Maximize Your Investment: Sell Zinc Futures with Insights from The Hindu BusinessLine
Zinc futures have experienced a notable decline since the beginning of the week, with the June contract trading at ₹356 per kg and the July futures at ₹353, reflecting a discount. The imminent expiration of the June futures on June 30 has shifted the focus to the July contract, which has struggled to break through a resistance level of ₹370 for over a month. This sideways price action has led to diminished bullish momentum and increased bearish pressure, resulting in a breach of the support level at ₹355 on Wednesday. Additionally, the price has slipped below the crucial 50-day moving average, indicating potential further downside.
The current price movement is driven by a combination of factors, including a prevailing global oversupply of zinc, coupled with weakening demand indicators from key consumer markets. As supply chains remain disrupted and global economic growth shows signs of deceleration, the demand for industrial metals like zinc has softened. Geopolitical tensions and uncertainties, particularly in regions critical to zinc production and exportation, have further exacerbated the bearish sentiment in the market. Traders are now facing the reality of market conditions that favor price corrections, and the recent breach of important technical levels reinforces this outlook.
In the short term, the market sentiment remains bearish, and traders should prepare for potential price movements targeting the ₹340 level. While a bounce-back to the ₹358-360 range is plausible, the overall trend suggests a renewed downward trajectory. As such, fresh short positions can be recommended, based on the recent support break. A strategy to sell the July zinc futures at ₹357 with a stop-loss set at ₹363 is prudent. If the price declines to ₹345, revising the stop-loss to ₹350 will help secure the position as profits can be realized when reaching ₹340.
Source: Market Source
(Expert Note: This report was independently prepared by the Wealthova Commodities team.)