Commodity market euphoric post US Fed meet: Narne

Kishore Narne of Anand Rathi Commodities told CNBC-TV18 that the commodity market is in a euphoric mood and primarily beneficiaries of this will be gold and silver.

Narne said, "It is a euphoric mood and certainly this will be boosting a lot of liquidity caused asset bubbles. Primarily beneficiaries will be gold and silver specially silver being a high beta commodity."

Below is the verbatim transcript of the interview

Q: What is the general mood in the commodity market after what you heard from the US Fed overnight?

A: Certainly, it is a euphoric mood and certainly this will be boosting a lot of liquidity caused asset bubbles. Primarily beneficiaries will be gold and silver. Silver being a high beta commodity, obviously it is reacting too much to the current situation.

But I would like to warn today at least because there have been a huge rally over the last two weeks and also yesterday. We should be looking to buy on dips rather than buying on current levels. Risk-reward ratio is not in favour of any traders at this point of time. So, probably even both in gold and silver, I will be looking for slight dips.

Probably on intraday Rs 64,900 per kilogram kind of levels on silver should be good levels to buy for targets close to Rs 65,800 or 66,000 per kilogram on a short-term.

Gold, I think around Rs 32,200-32,180 per 10 gram are good levels to buy for short-term again. For medium-term to long-term investors, I would advise to wait out, maybe let this euphoria settle down and then slowly lower bargain hunting.

Q: You are already seeing some signs of profit taking in gold in early trade today?

A: Yes, because the markets are being discounting this for a while now. There is a positive surprise. But still, I think markets have already rallied too much. So, probably we will see a good decent profit taking right now because the news is already out in the market.

Also the rupee, which is pretty strong against the dollar, would be causing some more weakness in domestic markets.

Q: What do you do with base metals which are starting the day quite strong on the back of QE3, things like copper?

A: Copper, on the supply situation, is fundamentally strong metal. But otherwise, on the demand side, it is still not very attractive. If you look at the copper demand in China or imports, they have been pretty dismal. But again, it has a good technical breakout now.

Probably, Rs 456-457 per kilogram kind of level should be a good buying level for short-term targets of Rs 465-464 per kilogram. So, one could look at a stop loss of Rs 453 per kilogram and keep buying on dips.