2020: Issue 738, Week: 1st - 5th June
A Weekly Update from SMC (For private circulation only)
NEY 
| Equity | 4-7 |
| Derivatives | 8-9 |
| Commodity | 10-13 |
| Currency | 14 |
| IPO | 15 |
| FD Monitor | 16 |
| Mutual Fund | 17-18 |
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n the week gone by, global markets moved little upward as hopes for a coronavirus I vaccine and the easing of lockdown restrictions worldwide drive investors back toward risk assets. Market shrugged off the approval of a new security law in Hong Kong, which could threaten its status as a global financial center and looked towards increased global stimulus. However on later part of the week, market looked anxious after President Trump said he would hold a press conference on China, raising jitters about a fresh standoff between the world’s two largest economies. Meanwhile, Japanese Prime Minister Shinzo Abe’s cabinet has approved a new $1.1 trillion stimulus package that includes significant direct spending, to spur the growth in the economy.
Back at home, domestic markets moved higher on hopes the government would give more relaxations and give states more autonomy in case it imposes the fifth phase of the nationwide lockdown. There was also expectation that government would announce more measures to support the fragile economy. Meanwhile, the recent data showed that the India's gross domestic product (GDP) was recorded at 3.1 percent in January-March 2020 quarter due to the coronavirus crisis. India's core sector output in April contracted an unprecedented 38.1 percent in April as the country was under lockdown for over two months due to coronavirus. The full impact of the lockdown on manufacturing and services will become more apparent in the June quarter. The government has been gradually easing lockdown restrictions, and is expected to announce further guidelines in the coming days. A recent data showed that Foreign direct investment (FDI) in India grew by 13 percent to a record of $49.97 billion in the 2019-20 financial year. In another development, the government has made 53 bulk drugs eligible for a production-linked incentive (PLI) worth Rs 6,940 crore, in a move aimed at reducing the country's dependence on Chinese raw materials in pharmaceutical manufacturing. Going forward, it is expected that a host of domestic earnings, threat of Covid -19 and other global factors along with domestic factors will continue to dictate the trend of the domestic stock market.
On the commodity market front, it was not so eventful week for commodities and CRB mostly traded in range and closed near 129 levels. Nevertheless the commodity index (CRB) has bounced back from the low of 100 to approx. 130. Production cut and the stimulus along with interest rate cut pushed up the prices higher. Ease in lockdown is another major trigger which made market little optimistic amid all odds. The shape of the Chinese economy is better. US started to see less new infections and lots of European countries started to travel around. These triggers are stimulating hope among investors at the same time they refrain to go long aggressively as geopolitical tensions are on rise. Gold should trade in a range of 45500- 47200 while silver may touch 49500 on higher side whereas support seems to be near 47500. Crude may take healthy profit booking from higher levels, if it comes near 2150-2250 then it should be a good buying opportunity. Markit Manufacturing PMI Final, ISM Manufacturing PMI, Non Farm Payrolls and Unemployment Rate of US, Interest Rate Decision and GDP of Australia, GDP of Switzerland, Unemployment Rate of Germany, Interest rate decision by ECB and Canada etc are few major triggers of market this week.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
SMC is a SEBI registered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.
SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.
The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.
SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.
DOMESTIC NEWS
Economy
• India's Gross Domestic Product (GDP) has fallen to 3.1% in the January-March quarter of 2020 amid the COVID-19 pandemic. The GDP for 2019-20 has dropped to an 11-year low of 4.2%
Pharmaceuticals
• Glenmark Pharmaceuticals has been granted final approval by the United States Food & DrugAdministration (USFDA) for Chlorzoxazone Tablets USP, 375 mg and 750 mg. This marks Glenmark's first ANDA approval out of their new NorthAmerican manufacturing facility based in Monroe,North Carolina.
• Sun Pharma Advanced Research Company and Sun Pharmaceutical Industries announced a worldwide licensing agreement on the development and commercialization of SCD-044 which is being evaluated as a potential oral treatment for atopic dermatitis, psoriasis and other auto-immune disorders. SCD-044 is entering phase 2 clinical trials.
• Dr Reddys Laboratories has received Establishment Inspection Report (EIR) from US FDA,forits Integrated Product Development Organization (IPDO) at MedchalMalkajgiri, Telangana, indicating closure of the audit and the inspection classificationofthis facilityisdeterminedas "NoActionIndicated"(NAI).
