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WEEKLY VIEW OF THE MARKET

Indian markets hit their record highs and ended the week with smart gains as Nifty was up by nearly 1.5% while Banknifty also surged more than 1%. Among sectors, buying was witnessed in PSU Banks, Metal, IT and Auto counter while some pharma names traded under pressure. From derivative front, call writers were seen covering their short positions while put writers added hefty open interest at 12100 & 12200 put strike. From the technical front, both the indices have seen maintaining their uptrend, while trading in a rising channel on daily and weekly interval. However at current juncture secondary oscillators suggest that both the indices are now trading in overbought territory and we might witness some consolidation at higher levels and one should keep stock specific approach for coming sessions. The broader trend is bullish for the markets, thus any dip into the prices towards support levels should be use to create fresh long positions. The immediate support for the Nifty is placed at 12220 & 12150 levels. As far banknifty is concerned 32200 & 32000 would act as strong support levels. The Implied Volatility (IV) of calls closed at 11.24% while that for put options closed at 12.15%. The Nifty VIX for the week closed at 12.12% and is expected to remain volatile. PCR OI for the week closed at 1.77.

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 (Mar) may continue to face resistance near 6335 levels, while the support level is near 6050 levels. We may witness a consolidation in the aforesaid range as not much business activity is happening on the spot markets. The stockists are staying away from bulk purchase due to lower quality supply. At Nizamabad market, arrivals are steady at 3100 bags, while at Sanglithe stockists are releasing old stocks, holding their good quality new stocks. Jeera futures (Jan) is expected to trade sideways in the range of 15800-16200 levels. The upside may remain capped owing to rise in area under cultivation. The acreage was at 375,533 ha as on 16th Dec, compared with 306,389 ha a year ago, state farm department data showed. The spot prices are also under pressure because of uncertain export prospects as the government has not renewed the export incentive scheme, which ended in July this year. The export volume for the current year is expected to be nearly half of what it was at the same time last year at over 1.6 lakh tonnes. This year, cardamom futures on the national bourse made a high of 3440 & currently trading near this level. The possibilities are higher, in days to come a new yearly high can be seen around 3600. Export orders from gulf countries, other than Saudi Arabia, and North Indian buying has perked up cardamom prices in the auctions at Bodinayakanur. The North Indian buyers for restockingcardamom following the fag end of the harvest season. Next year from January till April only inferior quality would arrive in the lean month. The new crop would be expected only by May.

BULLIONS

Bullion counter may trade with mixed bias as political uncertainty in US and Brexit concerns can result in safe haven buying. Meanwhile on US China trade war front mixed statements from US from both the US and China has been keeping investors on the edge. US officials mentioned that China will sign the phase one deal at the start of the January and the deal will not be subject to any renegotiations. China has announced a new list of import tariff exemption for six chemical and oil products from US, days after the two largest economies agreed on an interim deal. News of President Trump’s impeachment by U.S. House of Representatives can induce additional volatility. Donald Trump has become the third US president in history to be impeached by the House of Representatives, setting up a trial in the Senate that will decide whether he remains in office. A trial is set to take place in the Senate in the New Year but its timing is unclear. Gold may remain in narrow range of 37700-38400 levels whereas on the other hand, silver may recover towards 45500 levels while taking support near 43800 levels. After suffering several heavy defeats in the previous parliament, UK Prime minister Johnson now enjoys a large majority and should face little opposition in passing the Brexit bill. More than three years since Britain voted to exit the European Union in a 2016 referendum, the deep uncertainty over Brexit has been replaced by the firm deadline of Jan. 31.

