NMDC Limited (NMDC)

SRF Limited (SRF)

WEEKLY VIEW OF THE MARKET

Bulls once again made a comeback in Indian markets as Nifty along with Sensex surged sharply higher in the week gone by on the back of strong global cues. From derivative front, call writers at 12000 strike are seen covering their short positions while put writers added significant open interest. Broadly buying was seen in Auto, PSU banks, Metal and FMCG counters, which lifted the index towards its record peaks once again. From technical front, as well Indian, markets bounced sharply from its support levels of 11800 and seen heavy long build into the prices. However, on a higher side 12150 would be immediate hurdle for Nifty while Bank Nifty has immediate resistance at 32200 levels above which we can further witness follow up buying coming into a market. The Implied Volatility (IV) of calls closed at 11.74% while that for put options closed at 12.25%. The Nifty VIX for the week closed at 13.35% and is expected to remain volatile. PCR OI for the week closed at 1.35. For coming week, we expect that the still there is lot of outstanding position is held with call writers, and we can witness further short covering. After almost V shape recovery into the prices, technical setup in Nifty also suggest for further upside into prices.

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 (Mar) is expected to trade higher towards 6500-6600, taking support near 6000 levels. The report that the Andhra Pradesh Government might declare soon a Minimum Support Price for turmeric has lifted the sentiments of the counter. However, much of the turmeric is in poor condition, so traders are purchasing almost all medium-quality turmeric and a few bags of the good stuff from the arrivals. At the Erode Turmeric Merchants Association Sales yard, finger turmeric was sold at Rs.5,556-Rs.6,449 a quintal, while the root variety went for Rs.,5329 to Rs.6,116 a quintal. Jeera futures (Jan) may consolidate and trade sideways in the range of 15700-16200 levels. The market participants are avoiding taking long positions despite the fact it is trading near multi-months low, as they are keeping an eye on the sowing progress in the major growing areas. According to traders, jeera production is expected to increase this season. In fact, till December 9, its sowing in Gujarat has increased to 2,77,017 hectares as compared to 2,68,368 hectares during last season. In Rajasthan, it is reported that the farmers are not showing much interest in sowing jeera and shifting towards wheat & barley. Due to the presence of cloudy humidity with more moisture in the air, farmers have taken less interest in sowing of cumin crop. There is high probability that cardamom futures (Jan) may surpass the previous weekly high near 3136 & move higher to test 3200-3300 levels. In the recent times, there is surge in buying in anticipation of possible production drop in the coming months, as winter started catching up in the growing regions.

BULLIONS

Bullion counter may trade with mixed bias as US China trade war to guide its sentiments. Recently fresh comments by US President Trump stated that US was very close to nailing down a deal with china, making the riskier assets more attractive putting pressure on the safe have asset. Last week Fed held interest rates steady and signalled borrowing costs will not change anytime soon, with moderate economic growth and historically low unemployment expected to persist through the 2020 presidential election. In the meantime the White House has agreed to suspend some tariffs on Chinese goods and reduce others in return for Beijing’s pledge to hike purchases of U.S. farm products in 2020. Gold may remain in narrow range of 37800-38600 whereas on the other hand silver may recover towards 46000 while taking support near 43500. Prime Minister Boris Johnson has won the election and put the U.K. on track to leave the European Union next month after the biggest shift in British political allegiances for decades. For Johnson, a big majority would mark the culmination of an extraordinary rise to power after he led the pro-Brexit campaign three years ago. As expected first, ECB kept the interest rate unchanged and also lowered their growth forecast for the next year. Surging gold prices in India are keeping customs officials on their toes as there has been a jump in the smuggling of gold into India from China, Taiwanand Hong Kong.

