Energy

MCX crude moved above Rs.3,800 per barrel level today tracking the upturn movement on international exchange. Nymex crude edged up and breached $97 per barrel in the electronic trade session today after registering a 1.3% leap in the previous session which marked its first rise in four trading sessions.

· Militant activity has already affected 20% of oil exports from Nigeria since 2006. MEND, the main militant group in Nigeria, had earlier said that its goal remains to paralyze 100% of Nigeria's oil exports in one swipe.

· As per Dow Jones newswires, Reuters reported Tuesday that armed groups are stockpiling weapons and supplies in preparation for a major attack on an oil facility in Nigeria.

· Also in the background are tensions between US and Iran, an Opec member state. Tension rose last weekend as Iranian boats harassed and provoked three U.S. Navy ships in the Strait of Hormuz threatening to explode them.

· US President arrived in Israel today initiating his trip aimed at refreshing stalled Middle-east peace talks and for pressing the need to keep a check on Iran. Ahead of the arrival of US President, Palestinian militants fired 12 rockets and shells towards southern Israel, as reported by Dow Jones newswires. Earlier today Israeli forces had hit Palestinian militants firing projectiles from three points in the Gaza Strip.

· US has continued to press for a third round of UN sanctions on Iran for its stand on continuing its nuclear research even as a US intelligence report noted that Iran has halted weapon develpment development program in 2003.

Weekly Inventory Data:

· US crude inventories fell much further than expected in the week to Jan 4 and are in the lower half of the average range for this time of year, according to the US Energy Information Administration.

· Crude stocks dropped by 6.8 mln barrels, far more than expectations for a drop of 1.2 barrels. But Distillates stocks, which include heating oil, rose by 1.5 mln barrels, confounding expectations for a rise of just 100,000 barrels.

· Heating oil is in focus as the peak winter demand period begins. Meanwhile, gasoline stocks rose by 5.3 mln barrels, well above the forecast for a 1.5 mln barrel increase.

· Turning to refineries, the EIA said they operated at 91.3 pct of their capacity, up 0.9 percentage points from 89.4 pct in the previous week. Analysts had expected refinery runs to rise by 0.2 percentage points.



MCX Crude Oil Jan (Daily Chart)



Technical Outlook:

Momentum studies have turned bullish; will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are increasing from over sold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 18-day EMA. The downside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Crude Oil Jan: sell at 3790-3800 for target of 3750 and 3720 with stop loss below 3825



MCX Natural gas Jan (Daily Chart)



Technical Outlook:

Momentum studies have turned bullish; will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are increasing from over sold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 18-day EMA. The downside closing price reversal on the daily chart is somewhat positive.

Recommendations:

MCX Natural Gas Jan: Sell at 322-323 for the target of 315 and 311 with stop loss at 326

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Base Metals

Copper turned down after trading at the highest level of Rs. 292.65 per kg on MCX Feb Contract. Copper trades upbeat on Multi Commodity Exchange lifted by the positive sentiments in gold. Also the complex was bolstered by the index re-balancing in international markets. Zinc Jan registered at high of Rs. 102.60 per kg and closed with loss similarly Nickel Jan closed with loss after registering a weekly high of Rs. 1203 per kg.

· A stellar debut for gold futures traded on the Shanghai Futures Exchange Wednesday marked pent-up investment interest by China - the world's third largest gold consumer - and analysts said the expectation of a sustained bull run might encourage more follow-through buying.

· Although the premium in China can be a positive cue to drive prices up in other bourses, observers said enthusiasm alone won't guarantee any shortcut for the market to "have a say" on global prices, as some domestic players hope.

· BHP Billiton Ltd., the world's biggest mining company, may win a reduction in copper processing fees from Japanese smelters next week after cutting the amount paid toChina, analysts including Atsushi Yamaguchi at UBS AG said.

· Japan bought 4.6 million tons of copper concentrate for the first 11 months to November, according to the finance ministry's trade data. Japan's purchases compared with China's total imports of 4.1 million tons in the same period last year.

· Pan Pacific imports 1.8 million tons to produce 600,000 tons of refined copper a year. Sumitomo Metal Mining imported 1.35 million tons of copper concentrate last year.

· Energy, industrial metals and agricultural commodities rallied yesterday as the dollar fell, increasing the demand for alternative assets. The dollar fell on concern a housing slump and turmoil in U.S. credit markets may force the Federal Reserve to cut interest rates.


MCX Copper Feb (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Copper Feb: Buy at 283-284 for the target of 290 and 294 with stop loss at 276.50



MCX Zinc Jan (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Zinc Jan: Sell at 99.50-99 for the target of 96 and 94 with stop loss at 101.50



MCX Nickel Jan (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Nickel Jan: Sell at 1160-70 for the target of 1130 and 1105 with stop loss at 1190

MCX Lead Dec (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations:

MCX Lead Jan: Buy at 103-102.50 for the target of 106.15 and 108.50 with stop loss at 101.80

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Bullion

Gold advanced to a record and energy, metals and agricultural commodities rose as a weakening dollar sparked demand for alternative assets.

· MCX Gold Feb traded on a positive note and Wednesday and registered a hig of Rs. 11229 per 10 gram, closed with gains, similarly MCX Silver March followed the trend and registered a high of Rs. 20810 per kg also closed with gains.

· Gold, copper and nickel are off to the best start since at least 1980. Crude oil gained, after reaching a record $100 last week, and corn climbed to an 11-year high. The dollar fell on concern a housing slump and turmoil in credit markets may force the Federal Reserve to cut interest rates. U.S. Treasuries and equities also declined.

· China's gold futures advanced as much as 10 percent on the first day of trading as the world price of the metal climbed to a record on a weak dollar and concern rising energy and food costs will spur inflation.

