Zinc Commodity को Study करके #Stock #Trading करो। #Learn2Trade Session 45
Welcoming you all to session #45 of Learn2Trade and I’m Vivek Bajaj and I’m in the market for a long time And teaching trading to you with Annapurna Ji. Annapurna Ji is not there. She got a fever so she is not here. So she said you record a video, I will see it, and learn. So, I thought recording should be done and teaching is my responsibility And to fulfill the responsibilities is very important. So, today we will learn an extension of power learning on commodities
In the previous video, I had taught you about Copper. How was it? If you liked that learning then like this video. Such that I get motivated to record for you. Friends, on this concept many people have not talked about. I think I am unique in this concept. I am only talking about multi-asset trading. Or the people whom I know, Whose YouTube channel I watch, the books I read, I see that not many people talk about multi-asset trading.
It is a domain in which not many people talk about too. It’s my good luck that I started with Commodities, Then currency and then equity. So, multi-asset trading was natural so I thought to teach it to you. Multi-asset trading is such a nice domain that if you talk about a long-term career in the finance market. The more you learn about multiple assets the more you will be able to stay for a longer period in the market.
When I talk about multi-asset trading I don’t tell you to trade in every asset because if you trade in every asset, Then huge money is required. As I’m involved in this market for a long-time, money was made by keeping on doing. And from that, I can trade in multiple assets and keep my position in the market. When you start it’s not necessary to trade in every asset. Friends, something happened yesterday that someone called me and said that I’m trying equity for a long time Then I thought put hands in currency because you are talking about currency, so I felt good. So, I tried in currency, And my money is being made in currency. So, what should I do? I told him that many a time what happens?
That your DNA matches with a particular financial DNA. Have you heard about that horoscope thing? That when horoscopes match then only everything would be fine. So, your horoscope matched with your currency. Till the time everything is going well with currency, you focus on the currency. He had a capital of approximately 4-5Lacs
I said if you focus on currency and earn with 4-5 Lacs and on that generate a monthly return of 4-5% Then our objective is to make money by trading. Our objective is not to play video games. You can make a 4-5% return If you focus and work on a single asset. So he accepted that and in the coming 5-6 months he will work on currency But to work in currency, you would have to track the equity market, currency market, and the global market.
So, my theory is that to give you an understanding of multi-asset trading through this Learn2Trade series And motivate you to trade well. Today Annapurna Ji is not with us. But she will see this video and continue this learning So, friends let’s keep today’s video in this frame. In today’s video, I will talk about Zinc. You might be seeing that something is kept in front This is a year old lovely thing that my father gave me when I was young and I am sure his dad had given him. This is a very lovely thing. It’s of Iron, No. Steel. But on top of this, a coating of Zinc has been done.
Why do Zinc coating? Such that there is no Rust in it. You might be knowing that if rust is not coming Then the iron which is there, if you keep it open in water or air rust gets applied. So, zinc coating is done. Such that no Iron catches rust. Zinc is a type of metal. Non-ferrous metal. In the last video, I had told you the difference between ferrous and non-ferrous metal Ferrous metals are the metal that catches rust like Iron is a ferrous-metal. Non-ferrous metals like Copper, Zinc, Silver In all these, there is no rust because they have a natural capability that they don’t catch rust. So, copper is a non-ferrous metal, Zinc, Nickel, Lead are all base metals on which we are discussing. Zinc is a very nice metal. And its industrial utility is very much.
Almost 70% of its usage is for this purpose that we call Galvanisation where a coating is done over Iron. If you study the theme of industrialization then there is a big contribution of Zinc. Let’s keep this PPT as the base. And move forward with the discussion. Zinc has a very big history. Very old history. I won’t bore you by going into the history Because if you study the history on Internet then around 1700 talks are there. Talks about 9th Century BC where Zinc was used for multiple purposes.
When going to fight, then weapons were made through Zinc that were thrown in those battles. Zinc has one more big utility. You see in our body there is Iron as well as Zinc. We always think of Iron meaning that Metal or those hard things But if you have met a doctor then you might have heard that there is a lack of iron and zinc. Zinc has a medical utility,
Although Zinc is mostly used for the process of Galvanisation. But there is little medical utility but very effective. So, if you see Zinc then it is a very complete metal that comes in Industrial usage but barring that for fixing looks, In electronics, musical instruments. In many things it has utility. So, it is very interesting. Long-term base metal so we should understand it. Such a nice metal that we should at least use it for Learning. So, I will skip this slide and as it is I will share this presentation with you In this video’s description, there would be a link. You download it and do share it with your friends.
