ASIAN PAINTS LIMITED (ASIANPAINT)

HINDALCO INDUSTRIES LIMITED (HINDALCO)

WEEKLY VIEW OF THE MARKET

This week Nifty indices soared to multi week highs and climbed over 11550 mark along with bank nifty at its all time highs as the bull run in Indian markets continued on back of sustained buying in midcaps, small caps and banking stocks. However, from derivative front, options data suggests that 11600 levels will act as major resistance in Nifty as fresh call writing was seen in 11600 strikes, which currently hold with maximum open interest of nearly 39 lakh shares. As per option chain 11000 put strikes hold with the maximum open interest of nearly 40 lakh shares. However, the fresh addition of open interest has also been observed in 11400 & 11300 put strike which should act as near term support for the index. Implied Volatility (IV) of calls was down and closed at 14.45% while that for put options closed at 14.57%. The Nifty VIX for the week closed at 16.03% and is expected to remain sideways. The PCR OI for the week closed at 1.60 indicating put writing in recent rally. On technical front, it is expected that bullish momentum will likely to continue towards 11550 levels in coming sessions and every dip should be used as buying opportunity. The immediate support for nifty is now placed at 11400-11350 mark.

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 (Apr) is trading near its yearly low of 6100, hammered by dearth in domestic as well as export demand. This counter will possibly plunge further & make a new low by testing the quarterly support of 5925 levels. In days to come, the pressure from the supply side is likely to increase as the fresh Erode Turmeric may arrive for sale only in the middle of April, as the harvest is in progress in many places. For the time being, the spot markets are shut on account of local festival and Holi holidays. Erode market will re-open on Wednesday, while Nizamabad market will re-open on Monday. Jeera futures (Apr) is likely to extend its gains for the second consecutive week & test 15850, taking support near 15300 levels. The sentiments are positive because of strong demand for better-quality crop amid lower arrivals in Unjha market of Gujarat. The supply side fundamentals cite that in Gujarat, acreage has fallen by 5% to 315,000 ha with output seen 3% lower at 166,640 tn. However, this has been offset by Rajasthan, wherein jeera output is estimated at 249,960 tons this year, up from 207,830 tons last year, following a 19% jump in acreage. Coriander futures (Apr) is witnessing buying on dips & taking support near 6400 levels. In days to come, it may trade higher towards 6800-6850 levels owing to projections of lower crop. The crop in Gujarat is likely to be down by 52% to 38,890 tonnes, with acreage of 30,500 hectares. The largest grower, Madhya Pradesh, will also see coriander output at 1,16,510 tonnes, down 15% over last year. This season, the farmers have avoided this crop and turned to jeera or fennel seed instead.

BULLIONS

Bullion counter may witness some lower level buying as dovish stance by fed in recent meeting can support the prices. But appreciating local currency rupee and bounce in greenback can cap the gains. Moreover appetite for riskier assets improved on upbeat U.S. economic data thereby reducing safe haven demand for yellow metal. Citing a more modest outlook for the economy, the Federal Reserve last week held interest rates steady and signaled it did not plan to raise rates at all this year and would increase them up just once in 2020, providing a road map for a sustained period of easy-money policy. The Fed also announced that it will end a campaign to shrink its $3.8 trillion balance sheet later this year, a move that should help keep a lid on long-term rates. With plunging stocks hammering consumer and business confidence and inflation subdued, Fed Chairman Jerome Powell and other policymakers made an abrupt turnabout, saying the Fed will be “patient” as it weighs future hikes. Gold can recover towards 32600 while taking support near 31500 while silver can improve towards 39200 while taking support near 37700. Uncertainty regarding Brexit will keep investors edgy. Prime Minister Theresa May welcomed the European Union’s decision to delay Brexit, saying that lawmakers in the British parliament now had clear choices about what to do next. The U.S. imposed sanctions against Venezuela’s state-run gold mining company Minerven and its president, Adrian Perdomo, accusing them of illicit operations and propping up the government of President Nicolas Maduro.

OIL AND OILSEEDS

The trend of soybean futures (Apr) is bearish; hence the short covering may remain restricted near 3800 levels. In spot markets, price of soybean are trading weak owing to absence of any significant soymeal export deals along with strong rupee & restricted crushers' demand. Uncertainty over the early resolution of the US-China trade dispute has also impacted the sentiments as global prices under pressure. Soy oil futures (Apr) is likely to face resistance near 748 levels & once again selling may emerge from higher levels. The reason being is the hopes of cheaper imports due to stronger rupee and lower tariff rate for the second fortnight of March. The government slashed the base price for import of various edible oils for the current fortnight ending March 31 in view of falling global prices. A cut in base rate for calculating tax will make edible oil imports cheaper. Similarly, the recovery in CPO futures (Apr) will possibly get limited till 540 levels. The traders of palm oil in the international market have still a bearish outlook, viewing a potential trade war between the European Union and some of the world’s largest developing nations after the bloc imposed stricter limits on how the crop can be used in green fuels. In reaction to this, Malaysia has told the European Union (EU) that it will retaliate if the EU continues to discriminate palm oil. Mustard futures (Apr) can stand out of the its league as an upside momentum can be seen till 3850 levels. To shield the fall in prices below the MSP, Nafed plans to procure a large quantity of mustard seed at the minimum support price (MSP). At present, the central government order to start MSP operations is being awaited.