• Cadila Healthcare announced that the Company's formulations manufacturing facility located at Baddi, India has received an Establishment Inspection Report (EIR). The EIR report stated that the classification of the facility is ‘No Action Indicated (NAI)'. The USFDA had conducted an inspection at the facility from 2nd to 9th March, 2020. The audit had ended with nil observations.
Information Technology
• Tata Consultancy Services has announced the development of a cloudbased, end-to-end solution to help banks accept and process forgiveness requests as part of the Small Business Administration (SBA) Paycheck Protection Program (PPP) under the Coronavirus Aid Relief and Economic Security (CARES) Act passed by the US Congress.
• HCL Technologies has extended its partnership with technology firm Broadcom Inc. that designs, develops, and supplies semiconductor and infrastructure software solutions. The partnership, which was signed in 2018 will now include Symantec Enterprise Division (SED) consulting services, which was part of Broadcom’s enterprise security solutions.
Telecom
• Bharti Airtel and NODWIN Gaming, South Asia's leading esports company, today announced a partnership to further grow E-sports in India.
Packaging
• Uflex has recently developed a Personal Protective Equipment (PPE) Coverall 'Flex Protect' in joint collaboration with IIT-Delhi and INMAS, DRDO, Delhi. Flex Protect that comes with Four-layered Protection and Antimicrobial Coating has been approved by The Defence Research and Development Organisation (DRDO) for use by the front-line health workers who are fighting the battle against COVID-19.
FMCG
• ITC has entered into a share purchase agreement to acquire a 100 per cent equity in Sunrise Foods Private Limited, a company primarily engaged in the business of spices under the trademark "Sunrise". ITC said the proposed acquisition is aligned with its strategy to rapidly scale up its FMCG or fastmoving consumer goods businesses.
INTERNATIONAL NEWS
• US pending home sales index plummeted by 21.8 percent to 69.0 in April after tumbling by 20.8 percent to 88.2 in March. Economists had expected pending home sales to slump by 15.0 percent.
• US durable goods orders plunged by 17.2 percent in April following a revised 16.6 percent nosedive in March. Economists had expected durable goods orders to plummet by 19.0 percent compared to the 14.4 percent slump originally reported for the previous month.
• US initial jobless claims dropped to 2.123 million, a decrease of 323,000 from the previous week's revised level of 2.446 million. Economists had expected jobless claims to fall to 2.100 million from the 2.438 million originally reported for the previous week.
• Industrial output in Japan skidded a seasonally adjusted 9.1 percent in April. That missed expectations for a decline of 5.1 percent following the 3.7 percent drop in March.
• The unemployment rate in Japan came in at a seasonally adjusted 2.6 percent in April. That was beneath expectations for 2.7 percent but was up from 2.5 percent in March.
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THE RAMCO CEMENT LIMITED
CMP: 601.65
Target Price: 686
Upside: 14%
| Face Value (Rs.) | 1.00 |
| 52 Week High/Low | 883.30/456.50 |
| M.Cap (Rs. in Cr.) | 14173.48 |
| EPS (Rs.) | 26.57 |
| P/E Ratio (times) | 22.64 |
| P/B Ratio (times) | 2.94 |
| Dividend Yield (%) | 0.50 |
| Stock Exchange | BSE |
Investment Rationale
• The Ramco Cement’s main products include Portland cement, manufactured in eight production facilities that include integrated cement plants and grinding units with a current total production capacity of 16.5 million million tonnes per annum (MTPA) with 10 manufacturing facilities across India.
• The cement sale volume rose 3.53% to 28.44 lakh tonne units in Q3 December 2019 as against 27.47 lakh tonne in Q3 December 2018. According to the management, the sale volume has grown both in southern and eastern markets due to strong demand in all the segments viz., retail, infrastructure and affordable housing.
• The company’s strategy to grow in outside Southern markets started paying-off and commissioning of 3 MNT new satellite capacity in next 18 months will furthers aid to improve volumes and profitability. Moreover, visible change in fuel-mix and 12MW CPP (Captive Power Plant) will improve its operating synergy further.
• The management of the company is hoping to become the top cement company in South India by increasing its capacity. It has invested INR 3500 crore in the capacity expansion of existing plants and setting up new ones. The management of the company expects its new plant in Odisha and Kurnool will be commissioned soon.
