The zinc futures contract traded on the MCX has risen over 15 per cent from its low of ₹117.45 a kg recorded on March 24.

Thanks to higher zinc prices in the international market. The global market for zinc turned into deficit in 2013 for the first time after many years. The International Lead and Zinc Study Group has forecast the zinc market to remain under deficit in 2014 as well. This could keep the current uptrend in zinc prices intact.

Short-term view: The MCX-zinc futures contract is in a short-term up trend.

The pull back move from the high of ₹127.55 had found support near ₹120. The reversal then from ₹120 levels, turned the short-term outlook bullish.

Immediate support is at ₹135 and then ₹132. While the contract trades above these levels, a further rise to ₹140 looks probable in the coming days.

Short-term traders can go long now with a stop-loss at ₹134.5 for the target of ₹140.

Medium-term view: The medium-term outlook is also bullish. The contract had consolidated in the form of a triangle since August 2013. The recent rally since May has recorded a bullish break out of this triangle pattern. Key medium-term resistance is at ₹140. But the bullish triangle pattern formed has left the probability high for the contract to breach this resistance.

Such a break can take the contract higher to ₹155 – the target of the triangle pattern. So investors with a medium-term perspective can hold the long position with a stop-loss at ₹129 for the target of ₹155. They can also accumulate more long positions if an intermediate decline to ₹132 and ₹130 is seen.

The medium-term outlook will turn negative only if the contract records a strong close below ₹132. The ensuing targets on such a break will be ₹125 and ₹121.

Note: Price as of 6 PM on Tuesday. The recommendations are based on technical analysis. There is a risk of loss in trading.

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