Rupee: Sustained inflow of foreign funds and easing US-China trade tension led the Sensex to close at a record high level on Friday. The Indian rupee managed to trade strong inspite of strong US Dollar and weakening other emerging market currencies. Rupee, which had support around 71.50-71.40, has been tested and now we are seeing reversal. We don’t expect rupee to trade below 71 as weak emerging market currencies will drag rupee lower. Expect rupee to test levels of 72.20-72.40 in next month. RBI has boosted dollar purchases to increase rupee liquidity in the financial system, as shown by foreign-exchange reserves climbing to a record $448 billion. The RBI's rate cuts, almost twice the amount delivered by the Fed, have eroded the interest-rate advantage the rupee has over the dollar, denting its attractiveness as a high yielder
Gold prices have fallen for six straight days and we saw some respite yesterday after gold staging some comeback from its support zone of $1,450-$1,445. Gold is still vulnerable from higher levels. Optimism about US-China trade deal has dented gold prices. Dealers in India were offering a discount of up to $3 an ounce over official domestic gold prices last week, compared to a premium of $1.5 an ounce the previous week. Gold is trading at the lower end of the range of $1,450 and we have seen bounce coming from this level so we won’t approve of short position from here but one can wait for any pullback for creating short positions. MCX 38300 is emerging as strong resistance. Gold was expected to test lows of 37,500 which it trade from November 8 to 12, and it tested that level yesterday. Now wait for gold to come near 37,800-37,900 before initiating fresh shorts.
Brent markets have gone back and forth during the trading session on Monday and Tuesday, showing signs of volatility. Brent crude is dancing around the 200 day EMA. The US oil and gas rig count continued to fall this week, according to Baker Hughes, falling another 3 rigs for the week. Overall, this is a market that continues to be bought on dips by short-term traders, and as a result if you are trading that timeframe you should remain slightly bullish. I think the move is somewhat limited though as Brent crude has massive resistance zone around $65-$67.5 In MCX, upside is limited till 4,250-4,300 and we may see longs unwinding below 3,990.
Buy Natural Gas | TGT: Rs 190 | Stoploss: Rs 170
Natural Gas is near its support zone of 177 where 200 DMA is. The approaching cold will be beneficial for natural gas prices. Historically, Natural Gas have thrived around Nov-Dec period. RSI_14 has started curving upwards and after two days of selling pressure, Natural Gas has made doji candle indicating pause in selling. So we recommend buy with expected target of Rs 190 and stoploss of Rs 170 on a closing basis.
Buy Aluminum | TGT: Rs 135 | Stoploss: Rs 131.50
Aluminum has made ‘Bullish Engulfing’ candlestick pattern after fall from 137 to 130. This clearly indicates buyers now trying to take the market. Follow up candle are all bullish indicating short covering happening and buyers getting more control. Aluminum is trading above 20 EMA and RSI_14 has recovered from oversold region of 25 to 39 right now. All in all the set up looks positive and we expect Aluminum to trade till Rs 135 so go long with stoploss of Rs 131.50 on a closing basis.
Disclaimer: Views expressed are the author's own. He may have positions in one or more stocks.