The downward trend in global commodity markets over the past one month is having

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its impact on Indian market as well. The UBS Bloomberg Constant Maturity Commodity Index (CMCI) — a diversified commodity index made up of 26 components globally — dipped 7.71 per cent last month against a 0.30 per cent decline between April 3 to May 3.

An analysis by FC Research Bureau of 10 commodities (see table) — including, six agro products, three base metals and one precious metal — found that their average monthly returns dipped 3.20 per cent last month compared with a four per cent gain during the previous month.

Base metals have been heading southward since April. Zinc, aluminum and steel long have lost 19.40 per cent, 6.70 per cent and 5.90 per cent, respectively in May alone. The zinc counter has been hit the most as steel manufacturers have started cutting prices across regions.

According to an India Infoline report, Aluminum Corp of China lowered its spot price for alumina, which was cut for the first time in 17 months, as Europe’s debt crisis hurt demand for the material used in aluminum production. Rising aluminum production globally has also hit prices.

Vibhu Ratandhara, assistant vice-president at Bonanza Commodity Broker, said, “Except for gold, other commodities are not getting support in Indian market following the euro zone crisis. The news of tightening monetary policy in China will ensure a bearish trend on the base metal counter for some time.”

However, the performance in the agri commodities basket has been mixed. Pepper, chana, guar gum and gur have lost 4.05 per cent, 1.40 per cent, 1.40 per cent and 3.20 per cent, respectively, during last month while barley added 7.60 per cent.

A Sharekhan research report said pepper is in correction mode and the black spice is likely to test Rs 15,500 level initially and Rs 15,000 thereafter. The immediate upside is expected to be capped at Rs16,700.

“The outlook for agri commodities depends on the forthcoming monsoon season and a late monsoon can trigger some bullish trend on the counter,” Ratandhara added.

“While prices of a few agri commodities have gone up, the overall outlook continues to be bearish. Monsoon has started in time and the predictions are normal,” said Jayant Manglik, president of Religare Commodities.

Commenting on the global commodity market, Madan Sabnavis, chief economist at Care Ratings, said: “The global commodities market was affected last month due to a slowdown in recovery while the euro zone debt crisis hit demand.”

Gold is hovering around its all-time high. “The prices of gold are going up as investors are shaky about investing in stocks and are rushing to park their funds in gold. Also gold is strengthening in line with the dollar,” Sabnavis said.