Guar likely to remain firm on strong outlook

Fundamental Analysis
Guar futures rose sharply during the last few weeks on the reports of drop in acreage under Guar due to a poor monsoon in Northwest India where most of the Guar crop is grown.

Prices continued its uptrend in the current week due to supportive fundamentals.

Sowing of Guar has started across Rajasthan; however, the pace is very slow. According to the top official, there is a drop of 75% in the area sown under Guar due to poor monsoon.

According to IMD, monsoon was below 50% of the Long Period Average during the period 1st June- 9th July.

Sowing of Guari, which normally takes place between 15th of May and continues till Mid June was delayed this year. Also, drastic fall in acreage under Guari has been witnessed across North Rajasthan.

Technical Analysis
Guar prices (NCDEX August) settled at Rs. 2025 per qtl, higher as compared to Saturday’s close of Rs. 1,977.

RSI is at 75 and towards overbought region. Prices closed above its 5 days, 20 days SMA and 65 days SMA indicating an up trend.

Outlook
Guar prices are expected to remain firm in the short term on below average monsoon forecast and expected fall in acreage in the upcoming sowing season. Overall trend in Guar remains positive due to lower sowing acreage and lower stocks.

Any significant decline in the prices should be treated as a good buying opportunity due to strong fundamentals. Expect prices to trade in the range of Rs. 1900-2100 in the short term (August contract).

Courtesy: Angel Commodities