Hindustan Petroleum Corporation Limited (HPCL)

Tech Mahindra Limited (TECHM)

WEEKLY VIEW OF THE MARKET

Indian markets extended declines for the fifth consecutive session and ended the week on negative note with Nifty ending below crucial support of 11200 mark (SPOT). From derivative front hefty call writing was observed at 11300 & 11400 call strike which should now act as strong hurdle for Nifty in coming week. From technical front Nifty has once again slipped below its long term moving averages which may once again limit any sharp upside into the prices. The Implied Volatility (IV) of calls was up and closed at 16.68% while that for put options closed at 17.65%. The Nifty VIX for the week closed at 17.70% and is expected to remain volatile. PCR OI for the week closed at 0.91.For coming week we expect that volatility is likely to grip the market within broader range of 11000-11300 and any decisive move beyond this range will further decide the next momentum into the index.

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

In days to come, more downside can be seen in turmeric futures (Oct) as it can test 5700 levels. Spot turmeric prices are quoting lower day after day at the major Erode market amid sluggish demand. According to traders, demand is weak due to the ongoing rains in many states.Only poor quality turmeric is arriving for sale at Erode.At the Erode Turmeric Merchants Association Sales yard, the finger turmeric was sold at Rs.5,669-7,809 a quintal. The root variety was sold at Rs.5,251-6,465 a quintal.At the Regulated Marketing Committee, the finger turmeric was sold at Rs.5,608-6,614 a quintal, the root variety was sold at Rs.5,354-6,195 a quintal. Jeera futures (Oct) may consolidate in the range of 16600-17500 levels, with upside getting capped. Prices are witnessing correction in the benchmark market of Unjha in Gujarat due to a sharp rise in arrivals. In Unjha, the spice is being sold at 16,600 rupees per 100 kg, while arrivals today are pegged at 30,000 bags (1 bag = 55 kg), double the daily average quantity. Dhaniya futures (Oct) may continue to face resistance near 5800 levels & trade with a downside bias. In the spot market, the demand is weak and there is forecast of higher acreage in the 2019-20 (Oct-Sep) due to better monsoon. Cardamom futures (Nov) may witness an upside momentum towards 3200-3300 levels. The sentiments are upbeat due to strong festival season demand& lesser supply. This is the peak season for cardamom. Ideally, at least 150tn should arrive in the market, but only half the quantity is arriving for sale

BULLIONS

Bullion counter may continue its rebound on safe haven buying amid Brexit concerns, falling stock markets, concerns about economic growth as shown by various economic indicators are keeping the sentiment upbeat. U.S. data deepened concerns over economic growth bolstered bets for further interest rate cuts by the Federal Reserve. U.S. services sector growth hit its slowest pace in three years last month, and job growth in the largest segment of the economy was the weakest in half a decade. Institute for Supply Management (ISM) reported that U.S. manufacturing activity slumped to a more than 10- year low in September. Gold can test 39000 while taking support near 37000 while silver can test 47000 while taking support near 44000.The weaker-thanexpected U.S. economic data weighed on global financial markets, extending a stock slide that has pushed world equity benchmarks back to lows last seen in August. Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose to 923.76 tonnes their highest since mid-November 2016. Top trade negotiators from the U.S. and China will meet in Washington on Oct. 10 in a bid to break the deadlock in their talks. The ministerial-level talks will come right before the deadline for imposing new tariffs on $250 billion worth of Chinese goods, set by U.S. President Donald Trump. Investors await the next Fed meeting later this month on 30th October as Fed cut interest rates in September for the second time this year. Although the Federal Reserve signaled at its last monetary policy meeting that it is not expecting to change interest rates for the rest of the year