• Currently, the company has strong presence in southern and eastern parts of the country with plants in Tami Nadu, Andhra Pradesh, West Bengal and the proposed one in Odisha. The grinding units at Kolaghat and Vizag had enabled it to serve the eastern markets efficiently, which has contributed to the increase in market share in that area.
• The company is doing its efforts towards debt reduction since last year which has resulted in lower.
finance cost thereby improving its profitability. The management of the company expects the operating cost continue to remain under control in view of favorable prices of fuels viz., pet coke, diesel. The company is taking continuous efforts to optimize the supply chain efficiency.
Risk
• Regulatory change
• Fluctuation in raw material
Valuation
Strong balance sheet, low debt and optimize operating capacity and management focus to increase market share would give strong base for the growth of the company. The company continues to focus on customer service, brand building and developing niche markets while maintaining highest quality standards. The company has been constantly focusing on various cost reduction initiatives and improving productivity without compromising on quality. Thus, it is expected that the stock will see a price target of Rs.686 in 8 to 10 months time frame on current P/Bv of 2.94x and FY21 BVPS of Rs.233.30.
SUPREME INDUSTRIES LIMITED
CMP: 1028.10
Target Price: 1250
Upside: 22%
| Face Value (Rs.) | 2.00 |
| 52 Week High/Low | 1413.95/791.15 |
| M.Cap (Rs. in Cr.) | 13059.63 |
| EPS (Rs.) | 36.80 |
| P/E Ratio (times) | 27.94 |
| P/B Ratio (times) | 5.78 |
| Dividend Yield (%) | 1.26 |
| Stock Exchange | BSE,NSE,MSEI |
Investment Rationale
• The Supreme Industries Limited is engaged in the manufacturing of plastic products.The company operates in two segments: Plastics and Construction. Its product groups include plastics piping system, which includes unplasticised poly vinyl chloride (uPVC) pipes, injection moulded polyvinyl chloride (PVC) fittings and handmade fittings, among others. It has 25 manufacturing facilities across India. The company has about 3,800 channel partners,supportedby25plantsacrossthecountry.
• Considering the bright future prospects, the Company has not slowed down its investment plans. The same was, however, delayed due to cessation of activities in different parts of the country as a result of Lockdown which still remains partially applicable in various parts of the country.
Various initiatives taken by the center and state governments have given desired boost to the plastic pipe business. There is quantum jump in c o n s tr u c ti o n o f a ff o rdabl e h o u s e s . Th e infrastructure activities comprising supplying drinking water and to boost the sewage system have gathered momentum.
• The Company expects that by September this year the business should be returning to normalcy and will move to growth path by November, 2020.
• Pipe margins were higher during the quarter (Q4FY20) but are not on a sustainable basis. Higher margins was due to better product mix-less of agri products, secondly PVC prices were rising from Jan'20 to 18th March resulting into inventory gain and material procurement discount on fulfillment of its commitment.
• Supreme Industries’ Q4FY20 revenue de-grew by 7
per cent y-o-y, on account of shutdown due to Covid-19 impact. But profit after tax grew by 4 per cent y-o-y on account of higher operating margin. EBITDA margin improved by 590 bps y-o-y to 19.1 per cent led by yearly discounts from raw material supplier and better product mix.
Risk
• Volatility in raw material prices
• Intense competition
Valuation
With the sound track record and strong market position in each segment it operates in, backed by its widespread distribution network and ability to introduce new products, the company is expected to see good growth going forward. Its proven product development capability benefits from collaborations with international manufacturers, resulting in strong revenue growth and above-average profitability. Thus, it is expected that the stock will see a price target of Rs.1250 in 8 to 10 months time frame on a one year average P/BVx of 6.49x and FY21 BVPS of Rs.192.61.
Source: Company Website Reuters Capitaline
Above calls are recommended with a time horizon of 8 to 10 months.
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The stock closed at Rs 3378.85 on 29th May 2020. It made a 52-week low at Rs 2100 on 23rd March 2020 and a 52-week high of Rs. 3583.75 on 23rd September, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 2973.78
Short term, Medium term and Long term bias are looking positive for the stock as it is trading in higher highs and higher lows on charts, which is bullish in nature. Apart from this, it has formed an “Inverted Head and Shoulder” pattern on weekly charts and also has given the breakout of same along with huge buying so buying momentum may continue for coming days. Therefore, one can buy in the range of 3330-3350 levels for the upside target of 3700-3800 levels with SL below 3170.
