The Guar Seed futures contract on the National Commodity and Derivatives Exchange (NCDEX) surged in the beginning of the year to a high of ₹4,737 per quintal in February. However, it failed to sustain and has plummeted over 21 per cent to the current level of ₹3,724 . Increased arrivals and a weak spot market demand have pulled the prices sharply lower.

The outlook for the NCDEX-Guar Seed contract remains bearish. Though there is an immediate support near current levels in the ₹3,715-3,700 region. If the contract manages to sustain above this support zone, a range bound move between ₹3,700 and ₹3,900 is possible for some time. However, the bias will continue to remain bearish. Key resistances are poised at ₹3,900 and ₹4,000 which can cap the upside in the short term. The price action on the chart suggest that the contract is vulnerable to break below the ₹3,715-3,700 support zonein the coming days. Such a break can drag the contract lower to ₹3,400 or ₹3,350 in the coming weeks. The downside pressure will ease only if the contract breaks above ₹4,000 decisively,but this is unlikely at the moment.

Traders with a medium-term perspective can go short at current levels and on rallies at ₹3,800. Stop-loss can be placed at ₹3,950 for the target of ₹3,400. Revise the stop-loss lower to ₹3,650 as soon as the contract moves down to ₹3,600.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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