Take me to PDF file - Online Share Trading

Kunal Shah,
Head of Commodity
Research at Nirmal Bang
Kunal Shah serves as the Head of Commodity
Research at Nirmal Bang. He closely tracks
precious metals, base metals, energy and
agricultural commodities. He addresses
seminars on the outlook of commodities across
the country. He appears regularly on business
channels. He is also sought by the print media
and wire services, on a regular basis. Prior to
Nirmal Bang, he was associated with Motilal
Oswal Commodities Pvt Ltd, where he
managed the research desk.
50
Beyond Market 10th Oct ’11
The next speaker to carry forward the event was Kunal Shah. Explaining the reason
behind conducting the commodity camp in Nagpur, Shah said Nagpur is quite big in
terms of commodity trading. He further said concentrated orange juice is one of the
biggest traded agricultural commodities on the NYBOT.
“Even without the participation of FIIs, MFs and insurance companies, the markets are
growing at a phenomenal pace,” said Shah. “Internationally, commodities are treated as
an asset class.”
According to him, commodity prices cannot reach zero or negligible levels. He said the
future of commodities is bright because of the growing population of India, which will
result in the rise in prices as India’s acreage is on the decline.
He made a presentation on the reasons for the upward movement in commodities between
2000 and 2010, except the recessionary years of 2001 and 2008.
In 2010, commodities had beaten all other asset classes, including equities and currencies.
Even though, a correction was witnessed in the equity markets this year, the commodity
market has managed to outperform.
The current scenario is very similar to the one seen after WWI when Germany had printed
large amounts of currency notes, which resulted in the rise in commodity prices. At
present, prime economies around the world are increasing their supply of money in the
markets, which is pushing the prices of commodities, elaborated Shah.
The ongoing rally in the markets is mainly due to increased liquidity in the commodity
markets. This rally is not due to supply constraints and is not driven by market forces
alone, Shah maintained.
He went on to explain the sovereign debt problem in Greece, Portugal, Ireland, Italy and
Spain. The bond yield in these countries has been on the rise since these nations do not
have money, he said.
Talking about individual commodities, Shah expressed a strong outlook for gold. But he
said he was not optimistic about silver since industrial activity had subdued.
As far as base metals are concerned, he said there have been positive data from China.
However, its biggest markets – USA and Europe – are currently facing a slowdown.
Fundamentally, lead is the weakest among metals, he said. However, he remained bearish
on crude.
According to him, cumin has strong fundamentals due to robust demand from China. He
cautioned investors against having high exposure in the commodity futures market.
“People must not try to predict the markets by seeing charts alone. They should study
fundamentals too,” said Shah, adding that stop loss is an important tool and must be used.
Most importantly, investors must control their greed and fear, he addeD.
After Kunal Shah’s talk, the discussion was thrown open to the audience for a
round of questions and answers. The next Beyond Mandi camp was held in
Indore on 19th August this year.
It’s simplified...