OIL AND OILSEEDS

Soybean futures (Oct) may trade sideways to down in the range of 3600-3850 levels. Forecast of sunny days in most parts of Madhya Pradesh after heavy rains has increased the likelihood of a rise in fresh arrival in spot markets. Harvest in the state has been delayed by a fortnight following incessant rains. On the CBOT, U.S soybean futures (Nov) is looking bullish towards $9.40 a bushel. The market participants have turned optimistic since China resumed purchases of the key U.S. crop ahead of trade talks in Washington next week. Renewed Chinese buying combined with cool and wet weather impeding soybean harvesting in the U.S. and Brazil has been driving up a soybeans market that has otherwise been declining this year. Mustard futures (Oct) may trade higher towards 4020-4040 levels. The month-on-month demand from crushers is steady near to 5 lacs MT & the stock with processors & stockists is pegged at 32.50 lacs MT in September as compared to 37.50 in the month of August. Soy oil futures (Oct) may trade with a downside bias in the range of 750-770 levels following the tepid buying in wholesale markets. Most of the demand for the ongoing Navratri festival has already been met. CPO futures (Oct) is looking weak as it may plunge towards 538 levels taking negative cues from the international market. The market is not expecting robust exports for October, and there could be a slow build-up of stockpiles, so many traders are not keen on long positions. Next week, there will be caution will be seen in the edible oil counters ahead of the demand-supply monthly estimates by U.S Department of Agriculture on October 10

ENERGY COMPLEX

Crude oil prices may remain on weaker side on concerns about global oil demand and resumption of Saudi oil. Meanwhile U.S.-China trade talks, starting this week will be particularly important, given the sharp drop in the oil price recently. Saudi Arabia’s energy minister Prince Abdulaziz bin Salman stated that the world’s top crude oil exporter has fully restored oil output after attacks on its facilities last month that knocked out more than 5% of global oil supply. But some short covering can be seen on geopolitical tensions in Middle East and souring US Iran relations. Meanwhile continued falls in drilling activity has seen monthly growth in U.S. shale oil output fall, from 150 thousand barrels per day (kbpd) to only 50 kbpd. Crude oil may test 3600 while taking resistance near 4000 levels. Saudi Arabia pumped about 9.78 million bpd in August. Russia’s output declined to 11.24 million bpd in Sept. 1- 29, down from 11.29 million bpd in the previous month. PDVSA and China’s state-run CNPC have stopped all oil blending at their joint venture operation, Petrosinovensa. Russian Energy Minister Alexander Novak said oil prices were stable for now but the market outlook was uncertain. Natural gas may witness lower level buying as it can test 180 while taking support near 155. Recently forecasts for cooler weather this month drove expectations of increased demand for the fuel, offsetting a slightly bigger-than-expected storage build. EIA inventory data showed a build of 112 Bcf against the expectations for a build of 109 billion cubic feet

OTHER COMMODITIES

Cotton futures (Oct) is expected to trade with an upside bias & test 20100 levels. Despite an increase in arrivals prices are stable in the major spot markets of North India mainly due to local demand. The arrivals of new crops are increasing gradually due to clear weather conditions. At the same time, demand from local mills is being seen in the market. In South India, the arrivals are still facing a delay and mills are short of stock. In the international market, ICE cotton futures may rally till 64 cents per pound. The sentiments are positive on Sino-U.S. trade optimism and expectations that the U.S. Department of Agriculture will trim its cotton crop forecasts in next week's monthly supply demand report. Moreover, there is a possibility of a tropical disturbance coming into the Gulf of Mexico and we are anticipating a reduction in cotton crop in the next week's supply-demand numbers.Also helping cotton prices was the USDA's weekly export sales report, which showed that net sales of 177,800 running bales (RB) were up 15 percent from the previous week. Chana futures (Oct) is expected to trade range bound within 4200-4350 levels. At present, there is fresh buying from millers at lower rates to meet their immediate requirement for crushing. Moreover, physical buying had increased ahead with rise in consumption demand during festive period till Diwali. Mentha oil futures (Oct) is likely to fall further towards 1175 levels amid a rise in supply from the major producing regions in anticipation of lucrative returns. Weak demand in the spot market by consuming industries is also weighing on the prices

