Biocon Limited (BIOCON)

Sun Pharmaceutical Industries Limited (SUNPHARMA)

WEEKLY VIEW OF THE MARKET

Once again bears took the charge and kept Indian markets under pressure during the week with Nifty losing more than 6% while bank nifty nearly 13% week on week basis on the back of fresh short build up. Banking stock majorly hammered down badly in the week gone by as investor sentiments continued to weigh amid uncertainty over COVID-19 pandemic and its economic impact. From the derivative front, call writers remained active during the week and create fresh short positions in index. From the technical front , 8000 would act as psychological support for nifty below, which further sell off can be seen till 7850 levels. However, on higher side 8150-8300 zone would be immediate resistance for Nifty. The Implied Volatility (IV) of calls closed at 53.02% while that for put options closed at 59.41%. The Nifty VIX for the week closed at 60.05% and is expected to remain volatile with bullish bias. PCR OI for the week closed at 1.26. We expect markets to remain highly volatile in coming week as well and likely to trade with bearish bias as traders will keep a watch on any developments regarding updates on corona virus spread.

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 expected to trade sideways to down in the range of 5630-5830 levels. The COVID-19 pandemic is spreading across the globe at a faster speed and India has announced a nation-wide lockdown, hence the spice industry is facing a huge setback. Farmers and traders are facing an enormous crisis after the export of spices is temporarily suspended due to coronavirus fears. Jeera futures (Apr) may witness correction towards 13500, facing resistance near 14400. The farmers say thatthe situation is more worrying as this year has seen about 30% more crop than other seasons owing to favourable climatic conditions and good monsoons. Farmers in the major growing areas are bearing the brunt of the novel coronavirus disease (COVID-19) pandemic. A complete lockdown led to the shuttering of agriculture markets, impacting farmers across the state.India exports cumin to Europe and China.In the present scenario, the stockists have huge cumin stock but no buyers around the world at this point of time. Coriander futures (April) may trade sideways in the broader range of 5650-6050, with upside getting capped as the supply side is getting heavier as compared to demand. Due to the current lockdown, all the market yards in the state (APMCs) are closed. Farmers are unable to sell their produce. The producers of coriander have started sitting on truckloads of their harvested crops. Cardamom futures (Apr) is expected to consolidate in the range of 1835- 2135 levels. There is trade uncertainty in all countries and this will affect the auctions & the export demand of these aromatic capsules. In the present situation,the vendors are not willing to purchase. The normal course of auctions trade is affected due to the lockdown.

BULLIONS

Bullion counter can remain on firm note amid safe haven buying due to fear of global slowdown because of wide spread coronavirus pandemic. Recently U.S. jobless claims hit record highs for a second-straight week amid the coronavirus epidemic and its devastating impact on the world’s top economy. Yellow metal witnessed a sixth straight quarterly rise on concerns about the global economic damage caused by the coronavirus pandemic. The number of Americans filing claims for unemployment benefits last week shot to a record high of 6.65 million, as more jurisdictions enforced stay-at-home measures to curb the coronavirus. Gold can move towards 44600 levels while taking support near 42800 levels while silver may move higher towards 44500 levels while taking support near 39000 levels. The World Bank stated that it had approved an initial $1.9 billion in emergency funds for coronavirus response operations in 25 developing countries. Global sentiment remains shaky despite central banks and governments standing together in the fight against COVID-19 as fears revolving around a global recession should send investors rushing towards gold, especially if cracks start showing in the largest economy in the world. Meanwhile Russia's central bank suspended buying gold starting April 1. Switzerland's major gold refineries are in talks with local authorities about restarting production this week. Global coronavirus cases surpassed 1 million last week with more than 52,000 deaths as the pandemic further exploded in the United States and the death toll climbed in Spain and Italy. SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood at 971.97 tonnes.

