Dabur India Limited (DABUR)

INOX Leisure Limited (INOXLEISURE)

WEEKLY VIEW OF THE MARKET

The market undertone remain bullish for the Indian markets in the week gone by, as Nifty once again reclaim 11050 levels in Friday’s session on the back of sharp surge in Oil & Gas, Auto, Banking , FMCG and Reality counter. The sentiments in the domestic markets got a major boost as signs of progress in US China trade talks helped to calm fears of a global slowdown. From derivative front, put writers were seen active in 10900 & 11000 strikes while marginal addition of open interest was seen in 11100 strike. From the technical front, Nifty is gradually building up a base at 10900 levels and continuously adding up the gains in a rising channel with formation of higher high and higher bottom. The Implied Volatility (IV) of calls was up and closed at 14.17% while that for put options closed at 15.32%. The Nifty VIX for the week closed at 14.90% and is expected to remain volatile. PCR OI for the week closed at 1.18, which indicates OTM put writing. For coming week, traders should use any dip as an opportunity to create long positions as far Nifty is trading above 10900 levels. From technical front we expect that recovery in the Nifty will likely to continue towards 11150-11200 (SPOT) levels as the secondary oscillators are also showing positive divergence at lower levels which should limit the sharp downside in prices on short term basis.

DERIVATIVE STRATEGIES

NIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN NIFTY OPTION OI (IN QTY) (MONTHLY)

BANKNIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN BANKNIFTY OPTION OI (IN QTY) (MONTHLY)

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 (Oct) is expected to fall further below its one month low of 6480 to test 6400-6300 levels. The expectations of better crop in the current season due to good sowing progress are weighing on prices on the domestic bourse. As per the latest statistics, the total area sown under turmeric in Telangana was at 48,315 hectare as on September 9 in the current 2019-20 season, slightly up from 47,790 hectare over the year-ago period, as per the latest sowing data released by the state agriculture department. On the demand side, there are negative cues from the spot market, owing to sluggish demand from the stockiest. Jeera futures (Oct) is likely to break the major support near 16500, persisting since past four weeks & plunge towards 16200 levels. The sentiments are pessimistic due to anticipation of a rise in arrivals in coming weeks before the start of new season in October. While major buyers are remaining absent from the market due to rain. The spot prices at Unjha are quoting lower on quality concerns as moisture content in the spice has increased due to the continuous rains and overcast conditions in the last few weeks. Gujarat has so far received total rainfall of 926.59 mm, which is 13.5 per cent more than its Long-Period Average (LPA) of 816 mm. Dhaniya futures (Oct) would probably consolidate in the range of 6020-6320 levels. The upside is being capped by reports of rise in imports from Russia and Ukraine and expectations of likely rise in sowing in the upcoming Rabi season due to good progress of rains in Rajasthan.

BULLIONS

Bullion counter may continue to dip further as optimism and hopes of progressing trade talks increased risk appetite, after U.S. President Donald Trump preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as “easy” agreement would not be possible. This week outcome of Fed meeting on 17-18 September will be keenly watched as Federal fund futures imply that traders see a 89% chance of a 25 basis point rate cut by the U.S. Federal Reserve. Gold (Oct) can test 37000 in MCX while taking resistance near 38500 while silver (Dec) can test 46000 while taking resistance near 49000. Gold silver ratio again widened from 80 to 84 recently as silver fell at faster pace than gold. Meanwhile, European Central Bank chief Mario Draghi pledged indefinite stimulus last week to revive an ailing euro zone economy. ECB delivered a 10 basis point cut to the deposit rate that banks pay to park excess reserves with it last week. The bigger-than-expected stimulus will increase pressure on the U.S. Federal Reserve and Bank of Japan to ease policy this week to support a world economy increasingly characterized by low growth and protectionist threats to free trade. Most investors think that the Fed will cut rates, but it remains to be seen by how much. Trump has stated that the US should have zero or negative interest rates, following in the footsteps of countries in Europe and Japan that have had very low and even negative rates for years.

OIL AND OILSEEDS

Soybean futures (Oct) is looking bullish to test 3785-3820 levels, riding high on the back of anticipation of the standing crop due to heavy rains. The standing soybean crop in Madhya Pradesh is facing threat due to heavy rains in most of August and September. Heavy rains mostly in western parts of Madhya Pradesh are taking a toll on the standing soybean crop. Water logging in some fields is decaying the roots. Farmers in the state have sown over 80% early sown soybean varieties, which have attained the seed filling stage and now require dry weather conditions to get ready for harvest. As rains are largely incessant and no respite is seen in near future, chances are higher that seeds inside the pods may germinate and this would eventually hit the yield. On the CBOT, U.S soybean futures (Nov) is expected to trade with an upside bias & hold above the support near $ 8.5 a bushel. Hopes for renewed Chinese purchases of U.S. agricultural products could provide support to the market ahead of high-level trade talks next month between the two countries. Soy oil futures (Oct) may consolidate in the range of 749-762 levels. A stronger rupee against dollar is likely to cap the gains, however on the contrary the upside momentum persisting in CBOT soy oil futures may limit the downside. CPO futures (Sept) is likely to trade sideways to down in the range of 548-561 levels. The reports of that India agreeing to cut import duty on Indonesian palm oil by 5% in lieu of access to Indian sugar in that country has left the market participants to stay at bay due to lack of clarity.

