Sumeet Bagadia, Head, Commodity and Currency Research, Destimoney Securities spoke to Jinsy Mathew on metals and energy


Gold has declined after the Greek debt crisis returned to the spotlight.Whats your outlook for the yellow metal?
 
Well fundamentally, gold looks a good investment. The prices will continue to trend up till the time problems in the euro-zone and the geo-political situation in the Gulf is resolved. After every rise, the yellow metal will give some correction that should be used as buying opportunity for the long term.

Technically, it can give small correction till $1680 in COMEX. On the MCX, the prices can come down till Rs 27,500 levels. One can buy around that level for a target of Rs 28,500 – 29,000 levels in next two months.

IMF recently warned that a sharp downturn in Europe could cut China's economic growth rate nearly in half. What will be the impact on the base metals?

China's official PMI rose to 50.5 in January from 50.30 in December, which was above market expectations of 49.5. The PMI data above 50 suggests that the manufacturing sector has stabilised.

This also indicates that China, which is world's second largest economy, will avoid a hard landing. Despite this, the demand for base metals might remain low because of fears of recession in Europe. Base Metals will start performing when the problems in the euro-zone get resolved or if there is any announcement related to the third round of quantitative easing (QE3) in the US.

Technically, the Base metals are facing resistance at higher levels. For the short term, i.e for next 10 to 15 days, there can be a correction of 5% in all the base metals. But the longer term scenario for looks positive. Buy on a decline for an upside of 10 % in next one – two months.
 
Copper prices declined, owing to a stronger dollar and European debt-contagion fears. How do traders approach this space?

Traders can create short position at present levels. We think that in the short-term, prices can give correction of around 5% from the present levels. Sell copper at around 420 levels with stop loss above 430. On the downside, one can expect prices targets of around 405 and 390 levels in next 15 to 20 days. For investors, copper is good to buy at around 380 or 390 levels for a target of 430 - 460 levels in the next two months.

Crude oil futures have slumped. How do you see it panning from a near term perspective?

Crude looks bearish in current expiry, and one can see levels of Rs 4,650 and Rs 4500 in next 7 – 10 days. As far as NYMEX is concerned, we expect prices to test levels of $93 in next few sessions.

However, if anyone wants an exposure for next one to two months, then a possible correction till $93 would present a good buying opportunity. Buy with a stop loss below $89 for the target of $99- 104.

How do you see the Rupee panning out in the next three months?

In last one month, the rupee has appreciated nearly 10% from a level of 54.50 till 48.83. Since the rally was sharp, there can be some consolidation or correction from these levels. A further appreciation can be seen only if prices are able to break the major resistance of 48.70 levels.

For the next two – three months, we feel that USDINR will move in a range of 49 to 52.50 on higher side.