The stock closed at Rs 967.70 on 29th May 2020. It made a 52-week low of Rs 606.85 on 24th March 2020 and a 52-week high of Rs. 2215.59 on 31st May, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 1387.72
As we can see on charts that stock has been consolidating in narrow range and has formed an “Ascending Triangle” pattern on weekly charts and has given the breakout of same in last week, ended with marginal gains. Moreover, technical indicators such as RSI and MACD are also suggesting buying for the stock. Therefore, one can buy in the range of 955-960 levels for the upside target of 1100-1130 levels with SL below 900.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: CAPITAL LINE
Charts by Spider Software India Ltd
Above calls are recommended with a time horizon of 1-2 months
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Indian markets begin June series on subdued note after running sharply higher in May series. Nifty indices reclaimed 9500 levels on the back of sharp short covering. However, bank nifty outperformed the upmove as strong momentum was seen from lower levels in some of the heavyweights like HDFC twins, Axis Bank and ICICI Bank during the week. From derivative front, put writers are now actively adding open interest in 9200 strike which should act as strong support for the markets moving forward. On higher side, however, 9700 levels will remain crucial resistance for the markets.The Implied Volatility (IV) of calls closed at 26.38% while that for put options closed at 29.63%. The Nifty VIX for the week closed at 30.02% and is expected to remain volatile. PCR OI for the week closed at 1.48 flat as compared to last week. In coming week, we expect markets to remain in bullish mode and any dip into the prices should be use to create fresh longs. From technical front, Nifty has managed to move above short term moving averages and has managed to give breakout above the key resistance level of 9400.
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**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
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Turmeric futures (June) is expected to take support near 5100 levels, while the upside may remain capped near 5600 levels. The agricultural mandis in Nizamabad, Telengana, have resumed trade after remaining shut for over two months due to a nationwide lockdown imposed to curb the spread of coronavirus pandemic. The COVID-19 pandemic has led to the government extending the countrywide lockdown till May 31. However, some relaxations have been allowed since then. Spot prices of the turmeric increased at the markets in Erode as the demand has started coming from masala industries. Traders are showing interest and buying more than 90% of the arrivals Jeera futures (June) may witness consolidation in the range of 13300-13700 levels. The gains are getting capped due to a sharp rise in supplies of around 40,000- 50,000 bags (1 bag = 55 kg). However, the spot prices in Unjha, the benchmark market, are steady at 13,800 rupees per 100 kg. In the present scenario, the auction of Jeera is being auctioned at the agricultural produce market committee on alternate days. Cardamom futures (June) may show an upsurge towards 1800, taking support near 1550 levels. After a gap of more than 60 days, cardamom auctions resumed at Puttady & being the first harvest, field fresh varieties moved up in the price range of Rs.1,850-1,950 a kg, while export quality 8 mm capsules saw good demand with rates hovering at Rs.2,400. There was a good movement for the present bulk because of its fancy colour, with prices in the range of Rs.1600-1,700 kg. Meanwhile, the first shipment of 12 tonnes to Saudi Arabia after the lifting of the ban there has received encouraging response, as is evident from repeat orders.
Bullion counter corrected as major global economies further eased coronavirus-led restrictions, fuelling hopes of economic recovery and bolstering risk appetite. Still, the major trend for the counter is the upside. It is expected that Gold may test 48600 and may take support near 45400. Gold prices have put in a strong bounce from support over the past two days, and this follows a week of retracement after the precious metal had pushed up to yet another fresh seven-year-high. As looked at last week, just as Gold prices were setting that fresh high-watermark, FOMC Chair Jerome Powell communicating to markets that there was ‘no limit’ to what the Fed could do with the lending programs available helped to fire Gold prices higher. Denting sentiment further, China approved a decision to go forward with national security legislation for Hong Kong, which could erode the city's freedom and jeopardise its role as a financial hub. U.S. President Donald Trump's top economic adviser warned that Hong Kong, which has enjoyed special privileges, may now need to be treated like China when it comes to trade and other financial matters. Silver is following gold’s path, although it did outperform last week where we saw more selling pressure in gold compared to silver. The outperformance in Silver is because it could benefit from optimism about increased industrial demand as economies reopen following the COVID19 pandemic. At the same time, the metal also draws investment demand from those worried about a second wave of the virus. Silver may trade in the wider range where we may witness both side swings where support for the counter is seen near 46800 whereas resistance near 49000.