I am making these with many efforts. The more you share this presentation the more my efforts will be successful. Because we have to reach the corners of the nation and take the right knowledge. Where can Zinc be traded? If you talk about the futures market, then it can be traded in the MCX market. If you want to trade through Equity Then the stocks that are a producer of Zinc can trade in them which can be traded in NSE. And there are global ETF’s of Zinc And if you want you can take physical delivery of Zinc too. Many spot dealers will give you delivery sitting at home
And you can buy it. But obviously, people don’t take delivery because in raw form Zinc is like an Ingot. A very different kind of shape. So generally when Zinc is melted and it’s poured on top of something then only it glows. So you can keep it at home like this, you will not have any benefit keeping the raw zinc at home.
When you want to trade in Zinc, The futures contract is available in MCX. The quotation of It is 1kg. We will go to the site and study it. A value of 1kg is quoted in it. Lot size - That I have taught Annapurna Ji alot of time - has a very big relevance in the futures All these metal contracts are deliverable contracts. Like I said in copper, that Exchange on its own is a delivery center If someone wants Zinc delivery then can take it from the exchange too if it has. The spot market players, either consumers or producers use the exchange for delivery.
In India, focus on delivery has been done recently. Globally delivery is very big. So, the London Metal Exchange The oldest exchange is related to metals, over there, there are delivery centers and buying there. LME pricing is known as the benchmark pricing that all the deals of Zinc that is done in India is matched with that of LME. Nowadays MCX’s prices are here so it’s wildly used by spot players. When MCX was not there before 2003
Then the prices of LME were made as a benchmark. So, the lot size that is in MCX is 5000kg meaning 5MT. The tick size is 5p. When you 5000 * 0.05 = 250 meaning at every tick you have a difference of 250 1tick up then you get 250 and if 1tick down your 250 gets used. The expiry date is the last day of the calendar month and The delivery unit is 5000kg and if you want to trade it in MCX, then the margin requirement is approximately 1.45 to 1.5lacs
If you cannot give a margin of 1.5Lacs then you cannot work in this. Before there were mini contracts in exchanges In that, the very little margin was required but SEBI closed the mini contracts and before there were mini contracts in NIFTY too Copper, Zinc each had mini contracts but regulator think that derivatives are not for small investors, so closed all the mini contracts. Now you have the main contract. I am repeating this. If you want to do commodity trading then somewhere or other You would have to have a bare minimum capital. In exchange, there is no significant margin requirement. Very much capital is required for multi-asset trading. Around 25-30Lacs If you want to trade equities and commodities then 10Lacs If you have 2-2.5Lacs then trade in equity using the commodity information. This knowledge would be right if you follow it.
What is the usage of Zinc? Like I said for looks, rust doesn’t come on things, electric poles, vehicles as they are mostly exposed to water and air So, Zinc coating is done such that rust doesn’t apply. In musical instruments, In paint to there is a little bit of usage In that, Industrial paints mainly; House paints required a less amount; there is so much industrial activity that chances of rusting are high. In paint, the zinc component is high. In batteries, zinc is used. It is made of lead but ultimately zinc is used for covering it.
