SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

Top 10 Rollover

Bottom 10 Rollover

SPICES

Turmeric futures (Mar) may witness correction for the second consecutive week towards 5825, facing resistance near 6190 levels. According to traders, apart from Nizamabad and Erode, there is sporadic arrival of new crops in Maharashtra as well. Currently, the new Mysore-8 turmeric is arriving for sale& traders are waiting for upcountry demand to pick up as at present, there is only a little local demand. At the Erode Turmeric Merchants Association Salesyard, finger turmeric was sold at Rs.6,169-7,189 a quintal and root variety at Rs.5,644-6,307. At the Erode Cooperative Marketing Society, finger turmeric was sold at Rs.5,888-7,039 and root variety at Rs.5,513-6,589. Last month, jeera futures have descended by more than 15% on the back of estimates a bigger crop this year. The overall sentiment is weak as sharp increase in acreage has been seen in Gujarat and Rajasthan and favourable weather conditions across the growing regions. The growers in Rajasthan and Gujarat are expecting about 25-30% higher yield over last year. As the sowing was delayed, the harvest will also get extended to March instead of the usual February. This is keeping the big traders on the sidelines. Dhaniya futures (Apr) may continue to face resistance near 7000-7100 & the upside may remain capped. Demand is weak and market participants are waiting for fresh arrivals, which are expected in the middle of February. According to traders, the sowing has been good in in the major growing regions, which has boosted the new crop estimates. Sharp increase in acreage in Gujarat and Rajasthan and favourable weather conditions may lead to a rise in yield.

BULLIONS

Bullion counter can extend its upside momentum as concern of a slowdown in global growth due to a virus outbreak , fall in global equities markets and rise in US treasury yields will keep the prices well supported. Federal Reserve Chair Jerome Powell also noted the risks of a short-term slowdown in China, including to the U.S economy, after the central bank’s widely expected decision to keep interest rates unchanged. The United States Federal Reserve held interest rates steady at 1.5 -1.75% at its first policy meeting of the year, with officials pointing to continued moderate US economic growth and a "strong" job market. The World Health Organization declared that the coronavirus epidemic in China now constitutes a public health emergency of international concern. The new coronavirus has claimed 213 lives so far in China and has spread to at least 22 countries, while paralyzing many provinces in the world’s second-largest economy with lockdowns, travel restrictions and closed businesses. The declaration of a global emergency triggers recommendations to all countries aimed at preventing or reducing cross-border spread of disease, while avoiding unnecessary interference with trade and travel. Gold may move upside towards 41500 levels while taking support near 40500 levels whereas silver may move towards 47500 levels while taking support near 45500. Meanwhile global demand for gold fell in the last three months of last year as sales of gold jewellery, bars and coins declined alongside purchases by central banks and financial investors.

OIL AND OILSEEDS

The one & only factor which has dented the sentiments of the oilseeds complex globally is the outbreak of coronavirus in China, due to which the demand has slowed down from the highest consuming nation of edible oils & soybean. In days to come, this virus may induce more fear in the commodities market. Analyzing these negative factors, it is expected that we may see more of a selling pressure in the oilseeds. In the domestic market, soybean futures (Feb) may trade sideways to down in the range of 3910-4130 levels taking negative cues from the international market. In days to come, more correction can be seen in mustard futures (Feb) as it can trade lower towards 4040-4000 levels. This season, production can be at a record high of 9.7 million tons in 2019-20 (Jul-Jun), up from 9.3 million tons. The yield could rise over 1.4 tons per hectare due to ample moisture content in the soil. The current status of the crop is that pod formation has started in early sown crop while the late sown crop is at flowering stage. CPO futures (Feb) may continue to slide down to 720-710; while soy oil futures (Feb) may retest its previous week low near 820. The increasing death tolls & people getting affected have raised a doubt over the trade in global oilseed market and Chinese purchases in the months ahead. As of now, it is unclear how soon the epidemic will be contained. Recently, the World Health Organization declared the outbreak a global emergency after cases were discovered in more than a dozen countries.

