After retracting sharply from the high of ₹325.4 in early March, the continuous contract of aluminium on the Multi Commodity Exchange (MCX) remained subdued in the first half of the month. Nevertheless, the price band of ₹255-260 offered good support, preventing decline below these levels. Given that the major trend remained bullish, the contract resumed the uptrend, although the rally has been at a slower pace compared to the fall. It went past an important level of ₹285 and is currently hovering around ₹287.

Related Stories
High aluminium prices globally to benefit Indian producers
Domestic firms source most of their raw materials locally
READ NOW

Going forward, the contract is expected to stretch the current rally in the upcoming sessions. Supporting the positive bias, the cumulative open interest (OI) of aluminium futures on the MCX increased to 3,344 contracts on Friday as against 2,482 contracts by mid-March, when the contract bottomed out. A price rally, accompanied by increase in OI, indicates long build-up. The contract has the potential to rally past ₹300-mark and touch ₹325. But there could be a pause at ₹310 as it can be a hurdle for the bulls.

We advised to go long at ₹300 and at ₹275 in early March and mid-March, respectively. Based on our recommendation, the revised stop-loss would now be at ₹270. While one can remain bullish, traders can consider rolling over from March to April contract. But maintain the stop-loss at same level of ₹270. With respect to exit, liquidate half of your total long positions at ₹310 and tighten the stop-loss to ₹290. Exit the leftover longs at ₹325.

Related Topics
comment COMMENT NOW