2020: Issue 740, Week: 8th - 12th June
A Weekly Update from SMC (For private circulation only)
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| 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 looked cautious amid a worrisome surge in new I infections, dismal unemployment numbers and a bleak economic forecast from the Federal Reserve that recovery from the pandemic would take years. Besides, the fresh concerns about the second wave of coronavirus infections spooked the confidence of the market participants. Meanwhile, the Fed has said that it would keep its benchmark interest rate near zero through 2022 and would continue to support the US economy. The meaning thereby is that there would be no constrain of liquidity in the market. Fed has estimated that the economy will shrink 6.5 per cent this year, in line with other forecasts, before expanding 5 per cent in 2021. The Fed also projects the unemployment rate to fall to 9.3% by year-end from 13.3% in May. Recent data showed that GDP in the euro area contracted by 3.6% compared to the previous quarter.
Back at home, Indian market's roller coaster ride continued as the market mood has turned sour this week on the back of weak global cues, Supreme Court's comments on adjusted gross revenue (AGR) dues and anticipation by the section of participants that the government may resort to stringent measures like lockdown to combat the rise in infections numbers, impacted investor sentiment. However on Friday, market managed to close in green led by strong buying interest in auto and finance stocks. Recently, Fitch Ratings has said that the Indian economy is likely to bounce back with a sharp growth rate of 9.5 per cent next year, after the contraction in the current financial year, if it manages to avoid further deterioration in the financial sector. On the flip side, the Organisation for Economic Co-operation and Development (OECD) has said that India’s GDP growth will depend on whether the country faces a second wave of the coronavirus pandemic. Standard & Poor's (S&P) retained India's sovereign rating at "BBB-" - the lowest investment-grade level - with a stable outlook and promised to upgrade the country's ratings if the government significantly curtailed its fiscal deficit. Besides other domestic factors, the positioning of the global markets will continue to dictate the market trend ahead.
On the commodity market front, from the last few weeks, CRB has been gradually gaining buy side momentum and trying to move towards 140; nevertheless it couldn’t sustain at higher side. Three week sharp fall in dollar index amid ease in lockdown lent some support at the same time US and China trade issue kept upside in check. Ultraloose monetary policy is a positive for gold as it put downward pressure to long-term U.S. real yields and thus it is expected to continue its rally. It can move in a range of 45800-48000 whereas silver sails between 48000-51000. Crude rally appears little tired and hence it may see further correction; overall it should move in a range of 2600-3000. The easing of the lockdown for farm sector accelerated pace of transportation of the crop from farms to mandis. BoJ Interest Rate Decision, Inflation Rate of Germany, ZEW Economic Sentiment Index of Euro and Germany, GDP Growth Rate of New Zealand, Unemployment Rate of Australia, BoE Interest Rate Decision, Inflation Rate of Japan etc. are strong triggers for commodities.
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DOMESTIC NEWS
Economy
• The Indian economy is likely to bounce back with a sharp growth rate of 9.5 per cent next year, after the contraction in the current financial year, if it manages to avoid further deterioration in the financial sector, Fitch Ratings said. This forecast comes hours after credit ratings agency Standard & Poor's (S&P) retained India's sovereign rating at "BBB-" - the lowest investment-grade level - with a stable outlook and promised to upgrade the country's ratings if the government significantly curtailed its fiscal deficit.
Automobile
• Retail sales of passenger vehicles plunged 87% in May from a year earlier to 30,749 units as dealerships gradually reopened but the lockdown aimed at arresting the spread of the coronavirus pandemic and fears of contracting the infection kept most customers away.
Pharmaceuticals
• Biocon and Mylan announced that the U.S. Food and Drug Administration (FDA) has approved the New Drug Application (NDA) for Semglee™ (insulin glargine injection), in vial and pre-filled pen presentations, to control high blood sugar in adults with type 2 diabetes and adult and pediatric patients with type 1 diabetes. Semglee has an identical amino acid sequence to Sanofi's Lantus® and is approved for the same indications.
• Lupin announced that it has received approval for its Albendazole Tablets USP, 200 mg, from the United States Food and Drug Administration (U.S. FDA), to market a generic equivalent of Albenza® Tablets, 200 mg, of Impax Laboratories Inc.