Soybean futures (June) is likely to witness consolidation for the sixth consecutive week in the range of 3700-3900 levels. The weakness in U.S soybean, due to rising tension between U.S & China is a concern for the market participants. Another interesting factor is that the U.S. supplies about onethird of the soybeans used in the aquaculture sector. Due to COVID-19, the food service sector has seen a 70% reduction in sales. Due to social distancing, the aquaculture sector may witness reduced seafood consumption and decreased soymeal demand. In mustard futures (June) buy on dips would be suggest near 4400, as the U-shaped recovery may continue till 4650 levels. Due to the nationwide lockdown, the arrival of mustard in the mandis these days is only 50% compared to last year. These days, there are reports of daily arrival of 2.5 to 3 lakh bags of mustard in the producing markets of the country as compared to 6 lakh bags last year. Soy oil futures (June) is looking bullish and seen moving towards 800, taking support near 770 levels, whereas CPO futures (June) may witness an extended rally to test 660 levels. As the agreements which India had signed with Indonesia and Malaysia way back in 2010 not allowing India to raise duties, has now come to an end and India is free to raise duties. The Solvent Extractors Association has suggested the government to increase import duties on soya and sunflower oils to 45% from the current 37.5%, while crude palm oils to 50%. The government may look at demands for raising the import duty on edible oil gradually in a bid to incentivise farmers to grow more oilseeds locally.
The Crude oil market has been extraordinarily resilient. The main reason for the rally is strict compliance by OPEC+ in cutting their production and bounce in demand due to the reopening of economies. Russia reported that its oil output had nearly dropped to its target of 8.5 million barrels per day for May and June under its deal with the OPEC. The EIA's report, however, also showed refiners boosted output and gasoline stockpiles fell unexpectedly, while crude inventories at the US Cushing storage hub in Oklahoma fell 3.4 million barrels. Oil prices have rebounded in recent weeks on anticipation of improved demand after the coronavirus pandemic sapped worldwide consumption by roughly 30%. Overall investment is dropping and US production cuts are balancing out the supply glut, but demand still has not bounced back entirely. Momentum is trending higher. Crude oil for coming week may trade with bullish bias where it may take support near 2280 whereas break and sustain above 2640 may extend the bullish rally towards 2850. Buyers returned to natural gas following the recent slump. The recent jump in prices attracted 24k lots of fresh longs resulting in the net long rising to 136k lots. Falling production due to less drilling by US Shale companies is helping NG’s prices. The price action on the weekly chart displays a pattern of marginally higher lows since late March which is suggesting base is forming around 120 in MCX. Natural gas may continue to trade in the range of 125-149.
Cotton futures (June) is expected to consolidate in the range of 15400-15800 levels. The upside may remain capped owing to weakness being witnessed in the international cotton prices, due to concerns hovering over China’s demand from U.S under the Phase-1 trade deal. On the contrary, the factor that may support the domestic prices is the locust attack in parts of India, posing a threat on the Kharif cotton crop. The sowing in the North India has completed to the extent of 80% of the season's total sowing. In the central and southern parts of India, sowing is going to start in the first week of June. These locusts are very dangerous and are feasting on all sorts of plants, vegetation and the standing crops. Chana futures (June) will probably continue to take support near 4035, while the upside may get extended towards 4200 levels, owing to prospects of higher procurement. Rajasthan allowed government agencies to procure chana from up to 120 farmers in a day, double of the earlier cap. The status of procurement, shows that NAFED during lockdown period has procured 7.33 Lakh MT Gram (Chana) from 9 States namely Andhra Pradesh, Telangana, Karnataka, Rajasthan, Maharashtra, Madhya Pradesh, Gujarat, Uttar Pradesh and Haryana. Mentha oil futures (June) may witness rise on sell facing resistance near 1090, while the downside may get extended towards 1040 levels. The harvest operations of this mint is on full swing, but due to lockdown the business is getting affected as the farmers are not able to sell their produce to the oil factories, through traders. Selling pressure is likely to increase further from the first week of June, as arrivals are likely to touch 400-500 drums per day.
