Investors flocked towards the risky assets yesterday amid the Central banks coordinated plan to lower the cost of dollar liquidity, China reserve requirement cut and encouraging US economic data. Central banks expanded the emergency measures but still the Europe continues its battle to shun off the debt crisis, as it requires a bigger bailout fund.
Meanwhile metals demand from carmakers in Germany is likely to increase in the next few months at least in the first quarter as car sales to developing countries continued to grow.
BMW and Volkswagen both reported robust vehicle sales growth in October as demand from abroad, China in particular, offset a slowdown in Western Europe. Volkswagen group expected 2011 will be its best year so far as it forecasts it will sell at least a record 8 million cars this year, up from 7.2 million in 2010.
The dollar index edged down by 0.04% at 78.35 against the basket of 6 major currencies as the improved risk appetite still weighed on the dollar.
Other metals in domestic market at MCX, Nickel for delivery in December was drooping by 0.16% or Rs 1.5 at Rs 908.3 per kg. Aluminium was trading lower by 1.01% or Rs 1.1 at Rs 108 per kg and Lead was declining by 1.01% or Rs 1.1 at Rs 107.85 per kg. MCX Zinc was weakening by 1.64% or Rs 1.75 at Rs 105.15 per kg.
Base metals were trading in sideways with negative bias on Thursday with a mild retreat as the China PMI fell to 49 in November from 50.4 in October.
Comex Copper future for the most active March contract was trading at $3.564 a pound, down 0.32% (1 cent). SHFE Copper future for most active February 2012 contract settled at 57860 yuan per tonne, up 5.41% (2970 yuan). Likewise at MCX, Copper for delivery in February was receding by 0.62% or Rs 2.56 at Rs 407.35 per kg.
Currently investor's focus is on the Spain and France bond auctions, as well as PMI data from US and UK, which is ensued to be released today. However investors were also latched onto the key European meeting on Dec 9 to see whether euro zone policymakers will follow through.
But, the Central banks moves to lower the cost of dollar funding, China reserve requirement cut and encouraging unemployment data still remained in the market and cramping the metals from its huge fall.
The dollar index was steady at 78.23 against the basket of 6 major currencies as the improvement in the risk appetite for risky assets is pressuring the dollar.
Other metals in the domestic market at MCX, Nickel for delivery in November tested a high of Rs 915.4 per kg and low of Rs 893.3 per kg in intraday and is now trading at Rs 895.8 per kg, down 1.54% or Rs 14. Zinc was easing by 1.22% or Rs 1.3 at Rs 105.6 per kg. Aluminium was also trading flat at Rs 108.45 per kg and MCX lead was also flat at Rs 108.55 per kg.
Indian Black Pepper futures extended the gains for the fourth consecutive trading sessions lead by short covering amid strong spot demand against the restricted arrivals.
As per the latest updates from a leading trader in the state of Kerala, despite the weak export demand on the back of financial crises in Europe and US, the domestic demand for the spice is very good ahead of the winter season in north India and Christmas season in Kerala. However, the arrivals in the market dropped down in Kerala due to the on going agitation for demanding decommissioning of the Mullaperiyar dam in the Idukki district.
According to the survey by Directorate of Cocoa, Arecanut and Spices Development (DASD), Indian pepper output during the new crop season (2011-12) is estimated to be around 43,000 tonne, which is lower by around 5,000 tonne than the previous crop. Both trade and government sources are of the opinion that the new crop would be lower due to disease and neglect.
According to International Pepper Community's revised production estimates, the total production of pepper in 2011 is again lower by 17,230 mt to 3,18,000 from 3,35,230 in 2010. The annual world demand for pepper is consistently growing and reached a level of around 350,000 tons.
The Ncdex tips in pepper for the December delivery spurted Rs 420 per quintal to the session high of Rs 35655 per quintal. The contract ended at Rs 35460, up by Rs 235 or 0.62%over the last close. The open interest dipped more than 3% over the last day, indicating short covering.
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