• Dr Reddy's Laboratories Ltd on June 10 announced that it has completed the acquisition of select divisions of Wockhardt Ltd's branded generics business in India and from a few other international territories of Nepal, Sri Lanka, Bhutan and Maldives. The business comprises a portfolio of 62 brands in multiple therapy areas such as Respiratory, Neurology, VMS, Dermatology, Gastroenterology, Pain and Vaccines, which would transfer to Dr Reddys along with related sales and marketing teams and a manufacturing plant located in Baddi, Himachal Pradesh with all plant employees
Capital Goods
• BHEL has successfully commissioned one 270 MW thermal unit at the 4x270 MW Bhadradri Thermal Power Project in Telangana. This is the first unit to be commissioned at this project and work on the remaining three units is also at an advanced stage.
Power
• Adani Green Energy, part of India's Adani Group conglomerate, will build 8 gigawatts of large-scale solar capacity worth $6 billion in India over the next five years, after winning the world's largest solar energy tender award.
INTERNATIONAL NEWS
• While the Federal Reserve expects the U.S. economy to rebound in 2021 following a sharp contraction this year due to the coronavirus pandemic, the central bank has indicated interest rates are likely to remain at current near-zero levels through 2022. The Fed on Wednesday announced its widely expected decision to maintain the target range for the federal funds rate at zero to 0.25 percent.
• US producer price index for final demand climbed by 0.4 percent in May after tumbling by 1.3 percent in April. Economists had expected the index to inch up by just 0.1 percent.
• US initial jobless claims tumbled to 1.542 million, a decrease of 355,000 from the previous week's revised level of 1.897 million. Economists had expected jobless claims to slump to 1.550 million from the 1.877 million originally reported for the previous week.
• The UK Gross domestic product contracted by a more-than-expected 20.4 percent in April from March, when it was down 5.8 percent. GDP was forecast to fall 18.4 percent.
• Japan Industrial production fell a seasonally adjusted 9.8 percent monthon-month in April. According to initial estimate, production was down 9.1 percent. On a monthly basis, shipments declined 9.5 percent in April, which was revised from -8.8 percent.
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CHAMBAL FERTILISERS AND CHEMICALS LIMITED
CMP: 137.65
Target Price: 181
Upside: 31%
| Face Value (Rs.) | 10.00 |
| 52 Week High/Low | 190.75/95.25 |
| M.Cap (Rs. in Cr.) | 5729.10 |
| EPS (Rs.) | 27.28 |
| P/E Ratio (times) | 5.05 |
| P/B Ratio (times) | 1.62 |
| Dividend Yield (%) | 2.91 |
| Stock Exchange | BSE |
Investment Rationale
• Chambal Fertilisers & Chemicals manufactures ammonia, urea, pesticides and other products for farming and other agricultural applications. The company also provides consulting services to farmers on their seeding programs.
• It accounts for nearly 15% of the total Urea produced in the country. Its three hi-tech nitrogenous fertiliser (urea) plants are located at Gadepan in Kota district of Rajasthan. The three plants have an installed annual production capacity of about 3.4 million MT. These plants use state-of-the-art technology from Denmark, Italy, United States and Japan.
• The company’s newly commissioned urea plant achieved the rated capacity during the first full year of operation. Towards the end of the last quarter, the company faced the challenge of COVID-19 pandemic. The priority was to continue operations of all the three Urea plants.
• The company expects to comfortably meet all of its obligations towards interest and term loan repayments for the current year.
• The Company caters to the need of the farmers in ten states in northern, eastern, central and western regions of India and is the lead fertiliser supplier in the State of Rajasthan,MadhyaPradesh,PunjabandHaryana.
• According the management, the company’s performance for the financial year 2019-20 has been outstanding as compared to the last year and the best ever in the history of the company. Net profit for the year was at Rs. 1224.31 crore up by 124.53% y/y, including one time deferred tax credit due to promulgation of Taxation Laws (Amendment) Act,
2019. If exclude the above, net profit will be Rs. 880.34 crore up by 61.45% as against the net profit of Rs. 545.27 in the last year.
Risk
• Delay monsoon
• Delay in the subsidy receipts impact profitability
Valuation
The company expects the farming sector would get a boost in FY21 with the forecast of a good monsoon. It also expects normal production in all its plants. The demand for products looks encouraging and the firm is comfortable on the logistics side also. The company does not foresee any challenge in terms of availability of manpower. It expects to comfortably meet all its obligations towards interest and term loan repayments for the current year. Thus, it is expected that the stock will see a price target of Rs.181 in 8 to 10 months time frame on a current P/BVx of 1.62x and FY21 BVPS of Rs.111.68.