ENERGY COMPLEX

Crude oil price may extend its upside momentum as production cuts led by OPEC and U.S. sanctions on OPEC-members Iran and Venezuela boosted the prices higher. Meanwhile soaring US production is capping the upside. Crude oil can test 4300 levels while taking support near 3950 levels. The Organization of the Petroleum Exporting Countries (OPEC) on last week scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled. OPEC and a group of non-affiliated producers including Russia, known as OPEC+, started withholding supply to halt a sharp price drop in the second-half of 2018, when markets came under pressure from surging output as well as an economic slowdown. Venezuelan crude oil production has also dwindled amid U.S. sanctions and an internal political and economic crisis, plunging from a high of more than 3 million bpd at the start of the century to not much more than 1 million bpd currently. Soaring U.S. output has resulted in increasing exports, which have doubled over the past year to more than 3 million bpd. IEA estimated that the United States would become a net crude oil exporter by 2021. Natural gas may remain on sideways path as it can take support near 185 and resistance near 199. The weather is expected to remain normal to below normal for the next 6-10 day and 8-14 days. The calendar is fast approaching the end of the withdrawal season. It appears that inventories will be 8-10% below the 5-year average of inventories for this time of year.

OTHER COMMODITIES

Cotton futures (Apr) may witness some correction towards 21300-21150 levels, facing resistance near 21800 levels. This soft commodity is trading on a weaker note on the spot markets due to careful demand by mills and industrial buyers amid mixed cues from both domestic and US markets. On the other hand, the Cotton Corporation of India (CCI) is likely to start selling its existing stocks, procured in the ongoing 2018-19 season (Oct-Sept) from April. Chana futures (Apr) is not being able to hold up the gains due to ongoing domestic arrivals, supply from overseas & sluggish sale counters in processed pulses. Hence, the counter may get stuck in a consolidation within 4200-4350 levels. On the spot markets, chana (kanta) quoted at Rs.4,000-4,050 a quintal, while chana (vishal) ruled at Rs.4,100 and chana (desi) at Rs.3,900. The upside momentum of guar seed futures (Mar) is expected to restricted near 4400 levels, while guargum futures (Apr) may witness consolidation in the range of 8650-8850 levels with upside getting capped. Guar crop being a rain-fed crop, currently all the attention of the growers are on tracking the development of El-Nino & its impact on monsoon. In a recent report, the Australian Bureau of Meteorology has upgraded the outlook for a warming trend in the Equatorial Pacific from an El Nino 'watch' to El Nino 'alert', indicating a raised probability of an El Nino this year. But getting into the details, it is being concluded that this forecast agency also sees an evolving positive phase of the Indian Ocean Dipole (IOD) in JuneJuly-August, boosting the monsoon flows in the first three rainiest months of the Indian monsoon and also speed up the cultivation progress.

BASE METALS

In base metal counter, prices may trade with sideways bias. Rising LME inventories levels is exerting pressure on base metals while China’s announcement to cut tax for manufacturers from next month to boost growth in the world’s second-largest economy can cap the downside. China will cut value-added tax for manufacturing and other sectors on April 1, adding that cuts in taxes and fees remained a key measure to cope with downward pressure on its economy. Copper may take the support of 430 and resistance near 455. Capping gains in Copper is a 17% jump in on-warrant LME inventories to 761,425 tonnes recently. The reactivation of a smelter belonging to Chile's state owned Codelco, the world's largest copper producer, will take more time than expected the country's mining minister stated. A union at Chile's Sierra Gorda copper mine with over 520 workers, controlled by Polish mining company KGHM, could go on strike after rejecting the latest offer in contract negotiations. Meanwhile downside in Lead may witness some pause near 138- 140 levels while its upside will be limited near 145 Aluminium can remain sideways to weak bias as it can take support near 140 while facing resistance near 149. Zinc may remain on mixed path as it can take support near 192 while facing resistance near 203. Total LME zinc stocks remain at their lowest level since 2008 at 58,150 tonnes, with on-warrant material at 44,200 tonnes. Nickel can also witness further profit booking as it can test 850 while facing resistance near 920 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE OIL MCX (APRIL) contract closed at Rs. 4146 on 21st Mar’19. The contract made its high of Rs. 4170 on 22nd Feb’19 and a low of Rs. 3750 on 11th Feb’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4033.01.On the daily chart, the commodity has Relative Strength Index (14-day) value of 59.79.

