Financial Daily from THE HINDU group of publications
Monday, Aug 25, 2003
Agri-Biz & Commodities
Rubber may remain range-bound
Kottayam , Aug. 24
AN uptrend in rubber prices was witnessed last week with almost all grades recording gains against previous week's closing prices. RSS 4 which closed at Rs 46.75 last week, opened at Rs 48.00 on Monday. Later on Thursday the grade touched an intraday high of Rs 50 before closing at Rs 48.75 per kg on Friday.
The buying during the week originated from the books of major buyers including the tyre sector and the covering group. The declining stocks might have tempted the industrial giants to activate the buy signals.
The widening gap between the demand and supply positions due to sustained export oriented buying during the past few weeks while the arrivals were low extended strong technical support to an uptrend and the market reacted positively to the covering on Thursday.
Profit booking from the traders who were waiting to sell at higher levels pruned the gains at the weekend and the market retreated after hitting the Rs 50 barrier on Thursday.
Futures market opened with a bullish note on Monday and continued to surge ahead with its September contract ending sharply up by two percent on Wednesday, registering a record turnover of 1280 tonnes. The much sought after correction in anticipation of better supplies and TOCOM losses appeared near the weekend. The benchmark December contract ended higher at Rs.48.14 per kg
The weather being a major concern in the Asian rubber trade, its impact will continue to influence rubber prices.
The domestic rubber supply is still under pressure due to unfavourable climatic conditions.
Both SICOM and TOCOM are still in an over bought condition and a correction could be expected amidst lack of favourable factors. The spiral effect between these two markets would impact the domestic rubber prices and with limited downside risk, market is likely to be range-bound next week.
Sentiments seem positive, long term prospects look bright, and the undertone bullish. So the market might try to break the psychological resistance level of Rs 50 and any close above this level would further firm up prices.
However, a cautious trade is suggested.
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