KEI INDUSTRIES LIMITED
CMP: 330.05
Target Price:393
Upside: 19%
| Face Value (Rs.) | 2.00 |
| 52 Week High/Low | 614.70/208.40 |
| M.Cap (Rs. in Cr.) | 2954.09 |
| EPS (Rs.) | 28.64 |
| P/E Ratio (times) | 11.52 |
| P/B Ratio (times) | 1.96 |
| Dividend Yield (%) | 0.45 |
| Stock Exchange | BSE |
Investment Rationale
• KEI Industries (KEI) manufactures variety of cables namely HighTension(HT)andLowtension(LT)powercables,Control and Instrumentation Cables, other specialty cables, rubber insulatedpower,control&instrumentationcables.Tofollow the present demands of the market, its set foot into the manufacturing of EHV cables up to 220kV in collaboration withBRUGGKables,acenturyoldSwisscompany.
• ItsorderbookasendofMarch31,2020was3244crore(EPC Rs 1233 crore; EPC EHV 731 crore; cables Rs 1116 crore; Exports 164 crore). In addition, the company has an L1 order of Rs 16 crore (EPCEHV)taking the total orders to Rs 3260 crore. EPC portion of the order book is executable over 18 months. About Dangote Order, it has executed orders worth Rs 340 crore in FY20 and pending portion of this order is about Rs 110 crore which will be executed in Q1FY21. Moreover, recently the company has bagged a milestone orderfor 400 KV EHV cable from TNEB worth Rs 150crore.
• The management ofthe company expects to close coming fiscali.e.FY20-21witheitherflatormarginallylower sales compared to lastfiscal.However, considering strong order book the management ofthe company believes in turning inbettertoplinegrowthnumbersthanindustryaverage.
• During FY20, Cable business volume up 18% in FY20 and it was up 9%inQ4FY20.Moreover,the company has achieved adecentsaleindealernetworkinlast15daysofMay2020.
• According to the management of the company, in EPC segment, there is a significant improvement in May 2020. All sites where the work is on, the company is able to achievesignificantphysicalprogressinMay.
• Export salesofthecompanywasaboutRs531croreinFY19 and that increased to about Rs 900 crore in FY20. The company has substantial export market in Australia and MiddleEastandithaspresenceinAfricaandLATAMthrough various EPC contractors. So the company has never been dependentonlargeoneoffordersuchasDangote.
• Forthe quarter ended March 2020,revenue of Rs 1258.53
crore,aflatgrowthandtheoperatingprofitwasdownby 12% to Rs 120.61 crore.After accounting forlower other income,lowerinterest andhigherdepreciation,thePBT was down by 10% to Rs 81.60 crore. With tax incidence standlower,thePATwasupby2%toRs60.85crore.
Risk
• Fluctuation in metal prices
• Foreign exchange fluctuation
Valuation
The company caters to Power, Industrial, Infra, Railways, Metro Rails, Oil & Gas, Upstream,Aluminum, Refineries, Steel and Exports. It is working on increasing exports. It is exploring more business from Africa and Middle East. KEI can be a major beneficiary of the increasing demand from power, infrastructure and real estate sector. The company has been focusing on expanding its dealer network as this sales channel offers better margins. Institutional sale growth has been encouraging and management expects this division to grow in double digits, going forward. Thus,it is expected that the stock will see a price target of Rs. 393 in 8 to 10 month’s time frame on current PBvx 1.96 times and FY21 BVPS of Rs. 200.64.
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 242 on 12th June 2020. It made a 52-week low at Rs 179.75 on 07th April 2020 and a 52-week high of Rs. 388 on 29th January, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 270.81
As we can see on chart that stock has formed a double bottom pattern and recovered sharply from lower levels. Thereafter, it’s trading in narrow range and forming a “Bull Flag” pattern on daily charts which is considered to be bullish. Moreover, technical indicators such as RSI and MACD are suggesting buying for the stock. Therefore, one can buy in the range of 238-240 levels for the upside target of 270-278 levels with SL below 230.
