Stocks slide, technicals drag commodity prices

MUMBAI: Several agri-commodities hit the lower circuit on the Ncdex futures counter on Friday. This was because of reasons like a technical correction, fall in the stock market, higher inflation and bearish fundamentals. All spices, edible oil complex, sugar, chana, maize and kapas dipped by around 4%.

According to analysts, a significant movement in a few commodities like the edible oil complex and chana had triggered the surge leading to a correction.

Jayant Manglik of Religare Commodities said that a 5% inflation contributed to the fall amid fears that the government might again clamp down on the futures trading. Inflation touched a 10-month high driven by prices of food items like fruits, vegetables, milk and cereals. Also, the 3.4% fall in Sensex caused some traders to square off their positions to meet the mark-to-market margins in equities.

According to Kishore Narne of Anand Rathi Commodities, stocks contributed 10-20% of the fall in the commodities market.

���Arrivals of most of the rabi commodities like chana, mustard seed and spices like chilli, jeera and turmeric begin after the festival of Maha Shivratri, which was on Thursday, and that caused the fall in prices,��� Mr Narne said.

Meanwhile, the edible oil complex fell due to a 6% fall in the global palm oil futures on the Malaysian exchange following weak demand from China; domestic arrivals of mustard crop also fuelled bearish sentiments.

According to Faiyaz Hudani from Kotak Commodities, pepper prices slipped taking cues from lower prices in Brazil and Indonesia. He said jeera and chilli hit the low circuit due to arrival pressures.