OIL AND OILSEEDS

Soybean futures (Jan) has surpassed the previous high of 4370 witnessed during April’16 on the back of strong demand from crushing plants. Going ahead, this bullishness is to prevail till 4500, owing to domestic demand from livestock businessesamid tight supply from producing belts. The market participants are expecting soybean output to be 8-8.5 million tons, much lower than the official estimate of 13.5 million tons because untimely rain damaged the crop. Mustard futures (Jan) is trading near its 3year high of 4606 and the bullish trend is being attributed to firm demand from oil millers amid shrinking arrivals in spot markets, along with lag in sowing progress. Total area sown under rapeseed & mustard in Rajasthan, the largest producing state of the oilseed in the country, was at 21.71 lakh hectares as on December 16 in the current 2019-20 Rabi season, down 4.74% or 1.08 lakh hectares from 22.79 lakh hectares till December 13 a year ago, as per the state agriculture ministry's data.The Rajasthan agriculture department has set a target area of 25.50 lakh hectares for rapeseed & mustard sowing in the state this year. While, the total area sown under rapeseed & mustard was at 27.65 hectares in 2018-19. The edible oils on the national bourses are on a dream run like neverever; making new life time high’s every week tracking buoyant movement in CBOT soy oil price, trading near highest since Jan 2018 and based on the fact of Kharif crop damage as well as lagging Rabi crop sowing area. Coming week, soy oil futures (Jan) is seen heading towards 920-930, while CPO futures (Jan) will possibly test 760-770 on the higher side.

ENERGY COMPLEX

Soybean futures (Jan) has surpassed the previous high of 4370 witnessed during April’16 on the back of strong demand from crushing plants. Going ahead, this bullishness is to prevail till 4500, owing to domestic demand from livestock businessesamid tight supply from producing belts. The market participants are expecting soybean output to be 8-8.5 million tons, much lower than the official estimate of 13.5 million tons because untimely rain damaged the crop. Mustard futures (Jan) is trading near its 3year high of 4606 and the bullish trend is being attributed to firm demand from oil millers amid shrinking arrivals in spot markets, along with lag in sowing progress. Total area sown under rapeseed & mustard in Rajasthan, the largest producing state of the oilseed in the country, was at 21.71 lakh hectares as on December 16 in the current 2019-20 Rabi season, down 4.74% or 1.08 lakh hectares from 22.79 lakh hectares till December 13 a year ago, as per the state agriculture ministry's data.The Rajasthan agriculture department has set a target area of 25.50 lakh hectares for rapeseed & mustard sowing in the state this year. While, the total area sown under rapeseed & mustard was at 27.65 hectares in 2018-19. The edible oils on the national bourses are on a dream run like neverever; making new life time high’s every week tracking buoyant movement in CBOT soy oil price, trading near highest since Jan 2018 and based on the fact of Kharif crop damage as well as lagging Rabi crop sowing area. Coming week, soy oil futures (Jan) is seen heading towards 920-930, while CPO futures (Jan) will possibly test 760-770 on the higher side.

OTHER COMMODITIES

Cotton futures (Dec) is holding near the strong support near 19000, while on the contrary, it is facing resistance near 19345. The demand side, especially on the export front, is falling weak as it not being viable as compared to other regions. Currently, Indian cotton is being offered at 74 cents a pound, around 2 cents higher compared with the global market. It is reported that so far only 600,000-700,000 bales (1 bale = 170 kg) have been shipped out, and the total export contracts are yet to hit the 10 lakh bales mark. On the international market, the market participants are cautious as there has been only a verbal trade agreement between U.S & China but not a written one. The trade deal announced last week will be signed in early January, U.S. trade negotiators said. The National Economic Council Director said that the second phase of talks would start "pretty soon" but offered no specific date.Phase Two and its outcome will depend in some way on the success of Phase One. Chana futures (Jan) may witness consolidation for the fifth consecutive week in the range of 4380-4515. At present, there is lots of news impacting the sentiments from both sides. Firstly, the Centre offered to sell 8.47 lakh tons of pulses to States at average market rates and secondly the government imposed the CIF value of Rs.200 per kg as Minimum Import Price for peas. Furthermore, import is allowed only through Kolkata sea port. Mentha oil futures (Jan) is likely to face resistance near 1330 & may witness profit booking towards 1300. Lack of fresh buying at higher levels may drag down the counter on the national bourse.