OIL AND OILSEEDS

The selling phase in soybean futures (April) is likely to continue & this may bring down the counter to 3580-3500 levels. The edible oil refineries across the country have reduced their operating capacity to 40-50 per cent due to nonavailability of raw materials following delay in clearance of imported crude oil consignments and oilseeds supply disruptions on lockdown of spot Agricultural Produce Market Committee (APMC) mandis to prevent spread of coronavirus (Covid-19). The downside of US soybean futures may get extended towards $8.4- 8 a bushel as as fears of the coronavirus pandemic causing a deep economic recession weighing on global commodity markets. Despite the US-China Phase 1 trade deal signed January 15, Chinese crushers are still buying large quantities of Brazilian beans.Additionally, profitable crush margins have encouraged Chinese soybean buyers to continue covering their old crop and new crop demand. Mustard futures (April) is expected to take support near 3930-3900 levels. The state Government of Haryana has directed officials to make arrangements to ensure hassle-free procurement of mustard starting April 15 from April 20, so farmers did not face trouble in selling crops in mandis. The procurement of this oilseed crop would be done by issuing coupons after collecting data registered on the ‘Meri Fasal Mera Byora’ portal by the farmers. Soy oil futures (April) is expected to follow the bearish steps of soybean & plunge to test 770-760 levels, while, CPO futures (Apr) may descend towards 600-580 levels. Edible oil trade has been affected by logistics issues as truckers are very few on the ground. Many consumers have purchased edible oil for the month in anticipation of the lockdown, so the physical demand has slowed down.

ENERGY COMPLEX

Crude oil may continue to witness bounce back at lower levels as U.S. President Donald Trump stated that he had brokered a deal between Saudi Arabia and Russia to cut output, but made no offer to reduce U.S. production. But there will be skepticism over whether a deal to call off a damaging SaudiRussian price war would go ahead if there was no cooperation from other producers including the United States. Crude oil can recover towards 2200- 2300 range by facing support near 1600. Trump stated that he had spoken with both Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin and said he expected they would cut oil output by as much as 10 million to 15 million barrels per day (bpd). With the coronavirus pandemic worsening, the global market is facing a huge oversupply of around 25 million bpd. Cutting 10 million bpd of supply would at least help ease a shortage of crude storage capacity. Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries (OPEC), planned to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption. Global oil refiners, meanwhile, have cut their production due to the slump in demand for transportation fuel, with European refineries slashing output by at least 1.3 million barrels per day (bpd). Natural gas can remain on weak path as it may test 115-110 levels while facing resistance near 135 levels. The weather is expected to be warmer than normal in the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration.

OTHER COMMODITIES

The short covering in cotton futures (Apr) may face resistance near 16800 & upside may remain limited as the fundamentals are still indicating a bearish trend. India's cotton exports may witness a temporary slowdown as domestic prices are currently uncompetitive. Given the steep fall in international prices, Indian cotton is currently 2-3 cents higher compared to price of the US crop. Textile and clothing exporters have started feeling the impact of Covid19 because of supply chain disruptions, fall in exports and cancellation of international events. In the international market, once again selling may emerge in ICE cotton futures (Apr) and it may move lower towards 45 cents per pound. Looking at the extension of lock down & the scare around the world, the demand for cotton is going to be really low & prices would drop precipitously. The main events to watch for will be every week Thursday’s exports-sales report. Castor seed futures (April) may remain below 4150 & trade with a downside bias towards 3900 as the exports of castor oil have been hit and is under the grip of coronavirus. The farmers say while export to China, which accounts for about 40% of the export, is very much slower & exports to Europe, accounting for about 30 to 35%, have been stagnant. There is possibility that mentha oil (April) will face resistance near 1200 & witness corrections. This year, the area under the crop in Uttar Pradesh is likely to jump over 87% on year to 150,000 ha in 2020. From 120-130 kg per hectare so far, the new high-yielding variety may push up the yield to 200 kg. Sowing has been very good and if weather also remains supportive for the next 60 days.

