Agri-Tech: Weekly Calls

India Infoline News Service | Mumbai |

Jeera lost over 1% which sticking its neck above Rs13,000 for the second straight week, supported by good buying interest.

Market Recap

Indian spices complex turned weaker amid a high voltage price action witnessed during last week. Price changes on a wow ranged from -0.4% to -3.4%, with turmeric losing the least and pepper the most. It may be noted that despite last week’s weakness, prices are still holding their recent lows which indicates a cautious approach for the short run. Jeera lost over 1% which sticking its neck above Rs13,000 for the second straight week, supported by good buying interest. In the absence of specific leads from the global markets, Pepper drifted lower below Rs36,000 and later recovered on the back of short covering. Prices still remain in the safe zone of Rs36,000-37,000. Chilly prices lost ground and succumbed to selling pressure losing over 3% wow and downside breakout of converging bearish technical formation. Turmeric made a futile attempt to thwart above the Rs4,000 mark but fell sharply towards Rs3,700. Sugar prices scaled the upside potential and managed to close above Rs2,850 levels indicating strong positive momentum building. Cardamom prices made yet another attempt to thwart Rs1,330, but succumbed lower for want of follow through momentum.   


Recommended Strategy

  Closing price Trading range Strategy Levels Target Stop-loss
Rs/Qntl





NCDEX Chilly June’12 4,782 4,650 – 5,100 Sell Below 4,770 (on closing basis) 4,650 4,860
NCDEX Jeera May’12 13,315 12,500 – 14,300 Buy Above 13,200 13,810 12,810
NCDEX Pepper May’12 36,025 35,600 – 37,700 -- -- -- --
NCDEX Turmeric May’12 3,706 3,450 – 3,850 -- -- -- --
NCDEX Sugar May’12 2,954 2,850 – 3,015 Buy Above 2,955 3,005 2,925
Rs/Kg





MCX Cardamom June’12 1,321 1,170 – 1,350 Sell Below 1,290 (on closing basis) 1,230 1,330

Source: Bloomberg, India Infoline Research, *Prices as on May 14, 2012, rounded off to the nearest decimal

  • Chilly prices broke the convergence formation (with its support around Rs4,900) that could aggravate the fall towards Rs4,700 followed by Rs4,680 in the short run. Qualifies as short term ‘sell’ pick.

  • Jeera prices are looking strong with the ability to hold above Rs13,000. However, last week’s fall towards Rs12,750 calls for caution. As long as Rs13,000 is held, potential exists for breaching Rs14,000. Qualifies as a risky ‘buy’ call given the recent high volatility.  

  • Repeated test of Rs38,000-38,500 and the resultant failure to close above it, brings pepper prices back into the safe zone of Rs36,500-37,500. Mixed trend could prevail awaiting an either side breakout.

  • Bearish candle formation in turmeric and the gap down open on Monday indicate extended weakness. Immediate support exists at Rs3,610, a fall below which can take the prices towards Rs3,470.

  • Holding above Rs2,850 and last week’s upside breakout (Rs2,925) keeps open the possibility of sugar prices to move higher above Rs3,000.  

  • Last week’s smart recovery on cardamom prices from Rs1,240 could induce a mild dose of upward correction, but as long as Rs1,330 is not breached, trend remains mixed to weak.  

 

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