants trimmed their positions as seen by the open interest. The base metal closed in the negative territory after a gap-down start, tracking weak global cues.

The non-ferrous metal has been trading higher than 5, 20, 50, 100 and 200 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 62.33, which indicates bullish movement in prices.

“For the second straight week, MCX Copper rallied by more than 2.75%. It’s up 19% so far this year on bullish demand outlook, weaker dollar and optimism related to green energy plan around the globe. A slew of better-than-expected US and China data this week reinforced the view of a healthy economic recovery, while President Biden’s multi-trillion dollar infrastructure plan lent further optimism to the copper bulls”, said Jigar Trivedi, Research Analyst- Commodities Fundamental at Anand Rathi Shares & Stock Brokers. 

“Adding to the positive mood, copper market pundits lifted their bets on copper consumption this year, focusing on its longer-term role in a carbon-free world. Looking for the supply side, coronavirus-induced disruptions in some South American mines have supercharged existing upward momentum in the market”, the analyst noted.

“For next week, the outlook is positive but we recommend to go long on dip on MCX. The price of Rs 700- Rs 699 will act as support for the April contract and on the flip side, it can go up to Rs 720- Rs 730,” Trivedi noted.

The US dollar index ended slightly lower at 91.53, down 0.10 percent on April 16 against the major cross. The dollar index had fallen 1.9 percent from 93.32 level it touched on March 30.

MCX METLDEX decreased 170 points, or 1.17 percent, to close at 14,420. The index tracks the real-time performance of key base metals.

In the futures market, copper for April delivery touched an intraday high of Rs 719.15 and a low of Rs 708.20 per kg on the MCX. So far in the current series, the base metal has touched a low of Rs 657.85 and a high of Rs 732.70.

Copper delivery for April slipped by Rs 9.65, or 1.34 percent, to settle at Rs 709.50 per kg with a business turnover of 2,703 lots. The same for May contract tumbled by Rs 8.40, or 1.17 percent to Rs 711.45 per kg with a turnover of 752 lots.

The value of April and May’s contracts traded on April 16 was Rs 2,508.23 crore and Rs 149.19 crore, respectively.

The red metal price settled with a loss of 1.40 percent at $ 9,180.50 per tonne in London.

Strategy for coming week

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Strategy: For the upcoming week, traders should adopt buying on dips strategy in MCX Copper future wherein anticipated optimal range to enter in buy position should be around the psychological level of Rs 706 – Rs 707, keeping a stop loss at Rs 699 with a target of Rs 718. 

Rationale: Copper prices have been boosted by positive economic data from the China and US. MCX Copper has managed to close above the support of 10 moving average on a daily chart placed at Rs 697 which will be immediate support. On the other side, Rs 718 high of March 2 would act as strong resistance.

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