Amara Raja Batteries Limited (AMARAJABAT)

Cholamandalam Investment and Finance Company Limited (CHOLAFIN)

WEEKLY VIEW OF THE MARKET

Volatility once again gripped the Indian markets in the week gone by as tug of war between bulls and bears kept the benchmark indices in a specific range. On one hand Nifty index ended the week on quite note, while on the other hand banknifty managed to hold above 31000 mark. From derivative front, call writers remained active in 12000 call strike and created fresh short positions while on downside 11800 strike holds with highest open interest in puts. The Implied Volatility (IV) of calls was up and closed at 13.73% while that for put options closed at 14.15%. The Nifty VIX for the week closed at 15.65% and is expected to remain sideways. PCR OI for the week closed at 1.21, which points towards put writing and is positive for markets. From technical front, both the indices are trading in a rising channel with formation of higher and higher bottom. However, secondary oscillators suggest that consolidation in both the indices at higher levels is likely to continue in coming week as well and we might witness stock specific action rather than any sharp move in index. However, as far Nifty is holding above 11800 mark the short term trend is likely to remain bullish and any decisive move above 12000 levels will add up further buying momentum towards 12100 levels.

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

The correction phase of turmeric futures (Dec) would possibly take a pause & find support near 5750 levels. The spot markets are witnessing higher sales amid lower level buying. Turmeric Merchants Association Salesyard, finger turmeric was sold at Rs.5,669-7,101 a quintal and root variety at Rs.5,399- 6,399 at Erode. Finger turmeric was sold at Rs.6,049-7,219 and root variety at Rs.5,269-6,439 at the Regulated Marketing Committee. At the Erode Cooperative Marketing Society, finger turmeric was sold at Rs.6,109-6,989 and root variety at Rs.5,699-6,459. Jeera futures (Dec) may witness short covering towards 16700-16800, taking support near 16200 levels. This season the acreage in Gujarat is lagging due to late sowing. So far, acreage under jeera was at 243 ha in the 2019-20 (Oct-Sep) Rabi season, lower from 1,543 ha last year, according to the Gujarat farm department. Dhaniya futures (Dec) is likely to trade higher towards 7000-7100, giving respect to 6630 levels. At present, the seasonal domestic consumption is higher due to ongoing winter season. According to traders, the price of Eagle and Badami varieties is trading higher at the Ramganj and Baran markets in Rajasthan due to good buying. Cardamom futures (Dec) is expected to trade on a bullish note towards 3000 levels. The sentiments of the market participants at the auctions are strong and positive, and the availability of quality capsules is also receiving assured buyers. The North Indian buyers are participating actively along with subdealers catering to exporters demand. This upcountry demand, coupled with active participation of exporters, is pushing cardamom prices to higher levels at auctions conducted at Bodinayakanur. The average price realised was Rs.2,741.73 per kg, while a maximum price of Rs.3,002 per kg.

BULLIONS

Bullion counter may witness lower level buying amid safe haven demand due to growing skepticism regarding US China trade deal. Global sentiment has been hit in recent weeks by conflicting assessments of progress in talks aimed at ending the two countries' trade spat. Gold prices have gained more than 14% this year on uncertainties over the months-long China-U.S. trade war, which has roiled financial markets and prompted fears of a global economic slowdown. Gold can recover towards 38600 levels while taking support near 37700 levels while silver can test 45500 levels while taking support near 43500 levels. Governor Powell also gave a positive outlook of the economy, but showed concerns of the effects of trade war on the economy. Trump threatened to jack up tariffs on Chinese goods if the countries fail to reach a trade deal, which could raise the price of cellphones, laptops, and toys less than two weeks before Christmas. There were hawkish signals from the U.S. Federal Reserve on further interest rate cuts, citing growth in the U.S. economy, a strong labour market and steady inflation. Meanwhile the political unrest in Hong Kong can also support gold, which is considered an alternative investment during times of geopolitical and financial uncertainty. So far this year, central banks have purchased 547.5 tonnes on a net basis, which is 12% higher year-over-year. Also, gold holdings grew by 258 tonnes in Q3, the highest level of quarterly inflows since Q1 2016, according to the WGC’s Q3 Gold Demand Trends report.

