Natural rubber price sees a rising trend
The market is likely to remain volatile due to the expiry of May series futures & options contracts and also investor's focus now shifting to macroeconomic numbers, corporate earnings and global cues.
According to technical analysts, while the sentiment is on the bulls' side, breaking the high might be difficult. If there is any breakout, 13,000 levels might be the next targets and on the other hand, breaching below 11,590 might help the bears to push the price further down. The immediate support would be at 11,000 levels.
To continue the uptrend, the market has to close above the recently made lifetime high which is
12,040 level. If it happens, the price may touch the
13,000 mark.
On the breaching
11,614 levels downside, below the would help bears to retest the 11,250 mark. Technical indicators are showing positive sentiment.
Last week clearly saw the 'Mid-Cap' index moving up which was in a last phase of its time as well as price wise correction.
"Volatility will eventually come down and rationality will prevail. Benchmark indices might not give any direction next week but could face mild downward pressure and Indian markets will finally align with the global mood. As of now, a wait and watch approach should be followed by markets atleast till the Monetary Policy and Budget announcement by the newly elected Government, which might be a game changer," says Jimeet Modi, Founder & CEO, Samco Securities.
Investors must ideally avoid the large-caps as they are in the overvalued zone while selective beaten down the mid-cap and small-caps could be bought into, analysts said.
According to analysts, the market has already seen the mid-cap making a good leap from lows and expect further legs to unfold, which will eventually bring cheers to lot of investors.
"Going ahead, we may not see the similar kind of outperformance from previous index drivers and the focus is now likely to shift on mid-cap and smallcap universe as we expect the party to begin after a long underperformance," says Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking.
Although Indian indices attained new highs, certain sectors conspicuously were weak. FMCG, IT, metals and auto did not participate in the sentimental rally. That being the case, if these sectors cannot rally now when everything is up when else will they! Therefore, these four sectors are unlikely to run-up. On the other hand, PSU banks were the star performers during this quarter giving an indication that their time has come in Modi era-II.
The market, experts said, will move based on earnings visibility, economic policies and global sentiments and how their impact will be on corporate earnings will be the real guiding factor for the market in the long-run.
The market will be closely watching the fourth quarter GDP numbers expected on Friday. In fact, the country's GDP growth slipped to 6.6 per cent in third quarter of FY19. The economy had grown 7.1 per cent in the second quarter and 8.2 per cent in the first quarter, logging 7.6 per cent for the first half. Nearly a month ago, the price of premium grade ribbed smoked sheet (RSS4) in India was Rs 128 per kg on an average. This has now moved up to Rs 134 per kg. And many analysts think that the price of natural rubber has bounced back and this trend will continue for some time now. Mind you, when it comes to natural rubber (NR) production, the month of May is normally considered to be a lean period. But this time round, there is a tangible spiral of demand for NR from domestic stockists.
Given the bright price prospects, rubber production in the next year's peak season, may go up even further. At least that's what the Indian Rubber Growers Association feels. And not just production, rubber growers expect the price of
RSS-4 to go up well above Rs 142 per kg by Mid-June. This is notwithstanding the fact that India's NR production has shrunk, by nearly one-third, from 9 lakh tonne in 2008-2009 to 6.42 lakh tonne, in 2018-19.
Interestingly, the Rubber Board, meanwhile, has set a target of raising domestic production to nine lakh tonne in 2019-2020.The Rubber Board is also working on a package of production incentives, that would win back the confidence of the small farmers, who are the majority in rubber sector. In fact a large section of the rubber growers are already back to replanting of rubber sapling, getting the bounce-back signal. Earlier, thanks to poor price realisation, small holding farmers had even been abandoning tapping operations on their rubber trees.
Some analysts pointed out that arrivals remained weak due to lack of tapping in high temperatures. For instance, supply remained weak as tapping in Kerala's key growing areas has been halted since midMarch due to high temperature which is likely to continue till May-end. And this supply tightness is likely to continue for some time now-- at least for another month or so, analysts said.
Going by the traders' expectations, in the days to come, the price of natural rubber in key markets of Kerala is likely to rise further, thanks to robust demand from stockists amid the ongoing supply crunch in the market.