And after that cosmetics, lipsticks or nail polish. See, you might not have thought about this but it’s very interesting that Ultimately everything has possibilities of rusting when exposed to air and water as it can be oxidized. So, Zinc has so much utility. In so many things Zinc is used. And X-Ray when we go to the medical diagnostic center the X-Ray machine That produces X-Ray over there too there is the relevance of Zinc. So, from industrialization to music to general utility
Everything has a presence of Zinc. This means if the price of Zinc rises then the things we are using around us, Price of that increases. If prices rise then inflation will come and its impact would come. And many times you can pass on the price Meaning the price rises you pass on the information to the customer and say him that the value will increase. For example, I went to eat puffed rice and the seller says he will sell at 30 instead of 25, the prices of everything have risen. Now that 30 is fixed. It will not be 25 again. If the raw material price decreases even then his net margin will increase
That’s why people say inflation is good as prices rise the net revenue realization increases. We will discuss this sometime later. You see if you want to participate in the share market using Zinc then there are 2 types of companies One that is mining, producing, and recycling. Meaning the ones who own the Zinc supply and one that uses Zinc in its things. If the price rises then the company using it, there would be a problem as they won’t be able to increase their price Going up but the final products price will not go up. If they have the capability of increasing like the paint companies who have the right to increase
Then their margin increases. Raw material cost increases and then again it reduces. So the revenue rises once So the possibility of reducing again is less. Each company has to be analyzed on a stand-alone basis. But more or less you might have understood the application of Zinc that was and which industries use it. What are the factors that influence its prices because it is an industrial metal? In factors, how is their production & consumption Chinese demand and supply. I have mentioned the Chinese factor differently. China on its own is a very big country
That in the past 20 years industrialization started from there. It is necessary to understand their macro variables Because ultimately things growing there, Zinc consumption will grow. Demand will grow. Over there if there is demand then the price is impacted. And inventory data, I had said to track the worldwide inventory of Zinc. If you track it and see the Inventory rising Then there will be an impact on price. Simple. Like the law of demand, if increasing then the price will rise and vice versa
The best application of economics takes place in commodities because there is a very nice reflection of demand & supply in it. So, let’s move forward on certain things that what are the factors affecting Zinc price? The one tracking Zinc closely, Will have to track the demand of the US. How do find that out - how the growth is? How is the employment generation there? How is the GDP growth there? All these key points need to be studied. If I get a chance I will make a video on all these points Such that you will have an understanding about what are the worldwide data that we have to look up to. Input price - Ultimately when we take out zinc, while mining then in that process too we need some inputs like oil, energy Coal, if their price rises then zinc prices will rise too. And world economic health, meaning how the economy is doing worldwide If it is performing well then obviously there would be zinc demand and will go up. There are some slides of production that we will cover fast
As it is slides is shared with you so if you want you can read them. The major mine country is China, the greatest It is such a big country where there are mines. The biggest producer is China. Peru - you might have heard it during Copper There are some countries that the almighty have blessed them with raw material like you will have good people, You will have good minerals, you might have good scenery. Then there are some countries having raw material Like Peru, Australia. In the US too where there is too much availability of Zinc. In India too there are Zinc mines Some days ago I went to Udaipur where people were talking about Hindustan Zinc. Its core is there. And India’s biggest producer is Hindustan Zinc. India comes on #5. Consumption is done mostly in China and largely usage is in Galvanisation
That I have said many times used in a coating such that rust is not applied. So the biggest consumer is the steel sector. If the prices are rising in the steel sector then obviously zinc prices will rise too. If zinc prices rising then its impact will go on Steel. Understanding this relationship is very important. China’s demand is crystal clear that the prices will rise then commodity prices will increase and vice versa In China, there is an exchange - Shanghai Metal Exchange over there too people track zinc’s delivery. The one’s trading active zinc Either on MCX or in the global market, they track inventory such that if inventory is getting less than spot people are taking delivery.
Which means zinc prices will grow. So Shanghai Metal Exchange, people over there track inventory. Now China is such a country where there are many dynamics. Recently you might have heard that due to pollution control China is trying to fix its environment. As China is one of the major suppliers of Zinc, then their actions are coming regarding pollution Somewhere or other they will control their supply and environment due to which an impact can come. As I said, people track Inventory data of SME and LME the biggest metal exchange. You don’t have to do all this. If you want to do active trading in Zinc then you have to see all these things. If you want to track the price of Zinc
Then if you will track MCX it will work but it’s my responsibility that I give you an idea that if you want to become a next-level commodity trader And trade in Zinc, then you would have to study this information. Like I mentioned to you a point in the old slide, Input prices, if you are taking the supply of zinc then coal is the major energy source to take out zinc, electricity, and crude oil. Meaning if the price of raw oil (crude oil) increases, then obviously price of Zinc will grow too. Why?
Because the production cost of Zinc will go up. The energy required while mining, the oil required when we are mining zinc Then its price rises automatically its impact comes on final produce. So Zinc’s cost rises. That’s why I always say its important to track Crude Oil, As it is the mother of all commodities. The dollar Index is the mother of all currencies. World Economic Health, Whenever economic health prospered, prices of metals increased. Whenever a problem arises, prices have decreased.
So with the price of the metal, you will find out how the world is performing from the economic point of view. And obviously, if the economy is doing well then prices will rise. Like it’s happening now. The price of metals is increasing Then obviously metal-oriented company’s stock prices will grow too. We will see that through the Trading view That is how we can make our framework such that you have an understanding. The slide is here. Ultimately if you trade in the equity through Zinc then Hindustan Zinc, Vedanta, Pondy Oxides Chemicals are the few companies That mines these metals and produces them. Hindustan Zinc has a market share of 78% and Vedanta almost owns a 65% stake in Hindustan Zinc. You see how big a company is Vedanta. It controls the mining base of India.