OIL AND OILSEEDS

Soybean futures (Dec) is expected to consolidate in the range of 3900-4100 levels with upside getting capped. The increase in arrivals of fresh soybean crop, due to harvesting catching pace, is currently weighing on the sentiments. The new crop has started arriving from Rajasthan and Madhya Pradesh. The demand side is also being projected to be bleak as exports of soyabean meal are likely to drop by 10 lakh tonne in the new season due to low output and non-competitive prices in world market. The outlook of mustard futures (Dec) is bullish as it may trade higher to test 4320-4380 levels. The initial projections show that this season, there may not be drop in overall acreage of mustard but due to late rains in September and October, farmers are waiting for water to dry up from their fields in low-lying areas. This has delayed the sowing a bit and it is expected that farmers will complete mustard planting by mid-November. CPO futures (Nov) is expected to face resistance near 655 levels after posing a bull run for the past two months. The supply side is likely to get heavier after the news that Indian refiners have resumed buying Malaysian palm oil after a gap of nearly a month and contracted around 70,000 tonnes of shipments in December as Kuala Lumpur has been offering a $5 per tonne discount over supplies from rival Indonesia. Soy oil futures (Dec) is expected to trade sideways to up in the range of 792-805 levels. The latest statistic show that soybean oil import is stagnant at around 30.0 lakh tons, (except 2015-16), while demand is expected to increase due to increase consumption in winters.

ENERGY COMPLEX

Crude oil prices may continue to remain on sideways path as lower than estimated surplus by OPEC nations and hope of trade deal between US and China is supporting the prices but larger than expected buildup of inventories is capping the upside. Crude oil may face resistance near 4280 while taking support near 3900 levels. EIA reported build of 2.2Mbpd compared with expectations for a build of 1.65Mbpd Gasoline inventories rose by 1.9Mbpd while distillate saw drawdown of 2.5Mbpd. OPEC slightly revised down its estimates for non-OPEC oil supply growth by 36,000 bpd to 2.17Mbpd. The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia grouping known as OPEC+ have been restraining production since January to try support oil prices. OPEC Secretary General Mohammad Barkindo stated that the global economic fundamentals remained strong and hopeful about trade deal between US and China. On the production side, U.S. shale production growth is already slowing in response to lower prices, and Saudi Arabia and its allies in OPEC+ are signalling current output restraints will be extended well into 2020. Natural gas can remain on volatile path on uncertain weather conditions in US. Prices can take support near 175 levels while facing resistance near 205 levels. The weather is expected to become warmer than normal over the next 6-10 and 8-14 days, but over the next 5-days weather over eastern portion of U.S. will remain cooler than normal sustaining gas heating demand. There are no expected disturbances in the Atlantic or Gulf of Mexico as the hurricane season officially ends at the end of November.

OTHER COMMODITIES

Cotton futures (Nov) will most probably find support near 18930 levels. In order to support prices, the Cotton Corporation of India (CCI) has begun procurement of the fibre in Maharashtra at minimum support price (MSP). CCI has so far begun procurement in Punjab, Rajasthan, Haryana and Gujarat, and now in Maharashtra, Telangana and Karnataka. Procurement in Odisha and Andhra Pradesh is yet to commence due to late crop. This season the supply side is heavier as the country is likely to produce 354.5 lakh bales in 2019-20, against the 312 lakh bales reported in 2018-19. The yearly balance-sheet estimates shows that the carryover stock estimated at the end of the season is 46 lakh bales. In the international market, ICE cotton futures is stuck in sideways zone as all eyes are anxiously awaiting an agreement to end the trade ware uncertainty that has slowed business investment around the globe. The latest news have highlighted that the United States and China are getting close to a trade agreement, White House economic adviser Larry Kudlow said, citing what he called very constructive talks with Beijing about ending a 16- month trade war. Chana futures (Dec) is expected to consolidate in the range of 4450-4570 levels. The upside may remain capped as millers are buying only to meet their immediate requirement for crushing. Mentha oil futures (Nov) is likely to rise for the third consecutive week towards 1340 levels, taking support near 1285 levels. Last week, the stocks at the MCX-accredited warehouses have reduced the highest by 77804 kgs in the past six consecutive weeks, which shows that the demand is on the higher side.