ENERGY COMPLEX

Crude oil prices may trade on a volatile path as Opec commitment to adhere to compliance of production cut and falling stockpiles to support the prices while estimate of decline in demand amid trade tensions to limit the upside. A market-monitoring committee formed by OPEC and allied producers, a grouping known as OPEC+, met last week in Abu Dhabi ahead of policy discussions set for Vienna in December. OPEC+ has over-complied on average with its agreed cut of 1.2 million barrels per day (bpd) as Iranian and Venezuelan exports collapsed due to sanctions. Crude oil may take support near 3850 while taking resistance near 4200 levels. U.S. crude oil stockpiles fell in penultimate week to the lowest in nearly a year, as refineries raised output and imports fell. At 416.1 million barrels, U.S. crude oil inventories were at their lowest since October 2018, and about 2% below the five-year average for this time of year. EIA has cut its 2019 global oil demand growth outlook for seven months in a row, after starting the year at 1.5 million b/d. Natural gas may witness further recovery as it can test 190 while taking support near 175. Natural gas prices will be buoyed by a tropical disturbance that is circling near the Bahamas and has a 70% chance of becoming a tropical storm. The weather is expected to remain warmer than normal for the next 2- weeks according to the National Oceanic Atmospheric Administration. US natural gas production continued to increase in August, setting a new daily production record of 92.8 billion cubic feet per day.

OTHER COMMODITIES

Cotton futures (Oct) may give a strong upside momentum towards 20000- 20200 levels. In a latest estimate, the Cotton Association of India (CAI) has cited the small crop size and very tight cotton balance sheet for the smaller closing stock. The closing stock of cotton at the end of the 2018-19 season on September 30 will be the lowest in at least five years, at 15 lakh bales (of 170 kg each). The total supply by the end of the season in September 2019 will be about 374 lakh bales. In the international market, U.S Cotton is likely to gains to test 61.50 taking support near 58 cents per pound. The overall condition of the U.S. cotton crop continues its weekly shifts in ratings towards declining, which may support prices. Chana futures (Oct) may take an attempt to trade higher above the resistance near 4090 & test 4150-4180 levels. Overall, the pulses are quoting higher on the spot markets amid intermittent rains in Madhya Pradesh and decline in selling pressure by the NAFED. In news, Moong crop in Madhya Pradesh is facing threat as most of the crop is of early sown which is ready for harvest and rains at this time is hitting the legume. Castor seed futures (Oct) may witness a steep fall towards 5600, if breaks the major support near 5780. The rise in acreage year in year due to favourable weather in key growing areas may take a toll over the counter. In Gujarat, the largest producer, acreage has surged 35.4% on year to 577,745 ha..

BASE METALS

Base metal counter may witness some recovery at lower levels on signs of progress in U.S.-China trade conflict. China renewed purchases of U.S. farm goods, and U.S. President Donald Trump delayed a tariff increase on certain Chinese goods by two weeks, as the two sides made conciliatory gestures ahead of planned talks later in September and October. Copper may trade sideways to upside bias as it can test 460 levels while taking support near 442 levels. Refined copper cathode production by major Chinese smelters fell by 0.5% in August from a month earlier. Meanwhile, Lead may also remain sideways as it can move range of 151-158 levels. Zinc may witness recovery towards as it can test 192 levels while taking support near 180 levels. Nickel prices can move with upside bias as it can test 1300 while taking support near 1210. The premium of LME nickel cash to the three-month contract jumped to $163 a tonne from $102 a tonne in the previous session, signalling tight nearby supplies. On-warrant nickel stocks in LME-approved warehouses or those available for delivery, tumbled to their lowest level in a decade at 77,628 tonnes, latest data showed. Aluminium can trade with sideways to weak bias as it can take support near 136 while facing resistance near 143 levels. Norsk Hydro, one of the world's largest aluminium producers, stated that it would close some production in Germany and could lay off more than 700 workers in a bid to increase profitability at its rolled products business.

TREND SHEET

TECHNICAL RECOMMENDATIONS

NATURALGAS MCX (SEP) contract closed at Rs. 183.00 on 12th Sep’19. The contract made its high of Rs. 191.00 on 10th Sep’19 and a low of Rs. 146.70 on 05th Aug’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 165.50. On the daily chart, the commodity has Relative Strength Index (14-day) value of 71.38.

One can buy between Rs. 177-180 for a target of Rs. 200 with the stop loss of Rs. 170.

GOLD MCX (OCT) contract closed at Rs. 37750.00 on 12th Sep’19. The contract made its high of Rs. 39885.00 on 4th Sep’19 and a low of Rs. 31520.00 on 23rd May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 37190. On the daily chart, the commodity has Relative Strength Index (14-day) value of 46.62.

One can sell only below Rs. 37605 for a target of Rs. 36800 with the stop loss of Rs. 38000.

