Bullish on crude: Religare Commodities

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

Jayant Manglik , Head of Commodities, Religare Commodities , is bullish on crude. "In the immediate-term, the geopolitical situation is going to dictate prices. So, whether it is the Israel-Iran issue or militant attacks in Nigeria, it is all on the price radar. On the supply front, there have been sandstorms in the Northern Gulf, which has disrupted oil exports temporarily. Supplies also seem to be tight as far as the expected inventory data is showing. It looks like crude is moving in a range. But because the trend is bullish, we are putting a buy on crude oil, just as soon as it breaks above a certain level."

 

Excerpts from CNBC-TV18's exclusive interview with Jayant Manglik:

 

Q: Crude prices are not going anywhere. What are your thoughts on crude?

 

A: The trend is still bullish. In the immediate-term, the geopolitical situation is going to dictate prices. So, whether it is the Israel-Iran issue or militant attacks in Nigeria, it is all on the price radar.

 

There is nothing to say on the demand front because it just doesn't seem to be falling. Even on the supply front, there have been sandstorms in the Northern Gulf, which has disrupted oil exports temporarily. Supplies also seem to be tight as far as the expected inventory data is showing.

 

It looks like crude is moving in a range. But because the trend is bullish, we are putting a buy on crude oil, just as soon as it breaks above a certain level, which is Rs 5,930. We are targeting Rs 6150, which really means a new high for crude.

 

Q: It is not too bullish for gold because that really hasn't been able to stay above USD 900/oz for very long successfully?

 

A: That is true. The immediate factor is going to be Fed rates, which everyone expects to remain unchanged. A lot is going to depend on that. Crude prices are also firm, which in turn is holding up the price of gold.

 

It is moving in a band. We expect it to continue to trade in a band. Currently, we could have a call when the price moves above Rs 12,420. That will be a breakout. We could have a target of Rs 12,600, but with a strict stoploss of Rs 12,330 per 10 gm.

 

Q: The Mandi for red chilli at Guntur has opened after nearly a month. What kind of trades are you witnessing there, what levels would you give to traders now?

 

A: For chilli, the trend is bearish because trading activity is low mainly because exporters are away. Arrivals are also pretty high. So, there is a pressure on prices in the immediate-term. We are actually putting a sell on chilli August at Rs 5,350, with a target of Rs 5,260 which could come pretty quickly.