BASE METALS

Base metal counter can witness range bound movement as Nickel may extend gains on supply concerns. Copper may remain downbeat as it can test 425 levels while taking resistance near 445 levels. On-warrant stocks of copper in LME-registered warehouses jumped to 195,425 tonnes, the highest since Sept. 20, after 39,750 tonnes of arrivals. The discount for cash copper vs threemonth metal on the LME rose to $35 last week, the most since August last year, pointing to plentiful availability. Weak copper supply growth will likely tighten the market but prices will remain around current levels due to the poor demand outlook. Meanwhile, Lead may also remain sideways as it can move range of 150-158 levels. Zinc may witness lower level buying as it can test 187 levels while taking support near 177 levels. Treatment charges by Chinese zinc smelters jumped to $280, the highest since at least 2014. Higher treatment charges suggest that production will remain strong for the rest of the year. The premium for the cash over the three-month contract soared to a three-month high of $50 a tonne due to worries about supplies on the LME market. These worries have been fuelled by one company holding large amounts of cash contracts, and stocks in LME warehouses near historical lows at 67,300 tonnes. Nickel prices can move with upside bias as it can test 1270 while taking support near 1200. Aluminium can trade with sideways to weak bias as it can test 130 while facing resistance near 140 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

NATURAL GAS MCX (OCT) contract closed at Rs. 165.90 on 03rd Oct’19. The contract made its high of Rs. 198.60 on 17th Sep’19 and a low of Rs. 154.40 on 08th May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs.174.90. On the daily chart, the commodity has Relative Strength Index (14-day) value of 38.459.

One can buy near Rs. 164 for a target of Rs. 185 with the stop loss of Rs. 154.

COPPER MCX (OCT) contract closed at Rs. 436.05 on 03rd Oct’19. The contract made its high of Rs. 460.95 on 13th Sep’19 and a low of Rs. 431.70 on 1st Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 444.10. On the daily chart, the commodity has Relative Strength Index (14-day) value of 31.114.

One can sell below Rs. 430 for a target of Rs. 410 with the stop loss of Rs. 440.

TURMERIC NCDEX (NOV) contract was closed at Rs. 6002.00 on 3rd Oct’19. The contract made its high of Rs. 7074.00 on 29th Aug’19 and a low of Rs. 5866.00 on 3rd Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6285.54. On the daily chart, the commodity has Relative Strength Index (14-day) value of 31.817.

One can buy above Rs. 6050 for a target of Rs. 6600 with the stop loss of Rs 5850.

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NEWS DIGEST

• The CME Group will launch two gold futures contracts on October 14, 2019.

• The China Securities Regulatory Commission (CSRC) has approved the launch of the country’s first commodity ETFs.

• CME Group reached ADV of 20.2 million contracts during third-quarter 2019, up 30% from third-quarter 2018. September 2019 volume averaged 19.7 million contracts per day, up 13% from September 2018.

• The torrential rainfall in Madhya Pradesh has taken a toll on Kharif crops spread across 6.1 million hectares, mainly soybean and urad.

• The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) of China for September rose to 51.4 from 50.4 in August.

• Freight rates for U.S. crude tankers bound for Asia were bid up to a more than three-year peak as U.S. sanctions on a Chinese transport giant cut vessel availability.

• Global aluminum output in the first eight months of 2019 slid by 0.6% to 42.5 million tonnes with production down in both China and the rest of the world.

• U.S. crude oil output fell 276,000 barrels per day (bpd) in July to 11.81 million bpd, its third monthly decline from its record high in April at 12.12 million bpd.