The stock closed at Rs 48.10 on 12th June 2020. It made a 52-week low of Rs 34.75 on 18th March 2020 and a 52-week high of Rs. 80 on 08th November, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 55.64
After massive correction from 80 levels, stock registered yearly low and recovered sharply, formed rounding bottom on weekly charts, which is bullish in nature. Last week, stock also has given the breakout of downward sloping resistance line along with high volumes so follow up may continue for coming days. Therefore, one can buy in the range of 47-47.50 levels for the upside target of 55-56 levels with SL below 43.
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 remained highly volatile during last week. Nifty after slipping back below 9550 mark, it recovered sharply from its lows and once again reclaimed 9950 levels in single trading session as heavyweights like Reliance, Bajaj twins, M&M supported the markets from lower levels. From derivative front, a tug of war was seen between bulls and bears. On one hand hefty put writing was observed at 9700 strike while on other hand call writers at 10000 strike added substantial open interest. The Implied Volatility (IV) of calls closed at 29.46% while that for put options closed at 31.75%. The Nifty VIX for the week closed at 30.82% and is expected to remain sideways. PCR OI for the week closed at 1.54down as compared to last week at 1.76, which indicates put unwinding. From technical front, momentum oscillators suggest that volatility is likely to remain in markets in this week as well and on higher side 10000 would act as psychological hurdle for Nifty. However, on downside 9800-9750 zone would act as an immediate support for Nifty.
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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 (July) is likely to hold support near 5200, while the upside may remain capped near 5700 levels. The demand for this medicinal plant is increasing from various consuming sectors during this ongoing pandemic, to boost the immunity. The major demand is coming from the milk federation across India for their newly launched “haldi milk” following the self-care guidelines and recommendations issued by the AYUSH ministry as preventive health measures for boosting immunity amid the coronavirus outbreak. The root turmeric prices are witnessing rise in Erode markets & trading around Rs.5,309-6,409 a quintal and root variety at Rs.4,729-5,999 at the Erode Turmeric Merchants Association Salesyard. The upside momentum of jeera futures (July) may get limited & trade sideways to down in the range of 13550- 14500 levels. The large scale disruptions in supply chains are resulting in cancellation of orders. The ports and the weather may play spoilsport, as ports are struggling with huge backlogs coupled with low manpower due to the pandemic and the monsoon looms. Currently, export is allowed from select ports such as Haldia while Dabhol and Finolex in Ratnagiri are shut ahead of the southwest monsoon. Syria and Turkey are yet to come in the market and there was great opportunity for India to export during the new crop season as the sole supplier but that window is also closed in the present scenario. Cardamom futures (July) is expected to plunge further towards 1400-1350 levels. The Covid uncertainty in many upcountry destinations seems have damaged the demand & moreover the arrivals coming to the auctions are from the old stock from the last crop season.
Bullion Gold prices held steady as downward pressure from a stronger dollar countered rising safe-haven demand supported by gloomy economic projections and renewed fears over a second wave in COVID-19 infections. The dollar rose against a basket of major currencies, as the Fed projected the economy would shrink 6.5% in 2020 and the unemployment rate at 9.3% at year’s end. Even if things start to improve, we don’t expect the Fed to increase rates at all, so we’re going to be in a very low-interest-rate environment for the foreseeable future, and that’s positive for gold. Large stimulus measures and low-interest rates tend to support gold, considered a hedge against inflation and currency debasement. Meanwhile, the latest data showed layoffs in the United States are abating, but millions who lost their jobs because of the pandemic continue to draw unemployment benefits, suggesting the labor market could take years to recover. Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 1,135.05 tonnes. Based on weekly charts there is still room for correction in bullion counter. For the coming week, gold may trade in the range of 46500- 47800. Silver may trade in the range of 46550-49700. Overall, there should be limited downside in bullion counter as ultra easy money will remain in the system and dollar index should remain on lower side on fragile economic situation in US. Treasury secretary statement that Lockdown should not happen again in US despite the rapid spread is reflecting the seriousness of the situation. Silver should continue to move up with strength in gold prices nevertheless some expected correction in base metals upside should be capped.