Like I said 70% of Zinc’s demand is for Galvanisation which is quoting steel to avoid rust. Thank you is my slide. Let’s go to the trading view now and make a list of Zinc. I had made a watchlist Commodities and Equity Over here let’s add a section. Right-click > Add section > Name it Zinc. Let’s take it below, Above section is for Copper and this one is Zinc. Now let’s add in this. What to add? Search Zinc, MCX futures of Zinc. Current futures of MCX. This means it came here. Barring that international under which LME. Futures of LME isn’t available in Trading View. So let us search what is available in Zinc’s future. We have MOEX MOEX is a Russian exchange. Zinc is traded in COMEX. There is a Hongkong exchange. LME is owned by the Hong Kong exchange.
You can track this price if you want to track a mixture of LME and Shanghai exchange. You can see this & MCX you are seeing Generally, you will find the price movements of Zinc here. So, for a normal person, MCX prices are more than sufficient To track broadly what is happening in Zinc. Now, what do I track? I track weekly as I said in copper, I track weekly what is happening in commodities
And what’s the trend on daily basis? If you see the MCX chart, then Zinc is strong in MCX and the super trend is positive on daily Meaning there is a bull run in Zinc. Now if there is a bull run in Zinc then what are the companies I have to see? Three companies can be seen eminently. Hindustan Zinc, Vedanta & Pondy Oxide. So let’s add Hindustan Zinc here, then Vedanta I think Vedanta is added in Copper because It’s a huge company that produce and many commodities It has made its mining base in India. Over there you will see Vedanta. And third, to be added is Pondy Oxide.
I many times say that it is not necessary to trade in the whole market’s stock. If you fix your universe, tracking commodities And trading only in commodities then understands that strategy. Many people whom I know track USD-INR and trade-in IT stocks Because they know the impact of USD-INR will come on IT stocks. In any sector, Impact comes from its raw material, And from the broader market movement. When we track the movement of raw material, then to track the broader market
and the stock you are tracking with the broader market’s movement., then we get an opportunity to make a strategy. Let’s take an example in this only, Zinc is in a bull run. If you are tracking MCX daily then you can see clearly And now if we see Hindustan Zinc, then see it is even in a bull run. And if we compare it with the market,
The RS theory, which is mine, is that even it is seen that it is strong. RS is above 0 on weekly basis, You don’t track it on a 2hourly basis. Track it on a weekly or daily basis. And in this the best thing you can do is Take delivery on a staggering way in the cash market. Don’t trade on a single value. Slowly take delivery Till the time Zinc is in a bull run you are long in it and when you see a sign of bear run in Zinc then exit from these stocks Always remember one thing friends, these are cyclical sectors meaning these are driven by prices of commodities. If there is a correction in commodities, then the price will fall. You will have to do active trading in these. It does not value that you buy continuously Because after 5 years you might know that price remains constant. Go up and come back. Those who want to trade actively,
Want to trade-in cycles, want to trade with commodity price. For them this strategy is relevant. If you are trading Zinc in MCX And trading that stock in NSE then a brilliant strategy can be made. So, you see Hindustan Zinc has beaten its all-time high. It is going up so beautifully up. Zinc is in a bull run and going up. Even RS is strong weekly Then I will make a bull run view in Hindustan Zinc. Now how will I implement this bull run view? You can do this by buying little in the cash market or making an Options strategy in which you can do a Bull call spread trade Or credit Put spread depending on what Options you want to do. If you want to learn more about Option Strategy then I have made learning videos of Options in Learn2Trade only, then see that. You will have an idea about
how many types of Options Strategy you can make if you take a view. So, you can make a view of commodities By tracking raw commodities and their prices and making a view on the stocks related to it analyzing its impact. So, friends, this was on Zinc and what can be done in equity from Zinc. If you liked this video then do like, comment and If you are liking my content then share it with friends. A very unique concept - Multi-Asset Trading.
You understand that everyone should know then do share it with people. Hope you liked it. Take care of yourself. And in the next video, we will talk about the next commodity. Till then you track this commodity and let me know if you are seeing any trade ideas or not. Bye-bye friends. Take care.
2021-10-24 23:36
