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The Zinc futures contract on the Multi Commodity Exchange has fallen sharply since the beginning of this month.
The contract hit a high of ₹211.15 per kg on December 1 and has tumbled about 6 per cent since to a low of ₹198.55 on Friday. The contract has bounced slightly from this low, and is currently trading around ₹201 per kg.
The immediate outlook is mixed. The price action in the coming days will need a close watch, as that will be the key to determine the next move for the contract.
Traders can stay out of the market until a clear trend emerges.
The region between ₹198 and ₹199 is a crucial support. If the contract manages to sustain above this support zone and gains momentum, the downside pressure may ease. In such a scenario, a relief rally to ₹206 or ₹208 is possible in the coming days.
On the other hand, if the MCX-Zinc futures contract breaks decisively below ₹198, the selling pressure will increase. This can drag the contract lower to ₹195 or ₹193 thereafter. Such a fall might keep the contract under pressure for a prolonged period.
The region between ₹200 and ₹202 will act as a strong resistance and can cap the upside. In that case, there is a strong likelihood of the contract extending its down-move to ₹190 or even to ₹187 in the coming weeks.
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