BASE METALS

Base metal counter may trade with positive path. China's central bank lowered interest rate on 14-day reverse repurchase agreements in step with similar cut in 7-day repo rate last month. China’s factory activity showed surprising signs of improvement in November, while the United States and China reached n preliminary agreement to resolve their 17-month-long trade war that hurt global economic growth and metals demand. Copper may take support near 435 levels and recover towards 455 levels. China's refined copper output rose 19.6% year-on-year to a record monthly high of 909,000 tonnes in November, according to data released by the National Bureau of Statistics. The discount of LME cash copper over the three-month contract tightened to $6 a tonne, a level not seen in seven and a half months, suggesting nearby supplies are tightening. Inventories in warehouses approved by the LME dropped to 162,225 tonnes, the lowest since March 13. Meanwhile, lead may remain sideways as it can move in the range of 150-158 levels. Zinc may recover towards 187 levels while taking support near 181 levels. The spread between LME cash and three-month zinc contracts flipped to a premium of $10.5 a tonne after staying in discount for four sessions, suggesting nearby supplies are tightening. Nickel prices can move with upside path as it may recover towards 1080 levels while taking support near 1000 levels. Aluminium prices can trade on mixed path in range of 131-138 levels. Aluminum Corp of China Ltd, would pay 1.29 billion yuan ($183 million) for a 10% stake in regional aluminium producer Yunnan Aluminium via a share offering.

TREND SHEET

TECHNICAL RECOMMENDATIONS

COPPER MCX (DEC) contract closed at Rs. 445.70 on 19th Dec’19. The contract made its high of Rs. 452.30 on 14th Oct’19 and a low of Rs.427.70 on 04th Dec’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 440.66.On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.74

One can buy around Rs. 440 for a target of Rs.457 with the stop loss of Rs. 433.

CRUDE OIL MCX (DEC) contract closed at Rs. 4360 on 19th Dec’19. The contract made its high of Rs. 4372 on 19th Dec’19 and a low of Rs. 3866 on 31st Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4230 on the daily chart, the commodity has Relative Strength Index (14-day) value of 65.87.

One can buy above Rs.4280 for a target of Rs. 4500 with the stop loss of Rs. 4180.

JEERA NCDEX (JAN) contract was closed at Rs. 16020 on 19th Dec’19. The contract made its high of Rs. 17100 on 04th Nov’19 and a low of Rs. 15520 on 16th Dec’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 15975 on the daily chart, the commodity has Relative Strength Index (14-day) value of 52.95.

One can sell at Rs. 16300 for a target of Rs. 15500 with the stop loss of Rs 16700.

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NEWS DIGEST

Ÿ The government has imposed the CIF value of Rs.200 per kg as Minimum Import Price for peas.

Ÿ The Department of Consumer Affairs that maintains buffer stock of pulses for the Union Government under the price stabilisation mechanism has offered approximately 8.5 LT of pulses to State Governments at average market rates.

Ÿ NSE has sought the SEBI approval to launch futures contracts of potato, tur, chana, and guar.

Ÿ Import of vegetable oils, both edible and non-edible, has dropped by 0.5% in November 2019 at 1,128,220 tons compared to 1,133,893 tons in November last year. - The Solvent Extractors' Association of India (SEA).

Ÿ Import of gold in any form has been placed in "restricted" category from the "free" category, as perDGFT.

Ÿ The total value of shipments of India’s farm produce exports have seen a sharp decline in the first seven months of the current financial year, fell 16 per cent in dollar terms to $8.8 billion in April-October.

Ÿ China unveiled a new list of import tariff exemptions for six chemical and oil products from the United States.

Ÿ The Bank of Japan (BOJ) is expected to keep monetary settings steady and maintain its upbeat view on the economy, suggesting policymakers are in no hurry to boost stimulus.

