'Event-risks from Europe only dampener to commodity uptick'

Excerpts from Markets Midday on CNBC-TV18 Watch the full show »

T Gnanasekar of Commtrendz spoke to CNBC-TV18 about the trend he sees in asset classes other than equities. He sees Nymex crude and gold moving higher, and says that event-risks abroad may also pull along euro to higher levels.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: How much higher does crude move from here?

A: It's been holding on pretty well in this range between USD 95 and USD 100 per bbl for some time, and technically, it's building itself for some kind of a big move. I think anywhere close to USD 105 per bbl in the very short-term and possibly higher. Fundamentally I don't see any big factors helping such a move, but technically, it looks like Nymex crude can achieve those targets of USD 108-110 per bbl in the near-term. I think its going to be a technical move for crude.

Q: In that case how do you play it in India on the MCX?

A: Right now, its somewhere close to Rs 5,000 per bbl, the near month contract. Our sense is that it can go as high as Rs 5,150-5,200 per bbl on the upside. So one can buy it on any dips from here to Rs 4,985-4,975 per bbl levels with a stop at Rs 4,920 per bbl and a possible target of Rs 5,200 per bbl.

Q: What about gold, that's singularly not participating in this liquidity rally, is there a sell there?

A: No, the weakening in dollar is going to support precious metals going forward. We do have medium-term targets of USD 1,850-2,000 per ounce again, but the only dampener could be rupee appreciation. So we won't see domestic prices rising much higher, but it could rise to somewhere close to Rs 29,000 per 10g at least in the near-term to short-term. There are a lot of positive factors, the only downside risk at this point in time is the event risk in Europe and if that doesn't take place, gold is headed higher.

Q: This event risk in Europe that you are talking about, that would also hold true for some of the currencies, the euro for example, what kind of levels should we be looking out for over there?

A: Technically it looks like it can scale up higher. We have seen the way it has somehow chug through all these crises inching higher, but if you look at the other things which are lined up - you have other countries coming up with similar problems, its not looking very rosy for euro going forward. So it will be in some kind of a tight range between 1.3 to 1.34. It will play out for some time till all these crises settles, so that's the view for euro, and therefore, it could have a positive effect on rupee, meaning, rupee could depreciate by holding at these levels to close to 50 again.

Q: For MCX rupee dealer, what is the commodity that you are most bullish on? Where are gains more likely?

A: With the way precious metals are looking, I would bet mostly on silver because technically, its consolidating beautifully for a big move and it has underperformed over the last one year compared to gold. With some strength coming out of the US economy, the data which has come out from the US and even the emerging markets, the way interest rates have been cut, all this is positive for silver. So we have a target of close to Rs 62,000 in the short to medium-term. We are somewhere close to Rs 56,000 now. I think one can build the position from hereon, right up to Rs 55,700 with a stop at Rs 55,200 and a potential target of Rs 60,000.