The year 2013 has seen a lot of unpredictability in the commodity market. With Fed tapering decision still looming large on the performance of commodities, market analysts believe that fundamentals are still in favour.
In an exclusive interview with Ajeet Kumar of Zeebiz.com, Shiv Shrivastava, MD & CEO, IGuru Research & Advisory Services (P) Limited explains that Fed tapering will not be a big concern in 2014 as global macroeconomic scenario is improving.
Excerpts...
How do you see the performance of commodity market in 2013?
The Commodity Market performance in 2013 was not good. There were many reasons, i.e., CTT imposed by government, high volatility seen on USD/INR concern, and finally the NSEL scam had badly shaken the investor/trader confidence resulting in sharp decline (nearly 70 percent) in trading volume and participants.
Will commodity market outperform other asset class in 2014?
Yes, better global economy growth may lift demand of metals & crude oil, silver may outperform in 2014 on industrial demand growth.
How will Fed tapering shape the commodity market next year?
Fed tapering will not be a big concern in 2014 as US and global macroeconomic scenario is improving.
Which of the non-agri commodity should be more focused in 2014 and why?
Silver and crude oil may outperform in 2014 as they were under performers in 2013 and demand may boost from the industrial sector.
How will agri commodities react to the election year?
As inflation is on peak, government will try its best to check the prices of essential commodities in election year 2014.
Which of the agri commodity, will you opt for better returns?
As per my opinion edible oil sector will give better returns as there is a huge gap between demand and supply. Demand of guar and castor seed may see rise in 2014.
How will better monsoon and an estimate of record production affect commodity market outlook? Also discuss about the impact of major Govt. decisions like sugar decontrol and announcement of a bailout package of Rs 6,600 cr for the sugar sector.
We have enough stocks of wheat, but paddy crop was affected by flood and drought in many parts. There is a marginal gap in demand and production of pulses. Sugar decontrol and bailout package will boost sugar production & industry sentiments.
Has the fears of Fed tapering already been factored into commodity market or is it yet to be reacted?
Fed tapering impact may continue till the first quarter of 2014.
Which commodities will be more vulnerable to Fed tapering (both agri and non agri)?
As per my opinion gold will be the big sufferer owing the Fed tapering decision, a bigger downside is expected in gold in first quarter, but later on its demand will grow further.
How will economic recovery in US and Europe affect base metals market?
Base Metals demand may pick from second quarter of 2014, copper, aluminium and nickel may be the out-performers in 2014.
Will commodity market keep the impact of NSEL crisis away in 2014?
Not so much, as the NSEL fraud involves a huge amount of Rs 5600 Crore.
Could you mention some of the key factors or events that will pave the way for commodity market in 2014?
We can see a ray of hope after 2014 General Election, if a stable government is formed in the centre. Situation is expected to be better after the passage of FCRA Act.
What would be your advice for the commodity investors in 2014?
Trade patiently, always maintain stop loss, book profit when it moves northwards. Silver will be the out-performer in 2014.