REF. SOYOIL NCDEX (OCT) contract was closed at Rs. 756.15 on 12th Sep’19. The contract made its high of Rs. 764.25 on 26th Aug’19 and a low of Rs. 706.00 on 13th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 743.87. On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.99.

One can sell below Rs. 753 for a target of Rs. 730 with the stop loss of Rs 764.

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NEWS DIGEST

• World Gold Council (WGC) published a set of guidelines for gold miners designed to encourage high environmental and ethical standards.

• SEBI has granted a three-year extension to National Commodity Clearing Ltd, the wholly-owned subsidiary of NCDEX for clearing operations.

• The closing stock of cotton at the end of the 2018-19 season on September 30 will be the lowest in at least five years, at 15 lakh bales (of 170 kg each). - Cotton Association of India

• The Government rejects millers request to extend date for pulses import beyond Oct 31.

• India has received 3% more rain than average since the start of the monsoon season on June 1.

• Large mining companies welcomed a recent decision by the Indonesian government to move forward a ban on exporting nickel ore, as the firms aim to increase smelting output.

• UAE's Minister of Energy and Industry Suhail al-Mazrouei stated that members of OPEC and non-OPEC producers are "committed" to achieving oil market balance.

• EIA trimmed its outlook for US oil production 30,000 b/d to 12.24 million b/d for 2019 and 13.23 million b/d for 2020.

WEEKLY COMMENTARY

CRB gained for continuous third week and hit the high of 185. Fall in dollar index amid some sign of relief in US and China trade war strengthened commodities marginally. U.S. President Donald Trump indicated on Thursday that he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an "easy" agreement would not be possible. In another development, ECB chief, Mario Draghi, pledged indefinite stimulus on Thursday to revive an ailing euro-zone economy. Agri commodities saw significant rebound from the lows. Bullion counter traded weak on good recovery in equity market amid some rebound in US 10 years treasury. In energy counter, crude saw massive decline whereas natural gas prices saw little upside on lower than expected build up in inventories. Oil markets fell as an OPEC agreement to cut oil output and positive Sino-U.S. trade development failed to lift prices. It made a low of 3827 last week. OPEC agreed in a meeting on Thursday to cut its oil output and ask Iraq and Nigeria to bring production down in an attempt to prevent a glut as U.S. production soars. Iraq, OPEC's second-largest oil producer, pledged to reduce output by 175,000 barrels per day (bpd) by October, while Nigeria agreed to cut 57,000 bpd. After a very bullish oil inventory number, the market is now adjusting to the potential return of Iran to the global oil market. Base metals counter traded on mix note. Copper was sideways, lead, nickel and aluminum turned weak whereas zinc saw some rebound from the lower levels. The premium of LME nickel cash to the three-month contract jumped to $163 a tonne, signaling tight nearby supplies.

In agri commodities, cotton was the cynosure among all with its solid bounce back from the multi week lows. International market was firm and low inventory news stimulated upside. The closing stock of cotton at the end of the 2018-19 season on September 30 will be the lowest in at least five years, at 15 lakh bales (of 170 kg each). The Cotton Association of India (CAI) has cited the small crop size and very tight cotton balance sheet for the smaller closing stock. Ratio between guarseed and guargum decreased as guarseed outperformed guargum. Spread between cotton oil seed cake September contract and December contract increased as far month contract is trading in backwardation on expectation on improved supply due to fresh arrival in coming months. Spices were mostly weak except cardamom futures, which saw some fresh buying from multi week low.

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 $)

MCX COMDEX…….a barometer for the performance of commodities

MCX COMDEX is a significant barometer for the performance of commodity market and would be an ideal investment tool in commodity market over a period of time. This is the maiden flagship real-time Composite Commodity Index in India based on commodity futures prices of an exchange launched in June 2005.

MCX is India's leading commodity derivatives exchange with a market share of 91.3% per cent in terms of the value of commodity futures contracts traded in Q1 FY 2020.

MCX COMDEX is designed & developed by the Research & Planning Department of Multi Commodity Exchange of India Ltd. (MCX) in association with the Indian Statistical Institute (ISI), Kolkata. Also Group Indices for MCX AGRI, MCX METAL & MCX ENERGY on commodity futures prices have been developed to represent different commodity segments as traded on the exchange.

Advantage of MCX COMDEX/p>

• The COMDEX give users the ability to efficiently hedge commodity and inflation exposure and lay off residual risk.

• Protection can be established regardless of overall market direction.

Eligibility Criteria

Liquidity is most essential eligibility criteria for commodities to be included in the index. It means number of contracts traded on MCX of individual commodities (including all varieties) in a specified period is taken as eligibility criteria. The constituents of the Index are liquid commodities traded on the Exchange.

MCX COMDEX weighting approach is equally relying on factors that are endogenous to the futures market (liquidity on the exchange) and exogenous to the futures market (physical market size). The rebalancing is done annually or as and when deemed necessary by the Index management team on price-percentage basis. The last weightage has been rebalanced on June 13, 2019.

Weightage of commodities in MCX COMDEX

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week