One can buy at Rs. 4030 for a target of Rs. 4400 with the stop loss of Rs. 3850.

NICKEL MCX (Mar) contract closed at Rs. 892.30 on 21st Mar’19. The contract made its high of Rs. 960.80 on 06th Feb’19 and a low of Rs. 843.40 on 25th Jan’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 904.80.On the daily chart, the commodity has Relative Strength Index (14-day) value of 66.65.

One can sell at Rs. 910 for a target of Rs. 860 with the stop loss of Rs. 935.

JEERA NCDEX (APRIL) contract was closed at Rs. 15620 on 21st Mar’19. The contract made its high of Rs. 17250 on 31st Dec’18 and a low of Rs. 14965 on 26th Feb’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 15473.88 on the daily chart, the commodity has Relative Strength Index (14-day) value of 52.76.

One can buy at Rs. 15250 for a target of Rs. 15800 with the stop loss of Rs 15000.

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NEWS DIGEST

• US didn’t import any crude oil from Venezuela in the week to March 15, for the first time ever since the EIA began tracking weekly U.S. crude oil imports.

• U.S. crude oil production jumped more than 2 million bpd since early 2018 to a record 12.1 million bpd.

• China’s refined copper output in January and February rose by 6.3% YoY to 1.34 million tonnes.

• Brazilian miner Vale SA stated that a local court had cleared the way for it to resume operations at its Brucutu mine, its largest iron ore complex in the state of Minas Gerais.

• U.S. President Donald Trump stated that a trade deal with Beijing was coming along nicely, with U.S. trade negotiators poised to head to China this week for another round of talks.

• Indian state refiners will lift 8 million barrels of Iranian oil in April, a decline of about 12% from the previous month.

• NAFED has procured 204594.90 MT tur in Kharif-2018 season so far.

• Chances of El Niño rose to 70% in 2019: Accortding to Australia's Weather Bureau

• India's sugar production rose by 6% to 273.47 lakh tonne till March 15 of the current marketing year ending September 2019.

WEEKLY COMMENTARY

Recovery in CRB continued in the week gone by. However, the recovery was more because of downside in dollar index amid some fresh buying. The Fed earlier last week brought its threeyear drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year. Dollar index broke the crucial level of 96; nevertheless it recovered to some extent later on. Benefits of fall in dollar index went to the bullion counter and market players witnessed huge jump in the prices. Gold traded, pressured by rising stock markets but remaining on track for a third straight weekly gain after the U.S. Federal Reserve said there would be no further interest rate hikes this year. In MCX; Gold tried to regain the 32000 levels. Silver was few points shy away from 39000 levels. Oil prices hovered close to 2019 peaks reached the previous day, propped up by supply cuts led by producer club OPEC and by US sanctions against Iran and Venezuela. Prices have been propped up by supply cuts by OPEC and non-affiliated allies such as Russia. Natural gas traded down on mild weather concern. Base metals traded mix; copper and lead got corrected but zinc and aluminium ended on mixed note.

Fresh buying was witnessed in edible and oilseeds contract amid international firm market and better physical demand ahead of Holi festival. Soyabean saw a good rebound after a six week continuous downside. Even CPO gained marginally across the board. Cotton saw good buying supported by strong fundamentals. The market participants are waiting on the clarity of the export demand, after a news came out that the proposed summit between U.S. President Donald Trump and China's Xi Jinping to end the ongoing trade conflict between the world's two largest economies may be pushed back to June. Rally in Cocud looked little speculative now, hence cautious trade is advisable here. Cocud jumped from 1974 to 2280 in the time span of 3 weeks. Mentha oil saw healthy profitbooking after a seven week continuous rally. In spices, jeera, dhaniya and cardamom moved up whereas turmeric moved down last week on lower demand. The traders prefer only the new turmeric and also purchased little quantity of old turmeric for supply to the Masala firms and Turmeric powder grinding units. The arrival pressure is likely to increase in days to come as the fresh Erode Turmeric may arrive for sale only in the middle of April, as the harvest is in progress in many places.

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 $)

Brent Crude Oil on NSE

The National Stock Exchange (NSE) has launched a futures contract of Brent crude oil & Brent crude oil mini for trading on March 1, 2019. Both are cash settled futures product – 100 barrel Brent Crude Oil Futures and 10 barrels Brent Crude Oil Mini Futures. NSE has signed an agreement with ICIS, a leading global market information provider for the energy and petrochemical markets, to license its BFOE (Brent-Forties-Oseberg-Ekofisk) market data. All the contracts would have monthly expiry and the expiry day would be the last business day of the expiry month.

Brent Crude is extracted from the North Sea and its prices serves as a benchmark price for purchases of oil worldwide. India is 3rd largest consumer of crude oil in the world, after United States and China.

Contract Specifications of Brent Crude Oil Futures and Brent Crude Oil Mini Futures both:

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week