Technically Zinc market is under long liquidation as market has witnessed drop in open interest by 6.27% to settled at 7339 while prices down 1.9 rupees.
Now MCX Zinc is getting support at 193 and below same could see a test of 191.9 level, And resistance is now likely to be seen at 195.5, a move above could see prices testing 196.9.
Zinc on MCX settled down -0.97% at 194.10 on account on long liquidation as trader prefered to stay away as stocks of zinc in LME warehouses are up 25,250 tonnes at 267,050. A small premium for the cash over the three-month contract on Sept. 4 has over the last week turned into a $US5 a tonne discount.
Benchmark zinc was down 1.2 per cent at $3023. For the most part base metals prices are in correction/consolidation-at-lower-numbers mode, as markets where looking ahead to data from China on new loans, investment and industrial production due this week for clues on the strength of demand over coming months.
Although prices have corrected, there does not seem any rush for the exits so we do see this as the markets correcting having run ahead of the fundamentals, rather than sentiment turning less bullish. For now traders would give the market more time to adjust to recent price moves and wait to see if there are further large stock increases.
Overall, marekt would not be surprised to see prices pull back further, but would be on the lookout for buying opportunities.
--Zinc trading range for the day is 191.9-196.9.
--Zinc dropped as prices come under pressure from expectations that high prices would mean mothballed capacity could be restarted.
--A small premium for the cash over the three-month contract on Sept. 4 has over the last week turned into a $5 a tonne discount.
--China’s new property construction starts fell 7 percent in July year-on-year, the first fall since last September.
Courtesy: Kedia Commodities