BASE METALS

Base metals may witness lower level buying. Meanwhile China will make further targeted cuts in the reserve requirement ratio for medium and small sized banks to help cushion the impact of the outbreak. Copper may recover towards 395 levels while taking support near 360 levels. Copper prices can get support due to unexpected rebound in factory activity in China, but were set for their worst quarter since 2011 as the coronavirus outbreak shut down swathes of the global economy, reducing the need for metals. China's biggest copper producer Jiangxi Copper sated that is aimed to churn out 6% more refined metal in 2020 than last year. Chile's copper output rose 8.3% in February to 451,580 tonnes. Zinc may recover towards 157 levels by taking support near 145 levels. Vedanta Zinc International said it would suspend operations at its Skorpion Zinc mine and refinery in Namibia by the end of April. Lead may remain in range and it can face resistance near 138 levels while taking support near 128. Nickel may trade in range as take support near 840 while taking resistance near 890 levels. Mining operations in the Philippines' southern province of Surigao del Norte, home to most of the country's nickel mines, will be suspended from April 1. Aluminum also may remain in narrow range of 131-136 levels. A stubbornly high inventory of aluminum in China and coronavirus disruptions to the car industry, which accounts for about 20% of demand, has kept prices under pressure. Premium for aluminum shipments to Japanese buyers for April to June was set at $82 per tonne, down 1.2% from the preceding quarter.

TREND SHEET

TECHNICAL RECOMMENDATIONS

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NEWS DIGEST

Ÿ The coronavirus pandemic is expected to sharply slow growth in developing economies in East Asia and the Pacific as well as China, as per World Bank.

Ÿ In the wake of national lockdown due to Covid-19, the Government has extended the benefit of 2% Interest Subvention to Banks and 3% Prompt Repayment Incentive to all farmers upto 31st of May this year.

Ÿ MCX Kapas April 2021 contract is available for trading with effect from Wednesday, April 1, 2020.

Ÿ Sugar mills in the country produced 232.74 lakh tonnes (lt) of sugar till March 31, nearly 22 % lower than the 296.82 it produced in the corresponding period of the previous year. - ISMA

Ÿ The USDA's prospective planting report, mentioned that U.S Soybean planted area for 2020 is estimated at 83.5 million acres, up 10 percent from last year.

Ÿ The quantity restrictions in import of Peas, Moong and Tur will remain the same for Financial Year 2020-21, as per theGazetted notification issued by Commerce Ministry.

Ÿ Indonesia should allow exports of nickel ore to help offset the impact of the fall in exports of processed nickel caused by the coronavirus outbreak, the Indonesian nickel miners’ association (APNI) said.

Ÿ Trade ministers from the Group of 20 major economies agreed to keep their markets open and ensure the continued flow of vital medical supplies, equipment and other essential goods as the world battles the pandemic.

Ÿ U.S. crude oil output fell to 12.74 million barrels per day (bpd) in January from 12.80 million bpd in December, the U.S. Energy Information Administration (EIA) said in a monthly report.

Ÿ RioTinto would close one ofthe aluminium production lines atits340,000-tonneayear smelterinTiwai,NewZealand.

WEEKLY COMMENTARY

With some improvement in equity market, commodities also has taken baby steps and tried to make bottom. CRB traded above 125 levels and somehow traded up for continuous second week, nevertheless the weaker than expected data put the cap on upside. Dollar index saw some revival after a sharp fall in previous week. The dollar edged toward an almost 2% weekly rise, boosted by a surge in the oil price and as investors sought safety amid the worsening economic fallout from the coronavirus pandemic. Global coronavirus cases surpassed 1 million on Thursday, with more than 52,000 deaths as the pandemic spread further in the United States and the death toll climbed in Spain and Italy. In energy counter, crude saw significant much needed gain after a continuous massive fall of nonstop five week whereas natural gas remained in negative territory. Crude prices posted their biggest-one day gains on Thursday after President Donald Trump said he expects Russia and Saudi Arabia to announce a major oil production cut of around 10 million to 15 million barrels. Brent soared as much as 47% during the session, its highest intraday percentage gain ever. WTI jumped as much as 35%, it’s second highest ever, after an intraday gain of 36% on March 19. Nevertheless on Friday's drop reflected market scepticism over whether a deal to call off a damaging Saudi-Russian price war would go ahead if there was no cooperation from other producers including the United States. Bullion counter maintained its upside momentum, stimulated by rapid spread of COVID19. Japanese bank Nomura expects the world economy contracted 18% in the first quarter, on an annualised basis, and is tracking toward shrinking 4% in 2020. Despite all odds, base metals saw some gradual upside in last few trading sessions. It was only nickel which saw some marginal move.

