Since mid-March, the zinc futures on the Multi Commodity Exchange (MCX) has largely been moving in a sideways trend. The March series has been oscillating between ₹265 and ₹278. Over the past week, the price dropped, and the contract is currently trading around ₹268.
Going ahead, the price can rise but after a minor dip. On the downside, the contract has a strong support at ₹260 against which the contract has rebounded several times since September 2021. We expect the rally, which could be established after the contract moderates to ₹260, and can take the price to ₹300 over the next three months.
However, if the contract falls below ₹260, the outlook will turn bearish where we might see a decline to ₹242, a notable support. Subsequent support is at ₹225.
Trade strategy
As we expect the contract to soften a bid before establishing a rally, we suggest traders to stay away for now. Initiate fresh long positions in zinc futures if the price dips to ₹260. Place stop-loss at ₹245.
When the contract moves above the minor hurdle at ₹286, revise the stop-loss upwards to ₹275. Exit the longs at ₹295.