OIL AND OILSEEDS

Soybean futures (Jan) has the potential to reach for its previous high of 4309 and if surpasses then may even go higher towards 4370 levels. The USDA in its latest report has lowered India’s soybean production estimate for marketing year (MY) 2019/20 (Oct-Sept) to 9 million metric tons (MMT) on 11.3 million hectares to indicate poor yield due to weather-induced stress during the peak reproductive and maturity stage. Madhya Pradesh and Maharashtra will produce 28 percent and 24 percent less soybeans compared to last season (2018). Currently, daily average arrivals of soybean across the country are 400,000-500,000 bags (1 bag = 100 kg), nearly half of what was seen previous year. Mustard futures (Jan) is most likely to trade with an upside bias in the range of 4400-4530 levels. With planting still in progress, acreage in Rajasthan may fall but in other states, it is likely to rise. Higher-than-required soil moisture due to higher monsoon rains in Rajasthan would weigh on sowing. The sowing progress shows that across the country mustard has been sown over 5.5 million hectares, which is about 80% of total area. Last year, the total sown area was at 6.9 million hectares. Soy oil futures (Jan) is seen taking support near 850 levels & maintain its uptrend in days to come. While, CPO futures (Jan) is expected to hold above the support level near 713 and continue to make new life time high. The slew of government measures to reduce the edible oil import bill of Rs 70,000 crores & apprehension of a supply shortage in the domestic market following lesser crop of soybean may keep the prices elevated.

ENERGY COMPLEX

Crude oil prices may remain on upside path as the United States and China moved closer to a resolution to the 18-month trade war between the world’s two biggest economies that have raised big questions about global demand for crude. Crude oil may move upwards towards 4350-4400 while taking support near 4100. Meanwhile International Energy Agency report pointed to future pressure on oil prices, predicting a sharp rise in global inventories despite an agreement by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to deepen output cuts. Elsewhere, Norway’s oil output in November hit a 32-month high at 1.71 million barrels per day, the Norwegian Petroleum Directorate (NPD) stated last week. The U.S. is on track to become a net exporter of crude and fuel for the first time on record on an annual basis in 2020, the EIA said, due to a production surge that has dramatically reduced its dependence on foreign oil. Weather related developments to keep natural gas on volatile path as prices can take support near 155-160 range and recover towards 170-175 in near term. Demand will increase this week as cooling returns across many regions of the US, coldest across the Midwest and Northeast as lows of -0s to 20s return, along w/areas of rain and snow. The Department of Energy reported that working gas in storage was 3,518 Bcf as of December 6, 2019. This represents a net decrease of 73 Bcf from the penultimate week.

OTHER COMMODITIES

Cotton futures (Dec) is expected to break the strong support near 18950 & may plunge towards 18800 levels. This season the supply side is heavier on account of higher crop at 354.5 lakh bales (each of 170 kg) along with larger imports. As the latest statistics, import shipments from October 1, 2019, to November 30, 2019, which have reached Indian ports, are estimated at 5 lakh bales, while the balance 20 lakh bales is estimated to arrive in the ports between December 1, 2019, and September 30, 2020. The scenario of cotton in the international market is also bleak as U.S. China trade dispute remains a central source of uncertainty for the global cotton market. Statements from the U.S. suggesting that the dispute could linger on beyond the (November) 2020 elections, raise the possibility that this uncertainty could continue to dominate the market for some time into the future. Chana futures (Jan) may witness selling pressure facing resistance near 4500 levels since past many weeks. The news that the Centre has asked states to place demand for subsidised pulses available in Centre’s buffer stock may bring down the counter to 4290 levels. It is reported that the centre has a buffer stock of around 12 lakh tonnes. The upside moves in castor seed futures (Jan) is expected to face resistance near 4350 levels. The reason being is that the fresh arrivals have started hitting the spot markets of Gujarat & is priced at 780-790 rupees per 20 kg, down 22% from the year-ago period, owing to high moisture content in the crop, at 10-12%.

BASE METALS

Base metal counter may trade with positive path. Copper may take support near 430 levels and recover towards 450 levels. Declining stocks on the LME were supporting copper prices. Headline inventories fell to their lowest since April at 181,700 tonnes. Overall, the copper market should see a deficit of 320,000 tonnes this year but this will flip into a surplus of 281,000 tonnes in 2020, the International Copper Study Group stated. Meanwhile in China, data over the weekend showed that nation’s copper imports rose 12.1 percent in November to 13-month high at 4,83,000 tonnes versus October’s 4,31,000 tonnes. The rise in imports comes on the back of unexpected improvement in factory activity last month. Meanwhile, lead may remain sideways as it can move in the range of 150-158 levels. Zinc may recover towards 188 levels while taking support near 181 levels. Nickel prices can move with upside path as it may recover towards 1060 levels while taking support near 1000 levels. LME on-warrant nickel inventories, or those available to the market, rose to a 2-1/2-month high at 67,248 tonnes. Aluminium prices can trade on mixed path in range of 131-138 levels. LME headline aluminium stocks jumped to their highest since April 2018 at 1.33 million tonnes, and the spread between the cash and three-month contract flipped to a discount of $8.75 a tonne after mostly holding in the premium zone for around a month. Almost 394,000 tonnes of aluminium have been warranted in the LME warehouse system over the last four weeks, and the headline total has jumped from 940,500 tonnes to 1,288,150.