Base metal prices may trade in the range on mix fundamentals. Copper prices may trade in the range of 400-420 levels. The prices may get support on hopes of improving demand for the red metal amid more stimulus measures by many economies that reopened after months of lockdowns but rising tension between U.S.-China over Hong Kong may hampen sentiment already marred by the pandemic. South Korea’s central bank cut interest rates to a record low while Japan approved a new $1.1 trillion stimulus package. However, risks remains with U.S. Secretary of State Mike Pompeo saying the territory no longer qualified for its special status under U.S. law after China’s parliament approval of national security legislation for Hong Kong. Teck Resources Ltd said operations at its copper and zinc mine Antamina have resumed and expected full production there by the third quarter. Zinc prices may trade in the range of 150-165 levels with bearish bias due to concerns of supply rising as data from the International Lead and Zinc Study group showed a surplus of 240,000 tn in Jan-Mar, against 8,000 tn last year. Lead prices may remain in the range of 128-135. Nickel may trade in the range of 910-940 with downside bias. Stocks of imported nickel concentrates at China’s 15 ports finally rebounded to 9.7 million tonnes as of May 22 from a 23-month low, rising by 349,600 tonnes or 4.7% on week, Mysteel’s database showed. Aluminum can remain in range of 130-133. Falling costs of inputs such as power, alumina and carbon have allowed aluminium smelters to keep producing, despite low prices and losses. Aluminium Inventory has surged, with 663,475 tonnes of metal placed on LME warrant since the middle of March.
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COPPER MCX (JUNE) contract closed at Rs. 415.75 on 28th May’2020. The contract made its high of Rs. 421.70 on 21st May’2020 and a low of Rs.380.00 on 22nd Apr’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs.407.12 On the daily chart, the commodity has Relative Strength Index (14-day) value of 54.17.
One can buy around Rs. 411 for a target of Rs.432 with the stop loss of Rs.402.
ZINC MCX (JUNE) contract closed at Rs. 157.95 on 28th May’2020. The contract made its high of Rs. 160.35 on 20th May’2020 and a low of Rs. 145.30 on 22nd Apr’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs. 156.52 on the daily chart, the commodity has Relative Strength Index (14-day) value of 58.16.
One can buy around Rs.152 for a target of Rs. 165 with the stop loss of Rs. 148.
CPO MCX (JUNE) contract was closed at Rs. 630.80 on 28th May’2020. The contract made its high of Rs. 670.90 on 16th Apr 2020 and a low of Rs. 557.40 on 07th May’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 610.90 on the daily chart, the commodity has Relative Strength Index (14-day) value of 60.98.
One can buy at Rs. 620 for a target of Rs.655 with the stop loss of Rs 605.
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Ÿ OPEC+ countries are set to meet again in early June to discuss maintaining their supply cuts to shore up prices.
Ÿ Russia’s energy ministry said that a rise in fuel demand should help cut the current global surplus of around 7- 12 million bpd by June or July.
Ÿ ICSG has cut its 2020 global mined copper forecast by 950,000 tonnes, equivalent to nearly 4 million tonnes of copper concentrates output, citing the impact of the Covid-19 pandemic.
Ÿ Global copper demand is forecast to drop 5.4% to 22.625 million tonnes, said the International Wrought Copper Council.
Ÿ Japan approved a fresh stimulus of $1.1 trillion and the European Union unveiled one of 750 billion euros.
Ÿ Markets regulator Sebi issued uniform guidelines to be followed by stock exchanges while identifying and selecting a location as a delivery centre for commodity derivatives contracts.
Ÿ Deutsche Bank has received approval to offer custodial services for silver bullion contracts.
Ÿ Indian exchanges have reported 38% decline in commodity derivatives business since the Covid-19 pandemic started spreading across the country.
Ÿ NCDEX launched Agri Futures Index, which traded a total of 418 lots and Rs 21 crores volume on the first day.
Ÿ A quantity of 5.89 lakh MT Gram (Chana), 4.97 lakh MT Mustard and 4.99 lakh MT Toor has been procured by NAFED during the lockdown period. - Ministry of Agriculture & Farmers Welfare
Ÿ With the overall success of 585 mandis in Phase 1 and further expanding its wings to integrate 415 new mandis in Phase 2, the e-NAM platform now has a total number of 1000 mandis across 18 States & 3 UTs. - Ministry of Agriculture & Farmers Welfare.
