Petronet LNG Limited (PETRONET)

Titan Company Limited (TITAN)

WEEKLY VIEW OF THE MARKET

In the week gone by, smart recovery was witnessed led by short covering from lower levels. Calls writers covered their short positions and put writers were actively selling puts. Derivative data is positive. Maximum put open interest buildup of more than 30 lakh shares at 11000 strike puts were seen which should act as strong support zone. Nifty is most likely to trade in the range of 11000 to 11200 levels with positive bias this week. Nifty has support at lower levels. Various supports are 11000 & 10950 spot levels. Implied Volatility (IV) of calls was down and closed at 12.77% while that for put options closed at 12.55%. The Nifty VIX for the week closed at 15.29% and is expected to remain sideways. The PCR OI for the week closed at 1.37 indicating put writing in recent rally. We have seen put writing in 10800, 10900 & 11000 strike puts. On the technical front 10950-11000 spot levels is strong support zone and current bounce is likely to continue towards 11150-11200 levels.

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 witness a strong recovery & test 6500- 6550 levels. A boon to cultivators of turmeric in Erode district and surrounding areas, the Geographical Indication Registry of India granted Geographical Indication (GI) tag to Erode ‘manjal’ (turmeric). With the GI tag, turmeric cultivated in Erode district, parts of Coimbatore and whole of Tirupur will be recognized for its unique qualities derived from its place of origin. Such recognition would increase its demand globally and ensure better price for the product in both domestic and international markets. Jeera futures (Apr) is likely to remain in a consolidation zone within 15000-15500 levels. The upside may get limited due to improved output prospects for 2018-19 (Jul-Jun), while demand is seen largely unchanged. At present, the daily average arrivals of jeera are at 30,000 bags (1 bag = 55 kg) and this count will surely rise in days to come. Output prospects for this year have improved as higher acreage in Rajasthan will largely help offset the impact of a fall in area under the spice in Gujarat. In Rajasthan, yields are likely to have improved to 494 kg per ha from 489 kg, while in Gujarat also higher yields of 529 kg per ha compared with 520 kg a year ago after the state government provided water for irrigation. In addition, the market participants expect carryover stocks much higher at 10- 15 lakh bags which may add to the bearishness. Coriander futures (Apr) is looking bullish and the upside can get extended towards 6420 levels. On the spot markets, new arrivals of good quality have started coming in markets, buying is also improving day by day along with rising prices.

BULLIONS

Bullion counter may extend its downside pressure amid bounce back in greenback, rise in US treasury yields and lack of safe haven demand. The ECB changed track on its tightening plan, pushing out the timing of its first postcrisis rate hike until 2020 at the earliest and offering banks a new round of cheap loans to help revive the euro zone economy. The U.S. Federal Reserve should lower its expectations for rate hikes even if its economic forecasts have not changed, because of signs of a slowdown in spending and other risks, Governor LaelBrainard stated last week. Gold can test 31600 while facing resistance near 32400 while silver (May) can dip towards 37500 while facing resistance near 38800. China’s gold reserves rose slightly to $79.498 billion in February from $79.319 billion at the end of January, as the central bank increased the total amount of gold reserves to 60.260 million fine troy ounces from 59.940 million troy ounces. U.S. President Donald Trump is open to additional talks with Pyongyang over denuclearization, his national security adviser stated, despite reports that North Korea is reactivating parts of its missile program. The Perth Mint's February sales of gold products fell to the lowest level since June last year, declining more than 37 percent from the previous month. The U.S. Mint sold 12,500 ounces of American Eagle gold coins in February, down 81.1 percent from the previous month, according to the latest data.

