Buy Mentha oil futures, advises Karvy

Karvy's report on mentha oil

Review and Outlook:

Yesterday, Mentha oil spot prices at Sambhal and Chandausi regions rose by Rs.825/Kg and Rs.880/Kg respectively, higher by Rs.5/Kg from its previous day close. In meantime, spot prices at Barabanki mandis quoted at Rs.830/Kg remained unchanged. The arrivals were dull, similar to the arrivals over the last few days, hovering near 120-130 drums across the major physical markets of Uttar Pradesh. Since, the beginning of the session, mentha oil futures prices traded on a positive note. No fresh cues noticed from spot markets. Hence, mentha oil futures prices ended on a negative note, down by 0.22% from the previous session. Mentha oil February futures prices are expected to extend the positive trend on lower level buying. Spot market activity is remaining stable with no fresh cues from markets. Following the rise in prices, farmers are not ready to sell their produce at lower rates. Hence, they are restraining from selling in anticipation of further rise in prices. That might support mentha oil prices in near term. According to derivative analysis, prices and open interest have declined while volumes have increased. It is an indication that market is running out of traders, who are willing to open or hold positions. Therefore, looking at the overall factors, we recommend buying mentha oil in today’s trading session.

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