Upside in crude couldn’t provide much support to guar counter, guarseed closed in range whereas guargum was bearish. Mentha hold the gain. The stockists are indulged in lower level buying and it is trading near its 2 year low. The ongoing lockdown and the absence of a fresh stimulus package so far could severely impact the agricultural sector, and especially the cotton industry. Cotton was down for continuously forth week. Castor seed saw profit booking from higher levels. In spices, turmeric couldn’t sustain at higher levels on dull spot market. Chana continued to move up though profitbooking occurred later on and closed the week in red zone. It was a bearish week for edible oil counter; both CPO and Soya treaded bearish on concerns over demand and forecasts of better production eclipsed worries that the coronavirus pandemic could disrupt global supplies of the vegetable oil

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 $)

Gold demand in India…marred by Coronavirus

India’s sales of gold jewellery to bars are set to plunge to the lowest in a quarter of a century as a lockdown to combat the rapidly spreading coronavirus brings the industry to a standstill. Demand in the world’s second-biggest gold consumer has already tumbled, slammed by record high domestic prices and an economy headed for the slowest pace of growth in 11 years. That pain is set to deepen as jewelry store’s shutter has been down after Prime Minister Narendra Modi and state leaders imposed an almost-complete lockdown across much of the country.

Second worst quarter in FY 2020

According to the GFMS data March2020 could be worst in many years, with imports estimated only around 18 tonnes amid the coronavirus pandemic and the nationwide lockdown. The import in March 2019 was 72.5 tonnes. The March quarter of 2020 is expected to be second worst quarter in terms of gold demand in India with an estimated demand of only 120 tonnes after last September quarter 2019 when demand was only 83.6 tonnes. As per chairman of the All India Gem and Jewellery Domestic Council, total purchases are estimated to plummet 30% in 2020 from the 690 tons last year. That would make it the smallest annual purchase since the 477 tons bought in 1995, according to data compiled by Bloomberg based on World Gold Council reports. Next 2-3 months from here is still expected to be weak for gold demand as life will take time to return on normalcy. Gold imports took a sharp hit in FY20 following a series of developments — the latest being the coronavirus pandemic — which, on the other hand, pushed the price of the precious metal to record highs. The import is estimated at 559.6 tonnes for the financial year, which ended on March31, 2020. It is believed to the lowest in at least a decade. In FY19, the gold import stood at 775.4 tonnes.

Higher prices weigh on gold demand

The higher price of gold is putting pressure on physical demand. The price of the metal continued to jump due to geopolitical uncertainties and the trade war. In international market the gold prices topped $1,700 an ounce for the first time in seven years as financial turmoil triggered by the coronavirus as encouraged the safe haven buying. Currently the flow of monetary and fiscal measures taken by US and other countries to minimize the economic fallout from the virus outbreak is supporting the gold price. This high price has badly affected the gold import ofIndia. A drop in the Indian currency to an all-time low is also keeping local gold prices elevated.Gold futures have jumped to a record of 44,961 rupees earlierin last month.

Lower demand forced gold on discount

TIn India, due to lockdown to curb the spread of the virus, physical trade has stalled that pushed the gold prices on discounts to their highest since mid-September, at $48 anounce.

Currency Table

News Flows of last week