ENERGY COMPLEX

Crude oil prices may remain on weaker path as spread of coronavirus is keeping the sentiments down. Until this, fear does not vanish the sharp downtrend in oil is also unlikely to be reversed. The curbs for China outbound tourism and international carrier halt flights will reduce demand of crude by 5,00,000bpd. Crude oil may dip lower towards 3600 while facing resistance near 4200. Meanwhile some short covering cannot be denied as Saudi Arabia has opened discussion about moving upcoming output policy meeting to early February from March following the recent slide in oil prices. No final decision over the new date of the meeting has been made, and not all OPEC members are on board yet, with Iran a possible contender to oppose the move, OPEC wants to extend current oil output cuts until at least June from March, with the possibility of deeper reductions on the table if oil demand in China is significantly impacted by the spread of the coronavirus. Energy Information Administration reported that U.S. crude supplies rose by 3.5 million barrels for the week ended Jan 24. The EIA’s data showed a weekly climb was the largest since the 7.9 million-barrel rise reported for the week ended Nov. 1. Natural gas can remain on weaker bias as weather is expected to remain warmer than normal as it can further slip lower towards 120 by taking resistance near 150. The fact that winter has been relatively mild in the United States and 17 % excess gas production last year have resulted in huge glut of natural gas.

OTHER COMMODITIES

The trend as well as sentiments attached to cotton in international as well as in the domestic market is bearish owing to outbreak of coronavirus in China. This epidemic has dented the export demand from U.S & India to China. The virus has spread to more than 8,100 people globally, surpassing the 2002-2003 SARS epidemic's total fueling fears. Any signs of disruption in cotton shipments to China could pressure prices that had been recovering from three-year lows. Saying this, ICE cotton futures may break the support near 68 & can crash to 67-65 cents per pound. Following it footsteps, cotton futures (Feb) is likely to trade lower towards 19050-18800 levels. Chana futures (Mar) is expected to trade with a downside bias & test 3850-3800 levels. The sentiments are reeling under pressure due to improvement in Rabi Chana sowing and Government agencies holding major stocks. As per market view, millers will most likely purchase new Chana from Karnataka & Maharashtra as it trades below Rs.4,000/100Kg, instead of purchasing old Nafed procured Chana. Availability of new Chana at lower price will drag chana prices further down. Mentha oil futures (Jan) may breach its previously low near 1190 levels & witness further correction towards 1175-1150 levels. Firstly, this season the area under mentha cultivation is expected to be higher. Secondly, this year the farmers of Sambhal, Badaun and Chandausi in discussion with agricultural scientists in Badaun have decided to work on using the right technology to reduce the cost of the farmer and increase production. Also, emphasis will be laid on the use of drip method to reduce the cost of crop irrigation.

BASE METALS

Base metal counter may remain on weaker path. Copper may dip further lower towards 420 levels while taking resistance near 440 levels. Copper tanked to a 5 month low correcting by over 12% in last 15 days as funds sold on expectations of slowing demand in China, where a coronavirus outbreak has raised the prospect of an economic slowdown. Copper prices are expected to be sustained by low stocks in LME warehouses, which at 182,550 tonnes are down more than 45% since the end of August 2019. Meanwhile, lead may remain in red as it can test 144 levels while taking resistance near 151 levels. Lead stocks on the LME fell to 50,025 tonnes, the lowest since July 26 last year. The premium for cash LME lead over the 3M contract rose to $12 a tonne, the highest since Oct. 31, indicating tighter supplies. Zinc may tumble lower towards 170 levels while facing resistance near 183. Global crude steel production rose to 1.87 billion tonnes last year, up 3.4% from 2018, as per World Steel Association. Nickel prices can further decline towards 900 while facing resistance near 985. Aluminium prices can move in range of 143-149 levels. Aluminium stocks held at three major Japanese ports at the end of December were down 2.2% at 314,000 tonnes from the previous month. U.S. President Donald Trump signed a proclamation increasing tariffs on derivative steel products by an additional 25 percent and boosting duties on derivative aluminum products by an additional 10 percent.

TREND SHEET

TECHNICAL RECOMMENDATIONS

MENTHAMCX (FEB) contract closed at Rs. 1201.40 on 30th Jan’2020. The contract made its high of Rs. 1336.90 on 08th Jan’2020 and a low of Rs. 1196.00 on 31st Jan’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 1245.32. On the daily chart, the commodity has Relative Strength Index (14-day) value of 22.534.

One can sell below Rs. 1190 for a target of Rs. 1120 with the stop loss of Rs. 1225.

NICKEL MCX (FEB) contract closed at Rs. 936.90 on 31st Jan’2020. The contract made its high of Rs. 1025.80 on 20th Jan’2020 and a low of Rs. 930.00 on 28th Jan’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs. 976.92. On the daily chart, the commodity has Relative Strength Index (14-day) value of 32.471.

One can sell near Rs. 975 for a target of Rs. 880 with the stop loss of Rs. 1020.