Analyzing at the fear in the international market, sell on rise would be the plan of approach for the internationally linked oilseeds complex. Moreover, the US Department of Agriculture has painted a gloomy picture by raising U.S beginning stocks of soybean & lowering the exports, facing increased competition from Brazil. On the flip side, crude is negatively influencing the commodities, being dragged down by another record build-up in U.S. crude inventories and the U.S. Federal Reserve's projections that the world's biggest economy would shrink 6.5% this year. Last but not the least, the sentiments of the market participants is crumbling amid a fret about the second wave of infections of the coronavirus. Back at home, it is reported that southwest monsoon is progressing well & soon may hit Maharashtra, the major growing regions. This season, there are anticipations that area under soybean may rise as the farmers may get lured by the higher MSP & shift from cotton. Overall, soybean futures (July) is expected to witness correction towards 3700-3650, facing resistance near 3900. On the similar lines, we may see correction in mustard futures (July) towards 4500-4450, if breaks the support near 4540. Going by seasonality, the pace of crushing will slowdown from this month onwards till September, hence the demand from millers may slow down in days to come. The bullish bias may continue to prevail in edible oils buoyed by the strength given by weaker rupee against dollar & the news of hike in import duty hovering around. Soy oil futures (July) is expected to trade on a stronger foot in the range of 800-835, while CPO futures (June) will probably extend its rally till 710-720 levels.
Crude may witness the selling pressure. Oil prices fell by more than 12% in the previous week after made high of 3046. A surge in U.S. coronavirus cases this week raised the prospect of a second wave of the COVID-19 outbreak hitting demand in the world’s biggest consumer of crude and fuel. While producers are cutting supply, demand remains constrained by the outbreak as the market faced the reality that the coronavirus pandemic may be far from over, with cases in the United States alone passing 2 million. But we expect the pace of price recovery to slow down along with rebalancing. Producers from the United States, as well as from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group is known as OPEC+, have been cutting supply, some by record amounts. Still, U.S. crude and gasoline stockpiles grew last week, according to government data. U.S. crude oil inventories rose to a record of 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the country. The prices may take support 2590 but in case if prices failed to sustain above this level then the bearish rally may extend till 2310. On the other hand, prices may face resistance near 3040. U.S. natural gas futures rose as output continues to slow despite forecasts for demand to decline, lower liquefied natural gas (LNG) exports, and a weekly storage build in line with estimates. With milder weather expected in mid-June, it is forecasted that U.S. demand, including exports, would slide from 82.6 bcfd this week to 79.6 bcfd next week. On MCX Natural Gas prices may trade in the range of 130- 141. Break on either side will define the next trend.
CCotton futures (June) is expected to witness a consolidation in the range of 16200-16800, with upside getting capped as the supply is outweighing demand. India’s 2020/21 stocks are forecast to surpass the previous year’s record despite a recovery in consumption from COVID-19’s significant effects in 2019/20. India’s stocks are forecast to more than double in the current year amidst the highest production in 6 years, a 4-million bale plunge in consumption, and a decline in exports. Castor futures (July) may continue to show an upside momentum till 3900 taking support near 3700 levels. According to Solvent Extractors Association (SEA) of India, India’s average castor seed productivity has been slightly revised down to 1977 kg/Ha against 1st estimate of 2052 Kg/Ha. Final castor seed production in India is estimated to be 19.62 lakh tons during 2019-20 against the 1st estimate of 20.36 lakh tons and against 10.82 lakh tons in 2018-19. Moreover, the demand for the castor, used in grease and lubricant in the auto industry is increasing in the automobile sector after the ease of the lockdown. The overall trend of mentha oil futures (June) is bearish owing to ongoing harvesting season, however in days to come it is expected to find some support near 1010 & witness short covering towards 1040-1050 levels. It is reported that due to water logging in some areas of Barabanki district, the harvestable crop of mentha has been submerged. Due to this, farmers are facing difficulties & delaying arrivals. Secondly, the worries of mentha farmers are increasing due to untimely rains. There is a possibility of decreasing oil recovery in the crop due to strong sunlight after rains.