It was not so eventful week for commodities and CRB mostly traded in range and closed near 129 levels. Nevertheless this commodity indices has bounced back from the low of 100 to approx. 130. Production cut and the stimulus along with interest rate cut pushed up the prices higher. Ease in lockdown is another major trigger which made market little optimistic amid all odds. Dollar index moved down for continuous since last two week as money manager preferred riskier assets. Slowly it should touch the downside level of 97.85. On the other hand, gold remained the favorite for investor’s and it moved up amid negative GDP data’s of many countries and fall in dollar index. It traded near 48600 in MCX and 1715 in COMEX. Energy complex rally appeared tired last week and profit booking from higher levels witnessed as rally was overstretched. Gold edged up on Thursday after hitting a two-week low in the previous sessions as the rift between Washington and Beijing over Hong Kong escalated, with prices also supported by central bank and government largesse to cushion the blow from the pandemic. Worsening relations between the world's two biggest economies could further hobble global business activity, which is already under intense pressure due to the coronavirus crisis. Japan approved a fresh $1.1 trillion stimulus package, while the European Union unveiled one of 750 billion euros. It also supported gold. Oil prices slid as surprise build-up in crude stockpiles, dampening hopes of a smooth demand recovery as the world begins to ease its way out of coronavirus lockdowns. The decline extended losses from Wednesday on uncertainty about Russia's commitment to deep oil production cuts in the lead-up to a June 9 meeting of OPEC and its allies. On Thursday, it saw some recovery. Industrial metals traded in a range with slight weak bias as Sino-U.S. friction over Hong Kong quashed initial euphoria following the easing of lockdown restrictions in many countries. Tensions stoked worries that a U.S.-China “Phase 1” trade deal could be threatened.
In agri, spices gave mix performance. Turmeric couldn’t sustain above 5500 and saw profit booking whereas Cumin and Coriander saw some upside in the prices. The demand from bulk buyers such as spice companies increased following relaxation in some restrictions. The market participants would closely watch the auctions that are going to take place from this weekend in a staggered manner and accordingly take cues from the process. Guar counter was in range with witnessing correction in crude prices. After a fall of four week, chana saw surged despite surge in moong arrivals. BMD CPO pressured by weaker crude oil prices although higher exports in May limited losses.
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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 onss exchange platform.
With a base value of 1,000, the NCDEX AGRIDEX futures contracts expiring in the months of June 2020, July 2020, September 2020 and December 2020 shall be available for trading from May 26, 2020.
AGRIDEXComponents for FY2020-21
The following chart summarized the components of the index with their weightages for the period April 01, 2020 to March 31, 2021. 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:
• Overall directional indicator
• Commodities are selected based on the liquidity on exchange platform.
• Constituents having at least 80% combined weights in the index shall fulfil theADTV criteria i.e. ADTV >= INR 75 Cr as per SEBI guidelines.
• 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 A p ri l. Re s e l e c ti o n o f 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.
Benefit of AGRIDEX INDEX
• Estimation of risk & systematic risk.
• Very low correlation with other asset classes & indices.
• Real time calculation.
• Effective benchmarking.
The introduction of AGRIDEX Futures is another important step in providing risk management tools for the Indian agricultural value chain. AGRIDEX Futures contracts will provide investors one more tool for trading and risk management at a composite level. Since AGRIDEX Futures Contracts provide diversified cash settled instrument it will help in widening participation on the Exchange from both institutional and retail investors.
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| 25th MAY | Xi says China could have set GDP growth goal around 6% had there been no coronavirus |
| 26th MAY | U.S. smallfirms leave $150 billion in coronavirus stimulus untapped |
| 27th MAY | Japan approves fresh $1.1 trillion stimulus to combat pandemic pain |
| 28th MAY | UK economy to struggle to recover from "searing" COVID blow - BoE's Saunders |
| 28th MAY | Brazil unemployment rises to 12.6%, record 4.9 million people leave workforce |
| 28th MAY | U.S. weekly jobless claims drop, but economic recovery still elusive |
| 28th MAY | Senator sees U.S. sticking to trade deal with China despite pandemic concerns |
| 28th MAY | Japan's jobless rate rises to 2.6% in April - government |
Indian rupee remained flattened this week amid continuous dollar club with modest improvement in global markets based on ease of lockdown in various economies. However upside in rupee was capped after series of events surfaces which detonated relation between US & China started from US intervention to investigate the role of China to influence the outbreak and extending relationship with Taiwan where recent pro-democracy party emerged to remain independent of China. In retaliation, China's attempted to grip control over Hong-Kong is an eventual step. China has passed the legislation to deploy anti-subversion laws in Hongkong, it was obvious that US will react with sanctions power. Accordingly US secretary of state Mike Pompeo said Hong Kong was no longer autonomous from China. Markets reaction can be seen in renminbi and Hong Kong Dollar peg, although reaction in rupee on the negative side remain neutral for the time being. Indication of capital flight is witnessing in Hongkong as well Chinese policy makers are in no mood to warrant the fall in yuan notably offshore unit touched low of 7.18 against dollar mark. We are expecting rupee to fall below 76.00 soon in the wake of latest political development in Hong Kong. In Majors Brexit impasse continues to drag sterling and starting from first week of June fresh negotiations round of Brexit will guide GBP pairs.