Ÿ U.S. investment bank Morgan Stanley is building up its base metals trading business after abandoning it four years ago.

WEEKLY COMMENTARY

In the week gone by, Commodities closed on higher side; CRB closed near 195. Positive actions in trade deal stimulated buying in metals and energy, at the same time buying was also there in bullion counter on political uncertainties caused by U.S. House of Representatives’ voting to impeach President Donald Trump. Both gold and silver prices were marginally up. Gold prices were up by around 15% as a result of the Sino-U.S. trade war and the worries of its impact on the global economy. In the energy pack, both crude oil and natural gas futures saw fresh buying. Oil prices stayed close to three-month highs as the China-U.S. trade talks showed signs of progress. On Thursday, China announced import tariff exemptions for six oil and chemical products from the U.S., just a few days after both sides reached an interim trade deal. The exemption will be in force for 12 months, ending on December 26, 2020. Both JP Morgan and Goldman Sachs raised their 2020 oil price outlook earlier this week as OPEC-led output cuts and an improved global trade outlook led to more optimism. Base metals futures saw some buying on positive trade deal. The 10-year U.S. benchmark note is now yielding 1.94%, only three basis points below what would be its highest mark since President Donald Trump’s escalation of the trade war with China back at the end of July. The Baltic Exchange’s main sea freight index slid for a 12th straight session on Thursday, hitting a six-month low, as reduced seasonal demand dragged down vessel rates across segments. Cardamom was up on firm demand from Kuwait. The overseas demand was basically because of the delay in the arrival of Guatemalan crop and this would benefit Indian cardamom to get a due share in the export market. Oil seeds counter was firm as USDA in its latest report has lowered India’s soybean production estimate for marketing year (MY) 2019/20 (Oct-Sept) to 9 million metric tons (MMT) on 11.3 million hectares to indicate poor yield. The sowing progress shows that across the country mustard has been sown over 5.5 million hectares, which is about 80% of total area. Lower-than-expected output forecast of CPO next year in Malaysia and Indonesia boosted its futures prices. Inventories had fallen to a threemonth low in November, but the decline was slower-than-expected. Cotton was down. This season the supply side is heavier on account of higher crop at 354.5 lakh bales (each of 170 kg) along with larger imports. Chana had limited upside as to improve their availability, the Centre on Wednesday offered to sell 8.47 lakh tonnes of pulses to States at average market rates.

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 $)

Bloomberg Commodity Index (BCOM)

Bloomberg Commodity Index (BCOM), launched in 1998, is a highly liquid and diversified benchmark for the global commodities market. Bloomberg Commodity Index (BCOM) is calculated on an excess return basis and reflects commodity futures price movements. The index rebalances annually weighted 2/3 by trading volume and 1/3 by world production and weight-caps are applied at the commodity, sector and group level for diversification.

Composed of 23 exchange-traded contracts on physical commodities, the 2020 target weights become effective January 2020. No new commodities will be added or removed as a result of the annual reconstitution.

The index is subject to the following requirements for diversification and minimum weightings:

• No single commodity (e.g., Wheat) may constitute more than 15% of BCOM.

• No single commodity, together with its derivatives, may constitute more than 25% of BCOM (e.g., WTI Crude Oil and Brent Crude Oil, together with ULS diesel and Unleaded Gas); and

• O• No group may constitute more than 33% of BCOM (e.g., Precious Metals)

Key Features

The index is made up of 23 exchange-traded futures on physical commodities.

The precious metals group weight will increase by 1.27% to 17.4%, led by gold.

The energy group will dip below 30% for the first time due to a weight decrease in all energy components except WTI crude oil.

WTI overtakes natural gas as the highest individual weight since the addition of Brent Crude in 2012.

Overall, BCOM will see weight increases in precious metals and softs, and decreases in energy, grains, industrial metals, and livestock.

Target weights of all BCOM components for 2020,as well as their comparative weights in 2019:

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week