Copper can face resistance near 450 while taking support near 419. The prices may feel pressurise as risk aversion grew on diminished expectations that the global economy would recover swiftly from the coronavirus pandemic. Worries intensified about a second wave of the coronavirus in America and this may also depress investor’s sentiment. However, the investment bank Goldman Sachs raised its copper and aluminium forecasts, and lifted its 12- month commodity returns forecast to 13.1%. On-warrant LME copper stocks fell to their lowest since Feb. 24 at 130,225 tonnes. On supply side, Chilean state miner Codelco, the world’s top copper producer, saw production rise 2.8% year on year in April and 3.8% in the first four months of 2020, while BHP´s Escondida, the world’s largest mine, pumped out 102,600 tonnes, a rise of 11.4% on the same month the previous year, an increase of 9% so far in 2020. Zinc may move towards 168 and taking support near 159. With hopes of global economic recovery from the coronavirus crisis, LME zinc may find some support from fundamentals in the medium term but elevated inventories may cap its upsides. Lead can move towards 145 while taking support near 133. Nickel may trade with bullish bias where it may test 990 and taking support near 952. Aluminum may move towards 140 while taking support near 132 due to supply interruption in Russia. Rusal, the largest aluminium producer outside China, is negotiating alternative routes for the raw materials it needs for its Siberian Achinsk alumina plant, after damaged rail infrastructure interrupted supplies.
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ZINC MCX (JUNE) contract closed at Rs. 160.25 on 11th June’2020. The contract made its high of Rs. 165.40 on 05th June’2020 and a low of Rs.145.30 on 22ndApr’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs.160.28.On the daily chart, the commodity has Relative Strength Index (14-day) value of 53.69.
One can sell around Rs. 160 for a target of Rs.150 with the stop loss of Rs.165.
NATURAL GAS MCX (JUNE)contract closed at Rs. 138.40 on 11th June’2020. The contract made its high of Rs. 179.10 on 05th May’2020 and a low of Rs. 130.60 on 10thJun’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 139.80on the daily chart, the commodity has Relative Strength Index (14-day) value of 42.21.
One can buy around Rs.130 for a target of Rs. 148 with the stop loss of Rs. 121.
SOYBEAN NCDEX (JULY) contract was closed at Rs. 3856.00 on 11th June’2020. The contract made its high of Rs. 4230.00 on 05th Feb2020 and a low of Rs. 3226.00 on 13th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 3856.00on the daily chart, the commodity has Relative Strength Index (14-day) value of 61.851.
One can sell below Rs. 3800 for a target of Rs.3620 with the stop loss of Rs 3880.
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Ÿ NCDEX has started to publish two national-level rainfall-based indices on June 10, 2020 that would track the systematic rainfall movement in the country – the Indian Monsoon Index (Cumulative Monsoon Index) and Indian Rain Index (Monthly Cumulative Rainfall Index).
Ÿ The Fed’s statement showed near-unanimous anticipation that the funds rate would stay near zero as long as the U.S economy is struggling.
In the monthly report, USDA raised U.S beginning stocks by 5 million bushels with higher crush for 2019/20 morethan-offset with lower production and a lower export forecast.
Final castor seed production in India is estimated to be 19.62 lakh tons during 2019-20 against the 1st estimate of 20.36 lakh tons and against 10.82 lakh tons in 2018- 19. - Solvent Extractors Association (SEA) of India
Ÿ Global natural gas demand is expected to fall by 4%, or 150 billion cubic metres (bcm), to 3,850 bcm this year – twice the size of the drop following the 2008 global financial crisis. - International Energy Agency
Ÿ Cotton acreage across the country was up 23 per cent at 16.69 lakh hectares as against 13.51 lakh ha in the same period last year, according to data released by the Agriculture Ministry.
From the last few weeks CRB has been gradually gaining buy side momentum and trying to move towards 140; nevertheless it couldn’t sustain at higher side. Three week sharp fall in dollar index amid ease in lockdown lent some support at the same time US and China trade issue kept upside in check. Oil prices fell more sharply on worries about slow demand growth with coronavirus cases rising, U.S. crude stockpiles hitting an all-time high and the U.S. Federal Reserve projecting recovery from the pandemic would take years. U.S. crude inventories rose unexpectedly by 5.7 million barrels in the week to June 5 to 538.1 million barrels - a record - as imports were boosted by the arrival of supplies bought by refiners when Saudi Arabia flooded the market in March and April. Natural gas futures too saw some dip in the prices. The U.S. Federal Reserve said the world's largest economy would shrink 6.5% this year and the unemployment rate would be at 9.3% at the end of 2020 in its first projections of the pandemic era. It capped the upside of base metals and some of them such as lead and zinc saw some decline in the prices. Copper was the strongest among all and moved up on technical breakout.
