Chana futures to move sideways

Chana futures on the National Commodity and Derivatives Exchange are likely to move sideways with a slightly positive bias, mainly due to subdued activity in the spot market coupled with low warehouse stock, analysts said today.

A clear direction would emerge only after the Diwali festival season is over, they said.

"December chana is likely to trade in a range of Rs 2,330-2,420 a quintal in the current week," said Chowda Reddy, an analyst at Karvy Comtrade.

However, traders are likely to build fresh short positions in futures at every rise, Reddy said.

According to preliminary reports, chana sowing in Andhra Pradesh is progressing well. Carryover stock of chana from last year is also at a comfortable level.

This is likely to cap the rise in chana futures, Reddy said. Currently, low warehouse stock is likely to support futures at the current levels, despite weak fundamentals.

Chana stock in NCDEX-accredited warehouses nearly halved last month to around 3,250 tonne, easing delivery pressure on the November contract.

"This can trigger some short covering at every fall in prices and support them at current levels, despite weak fundamentals," the analyst at a Delhi-based brokerage said.

According to Suresh Mantri of Ventura Commodities, weak fundamentals are likely to keep chana futures in a bearish zone this week.

"As wholesale demand is almost over, higher supplies of imported pulses and favourable sowing conditions will keep prices sluggish in the next few days," Mantri said.

December chana is likely to touch Rs 2,328 a quintal, the strong support level.

If it is breached, it can slide up to Rs 2,275 a quintal, Mantri said.

On the upside, it can go to Rs 2,400, which offers very good opportunity to go short, he added.