Commodity Radar: Zinc under consolidation after 22% surge over a year. Time to buy or book profits?

Zinc prices rallied 2% in the domestic markets hitting the day’s high of Rs 332 on the MCX riding on favourable global cues. The base metal witnessed some consolidation on account of Chinese Lunar New Year holidays but is expected to get back into action once markets open. The limited supply vis-a-vis demand is expected to support prices and trigger the next leg of rally.

Decoding the recent consolidation in zinc prices, Ajit Mishra, Senior Vice President - Research at Religare Broking, said the short-term consumption prospects have reduced following closure of Chinese markets on account of the Lunar New year holidays.

Zinc has been consolidating within the 319-332 range, he said.


Over the past month, zinc's price has risen approximately 2% on the LME and is up nearly 22% when compared to the same time last year.

The price surge is mainly on account of limited availability factors and robust demand outlook, which should continue to support the market moving forward.

In his view, momentum will return in the next few days once the Chinese markets open.

Technical outlook

Decoding the charts, Mishra said MCX zinc could sustain above the strong support points, despite weakness in the other base metals segment especially copper.

“This clearly indicates persistence of positive tone in the Zinc market. The weekly charts convey the possibility of reasonable gain from current levels, as long as the daily closing remains above the 322 support,” the Religare analyst said.

Zinc trading strategy

Mishra expects the upward trend to continue. His premise is based on zinc prices currently trading significantly above the key exponential moving averages.

He suggests maintaining buy on dips strategy for targets of Rs 334-336 with closing stop loss of Rs 319.

Also read: Commodity Radar: Gold offers up to Rs 3,400 upside this week. LKP Securities expert lists 5 technical indicators in support

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)