BASE METALS

Base metal counter may trade with subdued path as weak manufacturing and investment data from China fuelled concerns about Chinese economy. China and the United States are holding “in-depth” discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal. Copper may trade sideways bias and it can take support near 435 levels and resistance near 450 levels. Copper inventories in LME-approved warehouses fell to a five-month low at 224,425 tonnes, while stocks in warehouses tracked by the Shanghai Futures Exchange have declined 44% since March to 148,687 tonnes. Meanwhile, lead may remain sideways as it can move in the range of 151-158 levels. Zinc may witness lower level buying and may test 200 levels while taking support near 185 levels. China’s monthly production of refined zinc hit a fresh record high October, as high margins encouraged smelters to step up operations. Nickel prices can move with weaker path and may dip lower towards 1100 levels while taking resistance near 1170 levels. Nickel prices might be pressurized as Indonesian government allowed nine companies to resume with their exports till the year end after they were halted on late October’19. Aluminium can further dip towards 128 levels while facing resistance near 134 levels. China’s aluminium production in October fell 0.7% from the previous month. China, churned out 2.88 million tonnes of the metal last month. That was slightly down from 2.9 million tonnes in September and down 1.8% from a year earlier. The January-October output for the group of 10 nonferrous metals rose 4.6% YoY at 48.15 million tonnes.

TREND SHEET

TECHNICAL RECOMMENDATIONS

ZINC MCX (NOV) contract closed at Rs. 193.00 on 14th Nov’19. The contract made its high of Rs. 196.25 on 11th Nov’19 and a low of Rs. 181.25 on 03rd Oct’19. . The 18-day Exponential Moving Average of the commodity is currently at Rs. 191.67. On the daily chart, the commodity has Relative Strength Index (14-day) value of 58.319.

One can buy between Rs. 188-190 for a target of Rs. 200 with the stop loss of Rs. 184.

SILVER MCX (DEC) contract closed at Rs. 44723.00 on 14th Nov’19. The contract made its high of Rs. 51489.00 on 4th Sep’19 and a low of Rs. 38200 on 14th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 45020. On the daily chart, the commodity has Relative Strength Index (14-day) value of 40.876.

One can sell near Rs. 45100 for a target of Rs. 42500 with the stop loss of Rs. 46100.

CPO MCX (DEC) contract was closed at Rs. 650.40 on 14th Nov’19. The contract made its high of Rs. 656.40 on 13th Nov’19 and a low of Rs. 544.00 on 10th Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 618.24. On the daily chart, the commodity has Relative Strength Index (14-day) value of 87.289.

One can sell at Rs. 650 for a target of Rs. 620 with the stop loss of Rs 665.

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NEWS DIGEST

• OPEC expected demand for its oil to fall in 2020 as rivals pumped more despite a smaller surplus of crude in the global market.

• Growth in demand for fuel in India is on course to fall to its lowest in at least six years as the economy slows.

• China world's top steel-making country produced 81.52 million tonnes of crude steel in October, down from both 82.77 million tonnes in September.

• LME would take an extra six months to make its telephone trades compliant with transparency requirements set by European regulators.

• Chile's Codelco, the world's top copper producer, boosted output by 7.5% in September to 145,300 tonnes.

• The SEBI has decided to give more flexibility to exchanges regarding modifying contract specifications for all commodity derivatives contracts. Changes that exchanges can make include margins, launch date, among others.

• The mock trading of NCDEX AGRIDEX index will be held on Saturday, November 16, 2019. It will be made tradable after being approved from the SEBI.

• Import of vegetable oils during Oil Year 2018-19 (Nov.’18 to Oct.’19) i.e. edible oil and non-edible oil is reported at 155.50 lakh tons (15.55 Mn. T) compared to 150.26 lakh tons (15.02 Mn. T) for the same period of last year i.e. up by 3.5%. - Solvent Extractors' Association of India

• Malaysia struck key palm oil partnership deals with two major supply chain managers in the United Arab Emirates (UAE) and China to facilitate greater palm oil penetration in China, India and the Indian sub-continent.