OIL AND OILSEEDS

Soybean futures (Nov) will probably trade sideways to up in the range of 3730- 3850 levels. Overall, the bias will be on the positive side as the excessive rains this year is likely to lower the production for the year 2019 to 89.941 Lakh tonnes (+- 5%), lesser by 19.391 lakh tonnes (-17.7%) as compared to final estimates for kharif 2018. Average yield for the year 2019 is estimated as 836 kg/hectare as against 1009 kg/hectare during the year 2018. As of now, the market would be focusing on the arrivals of soybean from the kharif season. On the CBOT, U.S soybean futures (Nov) is expected to take support near 9.20, while face resistance 9.54 levels. In breaking news reported by Bloomberg, China is returning to the U.S. soybean market, and other major farm commodities and would spend some $20 billion over the next 12 months. All of this depends on President Trump and Xi Jinping signing the Phase 1 deal, expected by the market at the APEC Summit in Chile next month. The bullish trend is likely to prevail in mustard futures (Nov) & it has an upside potential to reach 4400 levels. The restricted arrivals from growing belts and demand from oil mills for crushing to meet the demand of winter season are mainly lifting the sentiments. In news, the Cabinet Committee on Economic Affairs has approved the increase MSP of Rapeseed & Mustard by Rs. 225 per quintal. CPO futures (Nov) may regain towards 590-600, while soy oil futures (Nov) can see an upside target of 775-780 levels respectively. Malaysian palm oil is trending bullish on account of implementation of the biofuels mandates in the form of palm oil.

ENERGY COMPLEX

Crude oil prices may witness some profit booking at higher levels as increasing US production and global growth concerns can keep prices under pressure. Forecasts by two big U.S. producers outweighed recent OPEC-led efforts to rein in crude production. Chevron Corp and Exxon Mobil Corp released duelling Permian Basin projections pointing to big increases in shale oil production. China’s crude oil imports rose to the third-highest volume on record on a daily basis on increasing purchases by new private refineries. Crude oil can test 3800 while facing resistance near 4100. But on the supply side, prices have been receiving support this year from output cuts led by the Organization of the Petroleum Exporting Countries (OPEC). Together with some non-affiliated producers like Russia, the producer group has pledged to withhold around 1.2 million barrels per day (bpd) of supply to tighten markets and prop up prices.China, the world’s biggest crude oil importer, took in 39.23 million tonnes of crude oil last month, the data from the General Administration of Customs showed. Natural gas counter may witness short covering at lower levels as it may take support near 185 and can recover towards 215 levels. Natural gas futures edged up recently as utilities pulled huge amounts of gas out of inventories to heat homes and businesses to deal with a frigid cold snap blanketing much of the country.

OTHER COMMODITIES

Cotton futures (Mar) is expected to trade sideways to up in the range of 20600- 21100 levels. This season the gap between demand-supply will possibly widen as there would be no third, fourth or fifth pickings, which are usual practice every year. Due to shortage of rain this year, there will be no third and fourth pickings in most of the cotton-growing states. In regular course in India, farmers take 4 to 5 pickings. On the export front, Indian traders have signed contracts to ship 800,000 bales of cotton to China as demand surged from the world's biggest consumer of the fibre due to a rally in prices in China. However, one should keep a close watch on the price movement of the U.S cotton as this counter is on a roller coaster ride getting hit by a stronger dollar and weak US export sales data. Chana futures (Apr) will possibly trade with an upside bias in the range of 4100-4250. In news, the government of Maharashtra has sought permission from the Centre for the procurement of Chana. Also, there are market talks that the government is likely to relax quantitative restrictions on import of yellow peas from April as 2018-19 (Jul-Jun) pulses output is seen lower on year. For 2018-19, the cap on yellow peas import was set at 100,000 tn. Mentha oil (Mar) is most likely to breach the resistance near 1630-1640 & move further ahead towards 1660-1680 levels. The overall sentiments are bullish as demand from both domestic and export fronts are emerging at existing price levels. Besides, delayed sowing in the largely concentrated in Barabanki, Sambhal and Chandausi in Uttar Pradesh is likely to affect the crop