WEEKLY COMMENTARY

Weaker than expected economic data, once again created fear in commodity markets and CRB closed weak for nonstop third week. Safe haven buying returned in both dollar index and gold. Gold prices slipped on Thursday regained the $1,500 level after weak data from the U.S. and Hong Kong dampened investor sentiment. The weak data increased the likelihood of more rate cuts from the U.S. Federal Reserve. Ongoing political unrest in Hong Kong was also in focus. In India, some weakness in INR added more premiums in gold prices and it traded near 38350. Though, the upside was capped on dampened spirit for physical gold in India and China. India's gold imports plunged to only 13.5 tons, lowest in three years, in September, in response to high prices and a more than usually disruptive monsoon season. In energy counter, natural gas prices revived from the low whereas crude remained closed in bearish territory. Oil futures were on track for large weekly losses on fears that slower global economic growth will hurt fuel demand, even as Saudi Arabia said it has fully restored oil output after recent attacks. Weak U.S. services sector and jobs growth data on Thursday added to worries about global oil demand. In the energy space, it was natural gas futures that were pacing gains, with November natural gas on NYMEX climbing 2.89% on Thursday. In base metals, copper was weak, nickel traded in range and the trio, aluminium, zinc and lead gained some strength. Weak data from China, the US and Germany, together responsible for 70% the world’s consumption of copper, have intensified the selloff in recent days. Some 10% of copper mines around the globe are operating at a loss; as per a report.

In agri, the most active October rubber contract on the Indian Commodity Exchange hit an eightmonth low of 12,115 rupees per 100 kg, tracking spot markets. Demand from tyre makers is subdued due to a slowdown in domestic automobile sales. In India, the automobile sector accounts for about 85% of the country's rubber consumption, of which 65% is used for tyres and 20% is used for other accessories. In spices, only turmeric futures were weak; rest of the spices gained some buying momentum. New crop arrivals of cardamom are already delayed, and the peak arrival season is expected to start only in November. Soyabean rally saw some breather though the fundamentals were still intact. Concerns of damage to the crop due to the recent floods in key growing regions may cap the downside. CPO, refined soya oil futures and mustard followed the trend of soyabean and closed the week on negative note. There was no respite for cotton counter. Indian traders have been struggling to sign export contracts for the new season crop as local prices are prevailing above global prices.

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 $)

First Advance Estimates for 2019-20

• The First Advance Estimates of production of major Kharif crops for 2019-20 have been released by the Department of Agriculture, Cooperation and Farmers Welfare 23 Sep. 2019. As per First Advance Estimates, the estimated production of foodgrains crops is estimated at 140.57 million during Kharif 2019-20 showing decline from 141.71 million tonnes in kharif 2018-19.The production during 2019-20 is higher by 8.44 million tonnes than the average foodgrain production of previous five years (2013-14 to 2017-18).

• Total production of kharif rice during 2019-20 is estimated at 100.35 million tonnes. It is higher by 6.80 million tonnes than the five years' average production of 93.55 million tonnes but 1.6 per cent less than 102 million tonnes estimated in the 4th advance estimate for 2018-19.

• Production of kharif nutri / coarse cereals is estimated at 32.00 million tonnes. It is higher by 1.01 million tonnes than the production of 30.99 million tones achieved during 2018-19.

• Total kharif pulses production during 2019-20 is estimated at 8.23 million tonnes. It is higher by 1.00 million tones than the five years' average production of 7.23 million tonnes but over 3 per cent lower as compare to 8.59 million tonnes produced in the previous monsoon crop season because of anticipated dip in moong yield and a marginal drop in the production of urad.

• Total kharif oilseeds production in the country during 2019-20 is estimated at 22.39 million tonnes which is higher by 1.11 million tonnes than the production of 21.28 million tonnes during 2018-19.The production of oilseeds during 2019- 20 is also higher by 2.17 million tonnes than the average oilseeds production.

• Total production of sugarcane in the country during 2019-20 is estimated at 377.77 million tonnes. The production of sugarcane during 2019-20 is higher by 27.99 million tonnes than the average sugarcane production of 349.78 million tonnes.

• Production of cotton estimated at 32.27 million bales (of 170 kg each) is higher by 3.56 million bales than the production of 28.71 million bales during 2018-19. Production of jute & mesta estimated at 9.96 million bales (of 180 kg each) is higher than the production during 2018-19.

As per 1st Advance Estimates, the estimated production of major crops during Kharif 2019-20 is as under(in million ton):

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week