Bullion counter was up for the same safe haven buying reason as the number of cases rose and the world is continuously talking about second wave of COVID 19. Gold moved up after Wednesday’s U.S. Federal Reserve policy meeting decided on holding the benchmark rate near zero. Silver followed the footsteps of gold and closed in green zone. In edible oil and oilseeds complex, both behaved in different way; edible oil futures moved up whereas oil seeds futures were down on profit booking. Mustard rally was overstretched and now crushers are refraining to buy on such higher rates when fresh arrival is expected to hit the market soon. Thus we noticed correction form the higher side. CPO traded up on strong BMD amid expectation of hike in import duty in India which will make it expensive, if happens.The sentiments are bearish on the expectations of normal rainfall this monsoon season will likely see acreage under soybean crop rise by around 10% to nearly 12.4 mln ha in 2020-21 (Jul-Jun) kharif season. In spices, coriander and jeera saw gain on good offtake in spot market though turmeric traded down on smooth supply. The demand for chana has come down after the Madhya Pradesh State government has permitted purchase of chana with 2 per cent khesar a legume long, which could be toxic.
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Gold is always considered a good hedge & safe haven against numbers of uncertainties such as from financial crisis to risk of inflation and most recently corona pandemic. To provide a betterinvestment and hedging tool, NSE has started the option trading in gold mini.The'GoldMiniOptions' contractonspot goldprices isnowavailablefortrading from June 8. Currently, the leading commodity derivatives exchange MCX provides gold options trading which devolve on underlying futures contract. The 'Gold Mini Options' product has been designed as options on physical gold unlike the existing productin the market which is options on future. So itis a direct product on the physical gold itself.Itis a100gramgoldproduct.Ideaof keeping it100gramsofhigherquantity isagaintokeepit closer to the investors as well as traders. So it helps the small hedgers, particularly the bullion merchants and jewellers, to hedge their positions using the options. It is a fairly easy to use product and gives a lot of flexibility. It is a one-month product that allows a quickturnaroundandwehaveensuredthatitresults indeliveryatthedeliverycentres.
Three contracts expiring in June, July and August is available for trading from June 8. NSE has introduced market making in the gold options to provide liquidity in the initial days.
Contract Specification for Gold Mini Options
Instrument type- Options Contract with Spot as Underlying(gold)
Options type - The Options Contracts shall be European styled which can be exercised only on the expiration date.
Trading unit-100 grams
Underlying quotation / base value-₹ per 10 grams
Maximum order size - 10 Kg
Tick size (minimum price movement)-₹ 0.50
Strike interval-250
Minimum number of strikes -10 - 1 - 10
Daily price limit-A contract specific price range based on multiple factors including its delta value, DPR of Futures contract of the same commodity and volatility, is computed and updated on a daily basis.
Maximum allowable open position-For a member collectively for all clients: 100 MT or 20% of the market wide open position whichever is higher, for all Gold Options
c o n t r a c t s c o m b i n e d together. For individual client: 10 MT or 5% of the market wide open position whichever is higher, for all Gold Options contracts combined together.
S e t t l e m e n t l o g i c - Compulsory Delivery
Delivery unit-100 grams
Deliverycentre-Ahmedabad
Additional delivery centres -Delhi, Mumbai and Chennai
Delivery order rate - On expiry date, the delivery order rate shall be the Strike price. Settlement obligation shall be computed at respective strike prices of theOptions contracts.
