Dhanteras & DiwaliDhanteras & DiwaliSPECIAL REPORT ON

11th November, 2020

It’s a time of celebration as the auspicious “Dhanteras” and festivals of lights “Diwali” are on the way to sparkle

blessings on us. These are auspicious occasions are known as to bring prosperity in our lives.

SMC Commodity Research Team has come up with special report on these occasions which will throw light how some

commodities gave good returns despite the hit of all odds and slowdown amid Covid-19 and many geo political issues. We

have calculated the return on commodities from last Diwali to 10th of November.

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Bullion: Year of 2020 was a very volatile market for commodity and equity markets. Clearly the bullion counter has

emerged as winner with around 33% from last Diwali to 10th of November. Gold this year has touched an all-time high on

both COMEX as well as the domestic market. MCX. The bullion complex gave a massive 30% return this year in just 10

months supported by strong fundamentals. This statistic should put to rest all the noise about plunging gold demand hurting

gold’s prospects in 2020.

Beginning of the year prices climbed as trade war going between US and China, in February end the whole world faced

Corona pandemic. The accommodative stance of the central banks, stimulus measures, excess liquidity, the Covid-19

relief bill and lower bond yields were the other concerns among investors to create safe haven appeals. All these factors,

including the volatility in the rupee, have impacted gold prices on the domestic front. India’s gold demand in the first three

quarters fell 49% from a year earlier to 252.4 tonnes as corona virus-triggered lockdowns hit jewellery demand. While

overall gold consumption fell, demand for coins and bars, known as investment demand, jumped 51 per cent in the third

quarter as rising prices attracted investors, keeping the sentiment high. In coming months bullion prices got supported on

hope of a larger stimulus to bail out the coronavirus-battered US economy after democrat candidate Joe Biden occupies

White House as the country's 46th President.

Healthy sales during a recent festival Dussehra gave confidence to Indian jewellers to continue stocking up, while more

supply started to make its way into Singapore and Hong Kong as dealers navigate around COVID-19-led bottlenecks.

NICKEL 1182.20 1192.80 10.60 1%

ZINC 190.50 210.60 20.10 11%

Y-O-Y DIWALI RETURNS FROM COMMODITIES

Commodity 28th October, 2019 10th November, 2020 Change in Rs. Change in %

Bullion

GOLD 37922.00 50500.00 12578.00 33%

Base Metals

ALUMINIUM 131.50 156.60 25.10 19%

COPPER 442.30 536.05 93.75 21.20%

LEAD 158.80 152.25 -6.55 -4%

SILVER 46034.00 63044.00 17010.00 37%

Energy

CRUDE OIL 3953.00 3058.00 -895.00 -23%

NATURAL GAS 179.50 219.90 40.40 23%

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Indians jewellers are now awaiting Diwali, Dhanteras and other festivals in November. We can witness an upswing in gold demand

in the fourth quarter on account of these festivals coupled with a busy wedding season amid post-harvest. Notwithstanding high

price and Covid shadow a good monsoon this year will boost sentiment.

On the technical front the gold price continued to rally, reaching new multi-year highs. Now gold prices has been corrected the

Fibonacci retracement of 23.6% from 56191 to 50400 level. More correction can possible if it breaks below the support level of

49200 which will attract to fall towards the Fibonacci retracement level of 38.2% , 46730 levels. The moving average convergence

Divergence (MACD) trading above the resistance line which is signaling for strong buying in medium to long term basis. The

Relative strength Index (RSI) 14 value is trading above 70 which are also signaling for buying for medium to long term basis. In

short term support is seen around 49200, break and sustain below this level can expect more downside movement towards

48000/46730 mark very soon and resistance is seen around 51700, sustainable trade above it can move again upside towards

53500/55500 respectively.

For medium to long term, we recommend buy on dip strategy, investors can make long position between 46000-48000 levels for a

longer horizon.

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Silver

Silver future at the MCX platform has settled higher at 65635 on the previous week. At present prices are trading above the weekly

50EMA levels of 60500 and also above 200 EMA levels 60000. Buying can be seen in the counter if it continue to trade above

62000 levels, which can take the counter towards 64500/66000 in near-term. If it break below the support level of 60500 levels and

sustain can see further down side movements towards 57500/55000 levels respectively which is the Fibonacci retracement of

50% from the high of 77749.

Energy

This counter reflected the actual health of world economy. Surrounded by all negative news of slowdown, trade wars, political

issues of Middle East and multiple negative numbers by many agencies amid covid-19 led slowdown and increase in production

wiped out the profit of crude prices. It couldn’t stay at higher levels and saw negative return of around 23% from last Diwali to 10th of

November this year. While, from last Diwali to 10th of October this year natural gas posted 23% return supported by lower domestic

production, supply disruption in the Gulf of Mexico, higher US LNG exports and increased heating demand amid cold weather in

some parts of the US.

Long Term Outlook

Crude Oil may trade in the range as oil prices are gaining after Joe Biden clinched the U.S. presidency and buoyed risk appetites,

offsetting worries about the impact on demand from a worsening coronavirus pandemic. Weakness in dollar index may also

support the oil prices as the dollar hit a 10-week low as investors heralded Biden’s election as U.S. president by buying trade-

exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain

easy. However, both brent and WTI benchmarks could see headwinds in November as the latest news from the pandemic front is

unlikely to give much hope to those waiting for a price recovery. Considering the perilous situation because of the resurgence in Covid-

19 cases, Saudi Arabia, Iraq, Russia, and Algeria had backed an extension of the current rate of production cuts, standing at 7.7 million

bpd. Beside this, U.S. oil production is set to climb as producers are tapping into a backlog of drilled wells left uncompleted to boost

output. On other side, U.S. President-elect Biden and his team are working on tackling the worsening health crisis. Promising news

on Pfizer’s COVID-19 vaccine which would help people resume normal life and boost oil demand and prices.

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Crude oil Future at the MCX platform has settled higher at 2766 on last week, from the previous closing price of 2642. The Crude oil

prices have been trading above the 18 days moving averages of 2870. The short term channel resistance of 2950 is already

breached on previous week and now well sustained above the 18 days moving averages of 2870. Now the next immediate

resistance is seen at 3070, sustainable trade above it will see the good move towards 3300/3500 and if it breaks the immediate

support line of 2650 will see the downside move towards 2450/2250 respectively. Overall the commodity is expected to move

higher from its support level.

Natural Gas

Natural gas Future at the MCX platform has settled lower at 214.70 on last week, from the previous closing price of 247.70. Now the

next immediate resistance is seen at 235, sustainable trade above it will see the good move towards 250/275 and if it breaks the

immediate support line of 205 will see the downside move towards 190/175 respectively. Overall the commodity is expected to

move higher from its support level.

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