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USD/INR (JUN) contract closed at 76.0100 on 28-May-2020. The contract made its high of 76.2975 on 26-May-2020 and a low of 75.7725 on 27-May-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.74
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 45.16. One can buy @ 75.50 for the target of 76.50 with the stop loss of 74.99.
EUR/INR (JUN) contract closed at 83.6450 on 28-May-2020. The contract made its high of 83.7800 on 28-May-2020 and a low of 82.8500 on 26-May-2020 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 83.10
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 64.5. One can buy at 84.00 for a target of 84.75 with the stop loss of 83.50.
GBP/INR (JUN)contract closed at 93.1150 on 28-May-2020. The contract made its high of 93.4800 on 28-May-2020 and a low of 92.6875 on 26-May-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 93.48.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 45.76. One can sell at 93.50 for a target of 92.5 with the stop loss of 94.00.
JPY/INR (JUN) contract closed at 70.5300 on 28-May-2020. The contract made its high of 70.6075 on 27-May-2020 and a low of 70.3200 on 26 May-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 70.81
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 47.8. One can buy at 70.50 for a target of 71.50 with the stop loss of 69.99.
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* Interest Rate may be revised by company from time to time. Please confirm Interest rates before submitting the application.
* For Application of Rs.50 Lac & above, Contact to Head Office.
* Email us at fd@smcindiaonline.com
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Mutual funds add 7 lakh folios in April; total tally surpasses 9 crore mark
The mutual fund industry has added nearly seven lakh investor accounts in April, taking the total folio tally to 9.04 crore, amid volatility in broader markets. This is 71st consecutive month witnessing a rise in the numbers of folios, according to data from the Association of Mutual Funds in India. According to data, the number of folios with 44 fund houses rose to 9,04,28,589 at the end of April, from 8,97,46,051 in the end of March, registering a gain of 6,82,538 folios. This comes following an addition of over 9 lakh investor accounts in March. In February, the industry added 3 lakh folios, 14 lakh folios in January and in December, the number was over 6 lakh. Of the total 9.04 crore investors account, the number of folios under equity, hybrid and solution-oriented schemes, wherein the maximum investment is from the retail segment stood at about 8 crore. The number of folios under the equity and equity-linked saving schemes rose by 6 lakh to 6.33 crore in April-end as compared to 6.27 crore at the end of the preceding month. However, the number of folio count in debt-oriented schemes dropped by 4.37 lakh to 60.91 lakh at April-end from 61.35 lakh at March-end. Within the debt category, liquid funds continued to top the chart in terms of number of folios at nearly 19.5 lakh , followed by low-duration fund at 93,53,79. Overall, mutual fund schemes witnessed an inflow of Rs 46,000 crore last month across all segments. The inflow has pushed the asset base of the mutual fund sector to Rs 23.93 crore at the end of April from Rs 22.26 crore at the end of March.
Closure of six debt schemes: Franklin Templeton appoints Kotak Mahindra Bank as advisor
Franklin Templeton Asset Management has appointed Kotak Mahindra Bank to monetise assets of six schemes of Franklin Templeton Mutual Fund that are being wound up. On April 23, Franklin Templeton Mutual Fund had said it would wind up six schemes - Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund - citing severe illiquidity and redemption pressures caused by the COVID-19 pandemic. Kotak Mahindra Bank through its Debt Capital Markets team will work closely with Franklin Templeton Trustees, to assist with all portfolio actions in these six schemes that are being wound up, the release stated.
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Note:Indicative corpus are including Growth & Dividend option . The above mentioned data is on the basis of 08/08/2019 Beta, Sharpe and Standard Deviation are calculated on the basis of period: 1 year, frequency: Weekly Friday, RF: 7%
*Mutual Fund investments are subject to market risks, read all scheme related documents carefully
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