By Kiran Jani
Copper is often called ‘Dr. Copper due to its reliability as an economic indicator. The movement of copper prices frequently offers valuable insights into broader economic trends and can sometimes anticipate shifts in the equity markets.
Copper and Nifty Relationship
The correlation between copper prices and the Nifty index often reflects broader economic trends, as copper is widely considered a leading indicator for global economic health. As an industrial metal, copper is heavily tied to the performance of sectors like construction, manufacturing, and infrastructure, influencing stock market performance.
ALSO READAshish Kacholia’s Latest Stock Pick starts with a 2.53% Stake
When copper prices rise, it usually signals strong demand in global markets, especially from emerging economies like China, which can boost the performance of companies listed on the Nifty, particularly those in the metal, energy, and infrastructure sectors. Conversely, a decline in copper prices may indicate slowing global economic growth, potentially dampening investor sentiment and impacting the broader market, including the Nifty. However, the copper and Nifty prices are directly co-related.
Comparison Chart – Copper Vs. Nifty Source: Investing.com
From 2015 to the present, major up-and-down moves in copper prices have been exactly correlated with Nifty prices.
Copper – Bullish continuation pattern in play
Copper experienced a sharp 20% decline from its May 2024 peak of 10,450, reaching a low of 8,768. However, a strong rebound from this critical long-term support level indicates renewed buying interest and the potential for a trend reversal.
Key Indicators Highlighting Copper’s Bullish Outlook:
- Inverted Head and Shoulders Breakout – The breakout from this key reversal pattern strengthens the bullish sentiment.
- 200-Day SMA Crossover – Copper has moved above its 200-day Simple Moving Average (SMA) for the first time since November 2024, signalling a potential shift in trend.
- RSI Momentum Strengthening – The 14-period Relative Strength Index (RSI) remains above 60, showing bullish divergence and suggesting further upside potential.
Source: Investing.com Copper Outlook
Copper has delivered a solid 33% return since the start of 2024; however, the price has entered a corrective phase, falling from 10,960 to 8,770 over the past eight months. Early signs of a potential recovery are emerging. The price has already broken out from the inverted head-and-shoulders pattern and moved above the 200-day SMA.
» Read More