BASE METALS

In base metal counter prices can trade with negative bias as optimism over the ability of a potential U.S.-China trade deal and Chinese economic stimulus to push prices higher is fading. U.S. President Trump will reject a U.S.-China trade deal that is not perfect, but the United States would still keep working on an agreement, U.S. Secretary of State Mike Pompeo stated last week. Copper may test the support of 440 by facing resistance near 460. Copper can dip lower as rising inventories and a drop in the premium for directly available metal signalled easing supply squeeze. Copper Inventories in LME-registered warehouses rose to 120,075 tonnes from 116,872 tonnes last week, the lowest since 2008. Meanwhile Lead may dip towards 140 while facing resistance near 152. China imported 128,000 tonnes of refined lead last year, bringing the two-year cumulative total to 206,000 tonnes. The only precedent for this pace of import was 2009, when China soaked up 157,000 tonnes of refined lead. Aluminium can remain sideways as it can take support near 141 while facing resistance near 148. Rusal, the world’s largest aluminium producer outside China stated that its business was back to normal after U.S. sanctions were lifted in January, and reiterated a positive outlook for the global aluminium market. It also stated that global aluminium demand is expected to rise by 3.7 percent in 2019 to 68 million tonnes. Zinc may dip lower towards 184 while facing resistance near 196. Nickel can also witness some profit booking at higher levels as it can test 890 while facing resistance near 960 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

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NEWS DIGEST

• The number of Americans filing applications for unemployment benefits unexpectedly fell in penultimate week, pointing to strong labor market conditions despite signs that job growth was slowing.

• China's top steelmaking region of Hebei will cut 14 million tonnes of annual steelmaking capacity both this year and next year.

• US Commerce Department said that an 18.8 percent jump in the trade deficit in December had contributed to the $621.0 billion shortfall last year.

• Russian oil output stood at 11.34 million barrels per day (bpd) in February, down some 75,000 barrels per day from the October level.

• The Centre announced an additional soft loan of Rs.12,900 crore for sugar mills to create ethanol capacity.

• The Government introduced a scheme for providing financial assistance for transport and marketing of agriculture products with a view to boosting export of farm commodities to certain countries in Europe and North America.

• After an eight-year-long process, Erode turmeric finally got a Geographical Indication (GI) tag from the Geographical Indication Registry.

• Cotton deposited in Multi Commodity Exchange accredited warehouse soared to all-time high of 1.81 lakh bales and surged by 56% on 5th Feb’19 as compared to 1.16 lakh bales logged in the same period last year.

• Mustard oil mills across the country crushed 500,000 tn of the oilseed in February, up 33.3% on year. - Mustard Oil Producers Association of India.

WEEKLY COMMENTARY

It was a bearish week for commodities and CRB closed in negative zone for continuous second week, below the crucial level of 190. Bounce back in dollar index amid chaos in US and China trade deal stimulated selling pressure in commodities. The Organization for Economic CoOperation and Development cut forecasts again for the global economy in 2019 and 2020, and it warned that trade disputes and uncertainty over Brexit would hit world commerce and businesses cascading concerns on global growth. Indian currency appreciated a lot due to better performance of Equity, which locked the movement in commodities and in some commodities; it decoupled domestic commodities with international. For example; gold was down in international market but it was more in MCX. Oil edged up on Thursday amid ongoing OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran, although prices were prevented from rising further by record U.S. crude output and rising commercial fuel inventories. U.S. sanctions against the oil industries of OPEC members Iran and Venezuela have also had an impact. Despite these factors, oil remains in plentiful supply thanks to surging U.S. production. Base metals traded low, except Nickel. The trade dispute between China and the United States has fuelled concern about global growth and demand, undermining sentiment in metals markets. Nickel prices climbed to a six-month peak on Monday as expectations of a fourth consecutive year of supply deficit were reinforced by signs of robust demand from stainless steel mills in China. Global nickel demand is estimated at about 2.4 million tonnes this year. Aluminium and other industrial metals drifted lower on Wednesday as investors awaited more signs on whether demand in top metals consumer China would rebound after the Lunar New Year. So far, signs of metal demand in China have been lackluster, with rising inventories in the world's second-largest economy and weak physical premiums.

