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Turmeric prices have gained momentum over the last three trading days. The turmeric futures contract on the National Commodity and Derivatives Exchange (NCDEX) which was stuck in a sideways range between ₹7,200 and ₹7,500 per quintal almost all through the month of August, has risen sharply breaking the above ₹7,500 on Friday. The contract has surged about 6 per cent since Thursday and is currently trading at ₹7,760 per quintal. Restricted arrivals in the physical market, lower acreage and deficient rainfall in the major growing areas has lifted the turmeric prices higher. Expectation for a good domestic as well as export demand is also supporting the price rise.
Outlook The NCDEX-Turmeric futures contract was in a strong downtrend for a prolonged period of time since December 2015. This long-term downtrend came to a halt at a low of ₹5,234 in May this year. But, the contract has reversed sharply higher from this low, signalling a trend reversal. It made a high of ₹7,886 in August and reversed lower again. However, this pull-back move lacked strength and the contract has reversed higher again after a brief sideways consolidation. The strong bounce back move in the last few days reflects the strength in the contract. It also indicates the absence of strong sellers to pull the contract further lower.
The outlook is bullish. Resistance is in the ₹7,950-₹8,000 region. A strong break above ₹8,000 will increase the likelihood of the contract extending its upmove to ₹8,500 or ₹8,600 thereafter. Inability to break above ₹8,600 can trigger a pull-back move to ₹8,000 once again. But a strong break above ₹8,600 will pave way for the next target of ₹9,000 or even higher levels.
Key support for the contract is at ₹7,200. The outlook will turn negative only if the contract declines below this support decisively. In such a scenario, the contract can fall to ₹6,850 or ₹6,750. However, such a sharp fall looks less probable at the moment.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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