Commodity Pick: Dhaniya
Dhaniya Jan: Buy
CMP: Rs 5618 (As on 04th Dec 2017)
Buy on dips: Rs 5400-5380
Targets: Rs 6000-6400
Stop loss: < Rs 5200
Dhaniya, once touted as one of the most speculative agro commodity on trading bourses, slipped into sluggish price movement amid falling volumes and lackluster trading since the start of 2016. However, there were a couple of spells of decisive movement but those were not significant to bring in a sustainable rally. Prices declined to as low as Rs 4200 per quintal in October this year, equating the bottom formed in 2012 during the same month. Meanwhile, the price crash seen in October this year proved to be a blessing in disguise as the news of a low acreage for next Dhaniya crop due in April’ 2018 coincided with low prices and turned the attention of bargain hunters who barged on it as a hot commodity.
On technical charts, we can see a very significant trend line breakout that has successfully brought the much needed daily close above the resistance line. There is a positive movement emerging in momentum indicators. RSI and MACD are well in the positive divergence with a crossover while ADX has decisively shifted in the bullish territory. Prices are also now above the strategically important ‘three bands-three base’ moving average. There is still enough time left for next crop to arrive. Fundamental reports are pointing towards a low production due to decreased acreage. This coupled with a low carryover stock due to GST implementation is likely to fuel price rise. All in all, traders are having a very good opportunity in Dhaniya which can help finish the current year with a bang!
We recommend buying in Dhaniya January contract on dips to Rs 5400-5380 for targets in the range of Rs 6000-6400. Maintain stop loss below Rs 5200.