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| 08th JUN | U.S. consumers grew slightly more optimistic about jobs and earnings in May |
| 08th JUN | World Bank says coronavirus to shrink 2020 global output by 5.2% |
| 09th JUN | Trump open to another coronavirus relief package - White House |
| 10th JUN | S&P affirms India's long-term sovereign credit rating, outlook |
| 11th JUN | BOJ Kuroda says Hong Kong's dollar peg policy key to its economy |
| 11th JUN | International trade set to shrink 27% in second quarter after April 'nosedive', says UNCTAD |
| 11th JUN | U.S. household wealth fell 5.6% in Q1 2020 as corona virus hit |
| 11th JUN | IMF says $10 trillion spent to combat pandemic, far more needed |
Indian rupee somehow broke the narrow move pattern after fear of second wave hit of coronavirus outbreak prompted rupee to fell briefly below 76.00 this week. However major flows in coming days from Reliance Jio stake sell along with SBI’s fund raising program will give cushion in domestic unit. On the negative side, the gradual loosening of strict containment measures has provided a slight boost to activity, but with new COVID-19 cases still rising sharply, the recovery is likely to be slower. Based on rising cases of COVID_19, we may see strength in rupee get cap in coming days. From majors, it has been witnessed that euro has made a complete uturn amid weaker dollar tone and despite fear of rising public debt emerged from latest stimulus injection and going forward bloc currency likely to head higher. Meanwhile Sterling produces choppiest volatility in last few days, last seen during Brexit referendum. The upcoming week will be blocked by important meeting between UK PM Boris Jhonson and EU Commissioner on 15 June as well as BoE policy meet on 18 June. Extreme volatility is expected in coming days however expectations of further rate cut is not imminent but the BoE may need to do much more than the markets currently expect to get the economy back on track.
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USD/INR (JUN) contract closed at 75.8800 on 11-Jun-2020. The contract made its high of 76.4150 on 09-Jun-2020 and a low of 75.5325 on 10-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.88.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 52.5. One can buy on dips 75.50 for the target of 76.45 with the stop loss of 74.99.
EUR/INR (JUN) contract closed at 86.2375 on 11-Jun-2020. The contract made its high of 86.4150 on 11-Jun-2020 and a low of 85.1525 on 09-Jun-2020 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 84.55
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 68. One can sell at 86.20 for a target of 85.50 with the stop loss of 86.70.
GBP/INR (JUN) contract closed at 96.0975 on 11-Jun-2020. The contract made its high of 96.7225 on 10-Jun-2020 and a low of 95.5400 on 08-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 94.76.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 59.00. One can sell at 96.00 for a target of 95 with the stop loss of 96.50.
JPY/INR (JUN) contract closed at 70.8625 on 11-Jun-2020. The contract made its high of 71.0125 on 11-Jun-2020 and a low of 69.0050 on 08-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 70.39
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 56.60. One can buy at 70.80 for a target of 72.00 with the stop loss of 70.20.
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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 fund industry adds lowest number of investor accounts in three months in May
The mutual fund industry registered the lowest addition of folios in three months in May. The industry opened 6.12 lakh new folios in May, taking the overall folio count to 9.10 crore. In comparison, the industry had added 6.82 lakh new folios in April and 9 lakh folios in March. However, it is notable that the number of folios has consistently been on a rise for 72 consecutive months until May. Folios are numbers designated to individual investor accounts. An investor can have multiple folios. According to data from the Association of Mutual Funds in India, the number of folios with 44 fund houses rose to 9.10 crore at the end of May as against 9.04 crore in April.
Equity inflows down 15% at Rs 5,256.52 crore
Inflows in the equity mutual fund schemes in May fell 15 percent month-on-month (MoM) to Rs 5,256.52 crore, according to data released by Association of Mutual Funds in India. In terms of equity funds, the silver lining was all equity fund categories registered net inflows in the month of May. Highest inflows were registered by large cap funds of Rs 1,555 crore, followed by multi cap funds that saw inflows of Rs 758 crore. Equity assets under management (AUM) in May rose 3 percent MoM to Rs 6,31,015.51 crore.
Credit-risk funds see another month of outflows but redemptions ease
Mutual fund investors were again seeing taking money away from the credit-risk funds that have been at the center of debate since the month of April. Net outflows recorded yet again in the credit-risk funds were at Rs 5,173 crore in the month of May, according to the Association of Mutual Funds in India (AFMI). With this credit-risk funds have not seen net-inflows so far this year.
MF schemes can't invest in physical goods except gold: SEBI
Market regulator Sebi said mutual funds cannot invest in physical goods barring gold through gold exchange traded funds (ETFs). Exchange traded commodity derivatives (ETCDs) having gold as the underlying asset would be considered as 'gold-related instrument' for gold ETFs. However, as mutual fund schemes participating in ETCDs may hold the underlying goods in case of physical settlement of contracts, in that case the mutual funds will have to dispose of such goods from the books of the scheme at the earliest. With regard to physical gold and silver, Sebi said such goods will have to be disposed of not exceeding 180 days from the date of holding of such physical goods.
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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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