TREND SHEET

TECHNICAL RECOMMENDATIONS

GOLD MCX (FEB) contract closed at Rs. 37544.00 on 12th Dec’19. The contract made its high of Rs. 40806.00 on 04th Sep’19 and a low of Rs. 36098.00 on 31st Jul’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 37820.13. On the daily chart, the commodity has Relative Strength Index (14-day) value of 41.006.

One can sell below Rs. 37350 for a target of Rs. 36400 with the stop loss of Rs. 37825.

NICKEL MCX (DEC) contract closed at Rs. 1020.70 on 12th Nov’19. The contract made its high of Rs. 1245.60 on 11th Oct’19 and a low of Rs. 961.00 on 10th Dec’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 1029.39. On the daily chart, the commodity has Relative Strength Index (14-day) value of 42.200.

One can buy near Rs. 1010 for a target of Rs. 1080 with the stop loss of Rs. 975.

RMSEED NCDEX (JAN) contract was closed at Rs. 4468.00 on 12th Dec’19. The contract made its high of Rs. 4499.00 on 13th Dec’19 and a low of Rs. 4230.00 on 07th Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4387.87. On the daily chart, the commodity has Relative Strength Index (14-day) value of 75.916.

One can sell below Rs. 4460 for a target of Rs. 4300 with the stop loss of Rs 4540.

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NEWS DIGEST

Ÿ The Centre has partially restored the merchandise export of India scheme (MEIS) incentive much to the relief of the spice exporters of the country, whose margins were hit after its discontinuance from August. They have decided to extend it till December 31.

Ÿ The total shipment of soymeal has declined over 70% to 1.13 lakh tonnes in oil year October and November 2019 as compared to 4.57 lakh tonnes in previous year record in the same period of time. - The Soybean Processors Association of India

Ÿ The Cotton Association of India (CAI) has retained its cotton production estimate at 354.5 lakh bales in its latest November forecast for the 2019-20 season, same as October.

Ÿ Malaysia's production also dropped 14.35 percent month-on-month to 1.54 million tons & inventories fell 4.08 percent to 2.26 million tons in November from the previous month. - Malaysian Palm Oil Board

Ÿ The U.S Federal Reserve held interest rates steady and indicated that no action is likely next year amid persistently low inflation.

Ÿ Jiangxi Copper Co, one of China’s biggest copper producers, stated that it will receive “financial assistance” to the tune of 1.5 billion yuan from its parent to repay loans and cut financing costs.

Ÿ Mines across South Africa shut down after flash flooding triggered the most severe power blackouts in more than a decade, forcing major miners Harmony Gold, Impala Platinum, and Sibanye-Stillwaterto cut output.

Ÿ Chinas imports of unwrought copper increased to the highest since September 2018.