• Energy-markets giant Intercontinental Exchange Inc., or ICE, will team up with Abu Dhabi’s state oil producer and some of the world’s biggest oil companies to launch a new futures exchange in the emirates.

WEEKLY COMMENTARY

It was an average week for commodities where we saw limited move in the prices. CRB saw marginal gain; closed near 190 levels. Bullion saw some bounce back after a sharp fall of last week. Gold prices continued a gradual recovery after weak economic data around the world reassured market participants that the trend toward easier global monetary conditions is still intact. Silver followed the positive move of gold and ignored the bearish base metals. Japan, China, Australia and the U.K. all reported economic data of one sort or another that was below expectations. In China, retail sales growth was the weakest in 20 years while fixed asset investment grew at the slowest rate since the country started publishing that data series. Base metals felt the pinch of weaker data and most of them closed in negative territory. Oil prices settled slightly lower after U.S. oil inventories rose more than expected. That was coupled with a decline in equities, which hurt bullishness. The Energy Information Administration said U.S. crude inventories rose by 2.2 million barrels for the week ended Nov. 8, compared with expectations for a build of 1.65 million barrels. Once again, U.S. oil production for the week came in at a record of 12.8 million barrels per day. Natural gas also moved down. Dry natural gas production in the United States will rise to an all-time high of 92.10 billion cubic feet per day (Bcf/d) in 2019, the EIA reported on Wednesday. That figure is up 10% from 2018. Nickel, which is the best performer in metals pack year-to-date (YTD), has declined more than 15% from a multimonth high of $18,850 early September. Jump in stockpiles at SHFE along with signs of easing tightness in the physical market amid trade war tension weighed down the sentiments.

In agri, cotton futures managed to see some gain as cotton prices ruled steady in Gujarat, Maharashtra and Andhra Pradesh. Chana prices strengthened despite the news that Nafed planning to sell procured stock around 10 lakh tonnes state wise in next three month. Menthe futures prices propped up on plunging stocks at the MCX-accredited warehouses since past five consecutive weeks. Spices futures were mostly weak, except jeera. Turmeric futures were weaker demand remained lacklustre in the market as quality of spice that is being supplied reported inferior. Dhaniya traded in a range. Unfavourable weather conditions in the major growing areas have led to delays in sowing for the new season by around 10-15 days. International soyabean prices firmed. The world's two largest economies are trying to finalise a limited deal that focuses largely on increased Chinese purchases of American farm products and the opening of China's financial services market.

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 $)

NCDEX AGRIDEX INDEX

NCDEX has launched the “ AGRIDEX INDEX” with effect from, November 11, 2019. NCDEX AGRIDEX is India’s first return based agricultural futures Index which tracks the performance of the ten liquid commodities traded on NCDEX platform. The index represents the basket of ten commodities which are selected based on the liquidity on exchange platform. The NCDEX AGRIDEX serves as a benchmark and one can replicate the performance of the underlying commodities. These underlying commodities contracts are mostly deliverable, settled on spot prices, have circuits governing daily price limits and also restrict size of participation using position limits at client and member level. Strong surveillance exists both at the exchange and the regulator to prevent any abnormal trading behavior in these commodities. The index therefore will be a robust indicator of the broader market.

AGRIDEX Components for FY 2019-20

The following chart summarized the components of the index with their weightages for the period April 01, 2019 to March 31, 2020. A cap of 20% and floor of 3% is enforced onto the individual Commodity Index Percentage. The cap ensures that no single Commodity dominates the index performance. The floor ensures that each commodity, however small, has a meaningful contribution to the Index.

Some highlights of the Index:

• Commodities are selected based on the liquidity on exchange platform.

• 50-50% weights are assigned based on national production (average of last five financial years ) & traded value (last calendar year) on exchange respectively.

• Both upstream & downstream commodities are considered.

• Rebalanced annually on 1st April. Reselection of commodities & reassignment of weights is done based on the criterion.

• Rollover is done on first 3 days of expiry month.

• To ensure diversification, no related group of commodities (sectors) may constitute more than 40% of the weightage in the index.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week