Coriander prices have tanked over 20 per cent in the last two weeks on the National Commodity and Derivatives Exchange (NCDEX). They are currently trading at ₹9,391 per quintal. This sharp and sudden fall took the markets by surprise.

The trigger for the huge fall came after unconfirmed reports stating that the Securities and Exchange Board of India (SEBI) has asked the NCDEX to provide historical price data of the commodity. This made the market nervous and the contract witnessed panic selling thereafter.

The ripple effect had the contract hitting the lower circuit for three consecutive days. Following this, the NCDEX has increased the margin for the coriander futures contract with effect from Thursday last week.

The exchange has levied a 5 per cent special cash margin over and above the existing margin of 5 per cent on the short side. The exchange has also clarified that the regulator seeking information was part of a normal process. If fears of regulatory action dissipate, the contract could reverse its recent downtrend.

The fall in the last two weeks has wiped out all the gains made in the contract between August and early October. It has also turned the outlook bearish for the contract.

Medium-term view The outlook for the coriander contract is bearish. It was in a strong uptrend since late February. The price had more than doubled from ₹6,182 in February to its all-time high of ₹13,444 in the first week of June. The corrective fall from this high found support at the psychological ₹10,000 level in August. But the bounce-back thereafter failed to get strong follow-through buying and the contract reversed lower after recording a high of ₹12,230 in the second week of October.

This second leg of downmove has decisively broken below support at ₹10,000. As a result, the uptrend that was in place since March has been reversed.

Immediate supports for the contract are at ₹9,200, a trendline level, and then at ₹8,871 — the 61.8 per cent Fibonacci retracement level. A strong break below ₹8,871 can drag the contract lower to ₹8,450 or even ₹8,300 in the medium term. The key resistance to watch is the ₹11,500-₹12,000 zone. Only a strong break above this will ease the downside pressure and bring back positive sentiment for the contract. It will then increase the chances of revisiting the previous highs.

The sharp fall in the last two weeks may mark the beginning of a short-term downmove.

The presence of a key trendline support at ₹9,200 could pause this fall in the near term. While the contract trades above ₹9,200, there is a possibility of a corrective bounce to test the key resistances at ₹10,000 and ₹10,200.

The contract could come under fresh selling pressure as the price rallies to test this resistance zone. The upside for the contract is expected to be capped at ₹10,200. A reversal from here will increase the danger of the contract breaking below ₹9,200 in the coming days. A decisive daily close below ₹9,200 will increase pressure on prices and drag the contract lower to ₹9,000 and ₹8,900 thereafter in the short term.

The downward pressure will ease only on a strong break and a decisive close above the 200-day moving average resistance. Such a break will increase the chances of a rally to ₹10,700 and ₹11,000 thereafter.

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