NATIONAL COMMODITIES AND DERIVATIVES EXCHANGE (NCDEX)
GOLD FEBRUARY FUTURE/10 GRAMS
SILVER FEBRUARY FUTURE/KG
Rs.9200- Rs.9,400
Rs.19,260- Rs.20,175
STEEL FEBRUARY FUTURE
CRUDE OIL FEBRUARY FUTURE
Rs.19139.00 - Rs.19509.00
Rs.2,400 - Rs.2520.00
GENERAL MARKET CONDITIONS
On Tuesday, after market closing, in India the Forward Market Commission (FMC), the regulator of Indian commodity exchanges banned futures trading in Tur and Urad with immediate effect. This has shaken investor confidence in Indian commodity exchanges. In 2006, the FMC had banned opening of new future contracts and play with margins to curb excessive speculation in agricultural commodities. Retail investors and traders have been shaken with the governments decision and short sellers incurred huge losses as a result on the decision. “It Happens Only In India”. This sort of decision has never occurred in any existing commodity exchange in any part of the world. The government should not permit trading in certain agricultural commodities which affect the common man and if they give the go ahead, the commodity future should be allowed to complete its tenure. Prices of essential commodities like wheat, chana, soyabean, corn etc will face upward pressure not just in India but in other parts of the world as global population rise remain unchecked and the aftermaths of ecological damage pour in. This is one of the reasons why one should trade in gold, silver and other base metals and energies. I do not think Nymex will close crude future trading all of a sudden just because it contributes to price rise. The credibility of Indian commodity exchange has been put to question as a result of the Indian government decision.
I can compare the Forward Market Commission (FMC) to the controller of capital issues (CCI) which was regulator on Indian stock exchanges prior to the securities and exchange board of India (SEBI). Under the supervision of CCI there was a huge number of vanishing companies which took investments from the Indian public by way of Initial public offering (IPO’s). Retail investors in India incurred huge losses in mid 1990’s on their stock investments due to vanishing companies. It seems a large number of agricultural commodities will vanish under FMC at the cost of investors. FMC as well as commodity exchange officials have over the past have said that commodity exchanges provide hedging options to farmer and traders and trading options to investors. By stopping any commodity future mid way, both the investor and hedger are left in the lurch. There has been to an independent body for commodity governance in India which is not dictated by political compulsions. The more the delay in setting up an independent regulator, the more the number of commodities which will come in and go out as per the whims and fancies of the Indian regulators, whose independence remain in doubt.
China's economy grew at 10.7% in 2006, closing in on Germany as the world's third largest, fueled by investment in manufacturing and a boom in exports. Gross domestic product expanded to 20.94 trillion yuan ($2.69 trillion) after growing 10.4% in 2005. Chinese per demand for gold is very less as compared to India. This will catch as these Chinese per capita income rises. Gold and silver should catch the Chinese flu this year and create multi year highs.
GOLD -- FEBRUARY FUTURE
Gold needs to break and hold $660 for $693.60 and $730. On the lower side as long as $636.0 holds on closing basis the downside is limited.
SILVER -- MARCH FUTURE
Silver can target $1425 and $1545 over the coming weeks as long as it holds $1305 on closing basis. A consolidated fall below $1305 will result in further losses to $1272 and $1239.
Happy Profitable Trading
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