· ETFs enable investors to bet on price changes without having to trade futures or take delivery of commodities. The global gold price gained 31 percent in 2007 on a declining dollar and concern the U.S. would cut interest rates to avert a slowdown. Gold has more than tripled since 2000.

· Militancy inNigeria does not pose a serious threat to oil supply at the moment and the country's output is actually returning to normalcy, a Nigerian OPEC official told

· The World Gold Council [WGC] is considering listing a gold exchange traded fund inDubai to tap into booming investment demand in theMiddle East, a WGC executive said Wednesday.

Indian Bullion Spot Market

Gold and Silver prices soared in spot markets driven by the rally in international markets. There was fund buying in the precious metals complex amidst concerns over the state of affairs of theUS economy.

MCX Gold Feb (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations: MCX Gold Feb: Sell at 11140-11150 for the target of 11080 and 11000 with stop loss at 11175



MCX Silver Mar (Daily Chart)



Technical Outlook:

Momentum studies are still bullish but are now at overbought levels and will tend to support reversal action if it occurs. The daily stochastics have crossed over up which is a bullish indication. The stochastics indicators are rising from oversold level, which is bullish and should support higher prices. The market's short-term trend is positive as the close remains above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative.

Recommendations: MCX Silver March: sell at 20380-400 for the target of 20200 and 20060 with stop loss at 20510

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OUT LOOK

February gold posted a downside reversal due to profit taking on Wednesday as it consolidated some of this winter's rally but
remains above monthly resistance crossing at 874.00. The low-range close sets the stage for a steady to lower opening on
Thursday. Stochastics and the RSI are overbought but remain neutral signaling that sideways to higher prices are possible near-
term. If February extends this winter's rally, Monthly resistance crossing at 900.00 is the next upside target. Closes below the
10-day moving average crossing at 855.60 would signal that a short-term top has been posted. First resistance is today's high crossing at 894.40 then monthly resistance crossing at 900.00. First support is the 10-day moving average crossing at 855.60
then the 20-day moving average crossing at 832.10.

March silver posted a downside reversal on Wednesday and as it consolidated some of the rally off December's high but
remains above the 75% retracement level of the November-December decline crossing at 15.768. The low-range close sets the
stage for a steady to lower opening on Thursday. Stochastics and the RSI are overbought but remains neutral to bullish
signaling that sideways to higher prices are possible near-term. If March extends the rally off December's low, November's
high crossing at 16.445 is the next upside target. Closes below the 20-day moving average crossing at 14.818 would confirm
that a short-term top has been posted. First resistance is today's high crossing at 16.270 then November's high crossing at
16.445. First support is the 10-day moving average crossing at 15.260 then the 20-day moving average crossing at 14.818.

March copper closed lower on Wednesday as it consolidated some of the rally off December's low and closed below the 50%
retracement level of the October-December decline crossing at 330.22. The low-range close sets the stage for a steady to lower
opening on Thursday. Stochastics and the RSI are becoming overbought but remain neutral to bullish signaling that sideways to
higher prices are possible near-term. If March extends the rally off December's low, the 62% retracement level of the October-
December decline crossing at 340.79 is the next upside target. Closes below the 20-day moving average crossing at 307.64
would confirm that a short-term low has been posted. First resistance is today's high crossing at 337.85 then the 62%
retracement level crossing at 340.79. First support is today's low crossing at 325.90 then the 38% retracement level of the
October-December decline crossing at 319.65.

February crude oil closed lower on Wednesday as it consolidates below the 10-day moving average crossing at 96.83. The low-
range close sets the stage for a steady to lower opening on Thursday. Stochastics and the RSI are bearish signaling that
sideways to lower prices are possible. Closes below the 20-day moving average crossing at 94.37 are needed to confirm that a
top has been posted. If February renews last week's rally above November's high crossing at 98.12, upside targets will be hard
to project now that February has traded into uncharted territory. First resistance is last Thursday's high crossing at 100.09.
First support is Monday's low crossing at 94.47. Second support is the 20-day moving average crossing at 94.37.

February Henry natural gas closed higher on Wednesday and above the 50% retracement level of the November-December
decline crossing at 8.010. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are
overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If February extends this
week's rally, the 62% retracement level of the November-December decline crossing at 8.260 is the next upside target. First
resistance is today's high crossing at 8.200 then the 62% retracement level crossing at 8.260. First support is the 50%
retracement level crossing at 8.010. Second support is the 38% retracement level crossing at 7.759.

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GENERAL MARKET CONDITIONS

There was some mild profit taking in gold and silver while crude oil once again consolidates between $90-$100 a barrel. Base metals are caught between a fight between bulls and bears. Bulls are the one who expect the US economy may not move into recession while the reverse for the bears. There is a tug-o-war going on in base metals. Technical picture for all base metals is neutral to marginally bullish. As far as gold and silver are concerned there are in a consolidation phase before the next leg higher. There are more buyers at lower levels than sellers. Those who are short have started to exit their short positions.

Markets will be looking forward to the bank of England and the European central bank (ECB) meeting today. Interest rates are expected to be unchanged by both banks but the Bank of England is expected to cut interest rates in a future meeting while ECB may raise interest rates if inflation rises further. Day traders can buy gold and silver on dips using higher stop losses. Long term investors should wait for a mild correction and then invest.

GOLD -- FEBRURAY FUTURE -- INTRA DAY PIVOT:$872.0

Gold may consolidated between a $870-$900 range for a few days before the next leg higher if the rally is to continue. In the short term as long as holds holds $851 it will target $938.

NYMEX CRUDE OIL -- FUTURE -- INTRA DAY PIVOT: $102.0

Failure of crude oil to break $102 will result in a fall to $92 and $88. A consolidated break of $102 will result in $112.0

MCXARUN
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