JEERA NCDEX (MAR) contract was closed at Rs. 14035.00 on 30th Jan’2020. The contract made its high of Rs. 16235.00 on 11th Nov’19 and a low of Rs. 13780.00 on 31st Jan’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 14761.15. On the daily chart,the commodity has Relative Strength Index (14-day) value of 17.742.

One can buy above Rs. 14200 for a target of Rs. 15500 with the stop loss of Rs 13550.

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NEWS DIGEST

• The new coronavirus has been declared a global emergency by WHO, as the outbreak continues to spread outside China.

• Central banks added 650.3 tonnes (t) of Gold to global official gold reserves in 2019, 1% lower y-o-y but still the second largest in last 50 years. - World Gold Council

Indonesia will impose an export tax of $18 per tonne of crude palm oil from February for the first time in nearly three years.

• Area coverage under chickpeas in Australia in 2019-20 is expected to decline by 15% to 1.7 lakh ha.

• The government has cut sharply the reserve price of rice and wheat to help FCI offload bulk of its stock. Rice will now be sold at Rs.2,250/quintal, while wheat at Rs.2,135/quintal.

• China's crude oil imports from top supplier Saudi Arabia rose nearly 47% in 2019.

China official services PMI rose to 54.1, from 53.5 in December.

• Russia's oil and condensate production rose to 11.28 million barrels per day on Jan. 1-29 from 11.26 million barrels per day on average in December.

WEEKLY COMMENTARY

The world and financial markets eyed on the update of outbreak of coronavirus in China and other countries. It has raised fear and concern in markets across the globe. Safe haven buying returned in gold and it hit the mark of $1590 in comex but couldn’t sustain at higher side as after declaring emergency; THAT also showed its faith in China that it will control the virus in best possible way. In India, gold closed in green territory as depreciation in currency from past few weeks added premium in the prices. Silver saw some wild movements in both directions, finally settled down due to fall in base metal prices. Dollar index moved up owing to coronavirus issues together with unchanged interest rate. The central bank’s Federal Open Market Committee kept the rates between 1.5% and 1.75%. It was the second straight meeting the Fed made no changes to rates following three rate cuts in 2019. The greenback is the best performing currency among G10 currencies in January, with the dollar index rising 1.6% so far this month. It was a bad week for base metals, excluding aluminum which saw some surprise upside move. Copper touched an almost 5-month low of $5,565 last week. The metal is set for a monthly drop of 8.9%, the worst performance since May last year. Downstream zinc users in China have postponed resumption of operations until after Feb. 9, while most upstream producers are operating as normal. Oil prices fell more than 2% on Thursday to the lowest in three months on concerns over the potential economic impact of the coronavirus that continues to spread worldwide, while the market also considered the possibility of an early OPEC meeting. There was no respite for natural prices and it dipped further.

In spices, jeera fell the most in recent days and saw massive fall for continuous 5th week, now trading near the level of 14000. Jeera growers in Rajasthan and Gujarat are expecting about 25- 30 percent higher yield over last year. Turmeric was weak as well as arrivals of the fresh crop have started in key spot markets of Nizamabad and are likely to gain momentum in the coming weeks. The sentiments of the oilseeds and edible oil complex were bearish as they are under pressure from expectations for a massive harvest in rival supplier Brazil & also from China’ coronavirus. Even cotton counter was not immune and it saw further bearishness as the coronavirus scare looms large over the commodity trade with China, the largest buyer of the natural fibre and its yarn.

NCDEX TOP GAINERS & LOSERS (% Change)

WEEKLY STOCK POSITIONS IN WAREHOUSE (NCDEX)

MCX TOP GAINERS & LOSERS (% Change)

WEEKLY STOCK POSITIONS IN WAREHOUSE (MCX)

SPOT PRICES (% change)

WEEKLY STOCK POSITIONS IN LME (IN TONNES)

PRICES OF COMMODITIES IN LME/ COMEX/ NYMEX (in US $)

OPEC+ Countries’ Compliance of Oil-Cuts

OPEC is planning to extend current oil production cuts until June and could discuss deeper cuts if needed, as worries spread about the impact of the corona virus outbreak on China demand. At the OPEC+ meeting in December, OPEC and its Russia-led partners decided to deepen the oil production cuts by 500,000 bpd in the first quarter of 2020, when demand is expected at its weakest for 2020. This brings total production reductions at 1.7 million bpd—that is if rogue members fall in line with their quotas. OPEC’s compliance was exceptionally high throughout most of 2019. That’s largely due to deeper-than-required cuts by Saudi Arabia,which also suffered an attack on its oil infrastructure in September.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week