Copper
Copper surged 3.55 percent this week to settle at Rs 734.50 per kg on the domestic bourse. Copper eked out gain for second consecutive week running supported by a weakness of the US Dollar.
The base metal jumped in four out of the five trading sessions on the MCX.
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 68.96 which indicates upbeat movement in prices.
China kept its benchmark lending rate for corporate and household loans steady for the 12th straight month at its April fixing this week, matching market expectations. The one-year loan prime rate (LPR) was kept at 3.85 percent. The five-year LPR remained at 4.65 percent.
Expectations for a boom in copper demand in the transition to a lower-carbon economy and global economic recovery have also lent support.
Miners BHP Group and Antofagasta posted lower quarterly copper production due to COVID-19 restrictions on their workforce in Chile and if cases do rise further, we could supply disruptions from the country and pushed prices higher.
However, investor fears over rising coronavirus cases limited gains. The pace of China’s massive inoculation campaign has slowed, Reuters data showed. Meanwhile, cases are rising in India and Japan.
Sriram Iyer, Senior Research Analyst at Reliance Securities said, “Prices could continue to move higher supported by hopes that demand will recover as fast vaccine rollouts could bring back the economy on track. Additionally, as the globe move towards a greener economy, demand for copper could be higher and will push prices higher.”
However, fears of a rollback of monetary and fiscal policy from China to stop the rise of inflation in the country could cap upside.
So, as of now, the bullish news outweighs bearish news which could push prices higher next week, Iyer noted.
The US dollar index ended lower at 90.79, down 0.57 percent on April 23 against the major cross. The dollar index had fallen 0.82 percent during the week.
MCX METLDEX increased 195 points, or 1.34 percent, to close at 14,724. 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 735.90 and a low of Rs 726.70 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 735.90.
Copper delivery for April edged higher by Rs 10.20, or 1.41 percent, to settle at Rs 734.50 per kg with a business turnover of 809 lots. The same for May contract gained Rs 10, or 1.37 percent to Rs 739.10 per kg with a turnover of 3,738 lots.
The value of April and May’s contracts traded on Friday was Rs 1,360.05 crore and Rs 1,323.67 crore, respectively.
The red metal price settled with a gain of 1.63 percent at $ 9,549.25 per tonne in London.
Next Week Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
Strategy: For the next week, traders should look for Buy on dips strategy in MCX Copper future wherein the optimal range to enter in the buy position should be around the psychological level of Rs 730, keeping a stop loss at Rs 725 and set the target of Rs 741.50.
Rationale: MCX Copper has traded in a moderately bullish trend for the week. Copper future has formed a cup and handle chart pattern on the daily chart and we remained quite bullish for the coming week.
Sriram Iyer, Senior Research Analyst at Reliance Securities
Technicals: Domestically, MCX Copper May is trading at an all-time high 736.80 level indicating a strong bullish momentum where prices have shifted to a new range zone as prices are in uncharted territory. Support is at Rs 729-719 levels. Resistance is at Rs 743-755 levels.
Strategy: Iyer advised buy Copper May near Rs 734 with a stop loss at Rs 729 and a target of Rs 746.
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