WEEKLY COMMENTARY

In the week gone by, Bullion counter ended with weak bias as optimism regarding US China trade deal kept prices under pressure. Last week Federal Reserve stood pat on interest rates and signaled moderate economic growth for next year. Governor Powell mentioned that the US economic outlook remains favorable despite global developments and ongoing risks, he also mentioned that as long as the economic data remains broadly consistent with this outlook the current stance of monetary policy is likely to remain appropriate. US tariffs on Chinese imports loomed with no phase one deal remains in sight. Gold took support near 37450 while silver took support near 44400. Base metals registered gains last week on falling inventories. Copper prices rose to above 444 a five-month high on hopes that the US would delay imposing more trade tariffs on goods from China, which would signal a detente in the dispute that has sapped metals demand. The United States has reached a "phase-one" trade deal in principle with China, a source briefed on talks between the two nations stated last week. Nickel managed to witness recovery from five-month lower levels as took support at near 960 and recovered above 1015 as downtrend was overdone given an export ban on ore from Indonesia from 2020 is expected to tighten the market. LME nickel on-warrant inventories material not earmarked for delivery soared by 52% in one day to 102,036 tonnes, the highest since Aug. 29, LME data showed. Natural gas recovered last week as it took support near 155-157 range and recovered towards 164. U.S. Crude oil traded on sideways path. Prices got some support after OPEC monthly report showing a supply deficit next year, suggesting market is tighter than previously thought - even before latest pact with other producers to curb supply takes effect. U.S. crude stockpiles rose unexpectedly last week, while gasoline and distillate inventories jumped sharply higher. Crude inventories rose 822,000 Bpd with expectations for a 2.8 Mbpd drop. At 447.9 million barrels, crude stocks were about 4% above the five-year average for this time of year.

The oilseeds counters continued to rule and scale higher on persistent demand from the stockiest apprehending of a supply shortage in the domestic market following Kharif crop damage, talks that the Centre is mulling imposition of quantitative restriction on imports of all kind of edible oils and a sharp jump in the international market. The news that U.S. President Donald Trump signed off on a trade deal with China that would delay a new round of tariffs that was to be put in place on Dec. 15 lifted the sentiments of the market participants, those were facing the heat of the 17-month-old trade war. Turmeric witnessed a sharp bounce back on the news that the Andhra Pradesh Government might declare a Minimum Support Price (MSP). On the flip side, guar complex continued to descend amid lower demand from the oil drilling industries. Chana also decline on the back of the news that the Centre is about to take various measures to pause the rising prices of pulses.

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 Import of India & China In 2019

• According to World Gold Council, the global consumer demand for gold in the JulySeptember quarter of 2019 shrank 28 per cent to 611 tonnes, from a year ago due to factors including stronger dollar, the rising US stock market, signs of a détente in the US-China trade friction and of course, enervated demand in major markets such as India and China.

• The consumer demand for gold from India in the July-September quarter fell about 32 per cent from a year ago to 124 tonnes, its lowest level in 13 quarters. Demand in India was hurt by elevated prices of the yellow metal, dampened consumer sentiment due to the economy slowing, and an increase in import duty in July from 10 per cent to 12.5 percent.

• China’s demand is also contracted 25 per cent to 199 tonnes. However, the overall consumer demand for gold from China was 61 per cent higher compared to that from India in the JulySeptember quarter.

• Clearly, in the July-September quarter the elevated prices of the yellow metal pulled demand down to the level last seen in April-June 2016. Gold prices had soared from Rs. 34,000 per 10 grams at the end of June 2019 to Rs. 39,000 by the first week of September.

• China’s demand, too, was dented by soaring prices and weaker consumer sentiment. However, the rise in prices of gold in China was a slower 8.7 per cent compared to 15.6 per cent in India.

• Overall demand in the current calendar year is anticipated to settle much lower for India at about 700 tonnes, notwithstanding wedding season buying in North India.

• In the first nine months of the current calendar, consumer demand for gold from India was at 496 tonnes, while China stood at 639 tonnes. This was about five per cent and 14 per cent lower, respectively, compared to the same period last year.

• The demand for gold for jewellery from China was over 20 per cent higher than from India for the first nine months of the current calendar. China’s demand for gold for jewellery was estimated at 476 tonnes, compared with 396 tonnes from India.

• For the nine months of the current calendar year, India’s demand for gold as coins and bars was 38 per cent lower at 100 tonnes compared to 163 tonnes from China. India’s demand for gold bars and coins fell to its lowest January-March 2009.

• China’s official holding of gold, with the People’s Bank of China, is more than three times the holding of India, kept with the Reserve Bank of India. The WGC report estimates that China held 1,948 tonnes of gold as of September 2019, as the People’s Bank increased its holding of the metal every month, beginning December 2018.

• In comparison, India held 618 tonnes, of which 40.5 tonnes was acquired in 2018. China’s gold holding accounts for just about 3 per cent of its reserves, and in contrast, India’s hoard is about 7 per cent of its reserves.

• According to GOI sources, India imported 71 tonnes of gold in November, compared with 40 tonnes in October and down 16% from November 2018

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week