In agri commodities, oil seeds and edible oil futures traded bearish on lower export demand of soya meal. South America meal prices are at much cheaper rate as compared to Indian soymeal, hence the export demand for Indian origin meal is likely to remain down in coming weeks. In spices, cardamom and turmeric prices augmented on fresh buying while jeera prices were remained weak as it is reported seasonal diseases are beginning to occur in jeera crop due to mixture of all weather conditions from sun-shadow to moisture and hot weather. Indian traders have contracted for export 5 lakh bales to China for shipments in the next two months. It gave much needed strength to cotton counter.

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 $)

2nd Advance Estimates of major crops for 2018-19

The 2nd Advance Estimates of production of major crops for 2018-19 have been released by the Department of Agriculture, Cooperation and Farmers Welfare on 28th February, 2019. As per Second Advance Estimates for 2018-19, total Foodgrain production in the country is estimated at 281.37 million tonnes which is higher by 3.89 million tonnes than the production of foodgrain of 277.49 million tonnes in 2nd Advance Estimates of 2017-18. Further, the production during 2018-19 is higher by 15.63 million tonnes than the previous five years’ (2013-14 to 2017-18) average production of foodgrain.

Although the cumulative rainfall in the country during the monsoon season (June to September, 2018) has been 9% lower than Long Period Average (LPA), most of the major crops producing states have witnessed normal monsoon rainfall. Accordingly, the production of most of the crops for the agricultural year 2018- 19 has been estimated higher than their normal production.

• Total production of Rice d u r i n g 2 0 1 8 - 1 9 i s estimated at record 115.60 million tonnes about 2.38 per cent higher than the fourth advance estimates for 2017-18. It is also higher by 7.80 million tonnes than the five years’ average production of 107.80 million tonnes.

• Production of Wheat, estimated at 99.12 million tonnes, is higher by 2.01 million tonnes as compared to wheat production of 97.11 million tonnes in 2nd Advance Estimates of 2017-18. Further, the production of wheat during 2018-19 is higher by 4.51 million tonnes than the five years average wheat production of 94.61 million tonnes.

• Total Pulses production during 2018-19 is estimated at 24.02 million tonnes which is marginally higher by 0.08 million tonnes than the previous year’s 2nd Advance Estimates of 23.95 million tonnes. Pulses production is expected to hit as there is a substantial reduction in tur production is projected. As against 4.25 mt produced in 2017-18, this year’s production is slated to be 3.68 mt.

• Total Oilseeds production in the country during 2018-19 is estimated at 31.50 million tonnes which is higher by 1.62 million tonnes than the production of 29.88 million tonnes in 2nd Advance Estimates of 2017-18. While soyabean and mustard output is estimated to be higher, groundnut production is expected to be seriously hit by adverse weather conditions, particularly in Gujarat. As against the set target of 9.07 mt, the groundnut production is projected to be 6.97 mt.

• The total production of Sugarcane in the country during 2018-19 is estimated at 380.83 million tonnes.

Although the bumper production spells well for farmers, government and for better economic growth, but not always brings cheer to farmers. Adequate supply of agriculture produce keep food inflation under check, but it also weigh on prices to slide below the production cost that increase the misery of farmers. The government has also been facing a daunting task of ensuring farmers a fair and remunerative price for their produce. The lack of procurement processes and infrastructure are forcing farmers to distress sell their produce in the open market. Meanwhile, The Centre has implemented many procurement mechanisms so that most of the notified crops can be procured at MSP-a move, which may help farmers get remunerative prices of their farm produce.

Currency Table

News Flows of last week