PIDILITE INDUSTRIES LIMITED (PIDILITIND)

TATA GLOBAL BEVERAGES LIMITED (TATAGLOBAL)

WEEKLY VIEW OF THE MARKET

Nifty indices bounced back sharply from its key support levels of 10800, and ended the week above 11100 levels on back of sharp short covering. Hefty call unwinding at 10900 & 11000 call strike was observed along with fresh put writing which supported the up move in the week gone by. The Implied Volatility (IV) of calls was up and closed at 14.39% while that for put options closed at 15.07%. The Nifty VIX for the week closed at 16.09% and is expected to remain volatile. PCR OI for the week closed at 1.12, which indicates OTM put writing. Now, in coming week, we expect Nifty to trade with sideways bias along some volatility on cards as we have limited trading sessions. On higher side, 11200 will act as key resistance for Nifty while on downside, 11000 should act as a strong support. From technical front, 28750-28800 levels should as key supply zone for Bank Nifty as long term moving averages are placed over there.

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 LONG BUILD UP

TOP 10 SHORT BUILD UP

SPICES

This week,turmeric futures (Sept) may show an upside momentum towards 7100 levels, taking support near 6700-6750 levels. The correction phase in this commodity mighttake a pause as the spot are stabilizing on the reports of heavy rains in Sangli,the major-growing districtin Maharashtra may have damaged the crop. The flood situation in parts Sangli continues to be critical with increasing discharge from all the dams. The Krishna and Bhima river basins have received 300% rainfall above average in just 10 days, as a result of which 32 of 38 dams in the region are full,resulting in floods in Kolhapur and Sangli. Jeera futures (Sept) is expected to give respectto 17100 & gain to test 17700-17800 levels. Looking at revivals of monsoon & overflowing dams across the country damaging the crops, the market participants are closely keeping a watch over the Narmada Dam in the state of Gujarat. It is reported that the water level in Sardar Sarovar Dam over Narmada has increased to 129.65 meters,the highestin lasttwo years, with an inflow of 6 lakh cusecs. The level has been on the rise for the past 15 days following good rainfall in the catchment areas. Dhaniya futures (Sept) is likely to trade with an upside bias & recovertowards 6200-6300,taking support near 5925 levels. Lower arrivals & stockiestlooking for bargain buying may liftthe prices on the spot markets as well during the day’s ahead. Cardamom futures (Aug) is expected to trade in the broader range of 3390-3840 with an upside bias. The delay in the new crop and the likely shortage may increase the prices further in the coming days.

BULLIONS

Bullion counter may continue to extend its swift rally upside amid safe haven buying amid monetary easing by central banks and concerns of slowing global growth increased coupled with fresh concerns about the U.S.-China trade dispute. Gold continued to rise to its highest level breaching the level of $1500 on COMEX first time in six years and crossed lift time high of 38000 in MCX. All the major central banks are getting dovish and are ready to cut their interest rates. Central banks in New Zealand, Thailand and India stunned financial markets with a series of surprising interest rate cuts last week. Gold(Oct) can trade higher and can test 39000 level in MCX while taking support near 36500 level while silver can test 45000 level while taking support near 41800 level. US President continued his accusations on Fed by saying that everyone around is ready to cut rates and Fed is taking their own time to make any changes, this continued tussle is an added benefit to gold. Trade tensions between the United States and China further escalated after a report that Washington is delaying a decision about licenses for U.S. firms to restart trade with Huawei Technologies. Market participants are seen building bets that the U.S. central bank will cut rates three more times by year-end, according to the CME FedWatch tool. Policymakers at the Fed are next scheduled to discuss monetary policy settings in mid-September, with two more meetings to follow in October and December.

OIL AND OILSEEDS

Soybean futures (Sept) is likely to recover towards 3800, maintaining support near 3650 levels. This oilseed will be tracking gains of the U.S soybean, falling prey to weather disturbances in key growing regions due to rains, posing a threat on the standing crop. Late planting of the crop in the US this year due to excess rains and flooding in the Midwest is likely to hurt yields. The market participants would be closelywatching theUSDA'snext set of cropestimates tobepublishedonMondayby USDA as well as the season-average price forecasts on Thursday. These reports are likely to provide a short-term focus amid widely differing market assessments of this year's crop estimates. Following the footsteps, any increase in US soybean prices could push up the edible oil prices globally. Additionally, there is news that China is planning to remove soybean oil, rapeseed oil and palm oil from its import tariff quota management. Giving a positive reaction, Malaysian palm oil futures is trading near three-month high & more upside is likely to happen. Referring to the above fundamentals, soy oil futures (Sept) as well as CPO futures (Aug) are looking bullish to test 760 & 555 respectively. Mustard futures (Sept) may underperform in the oilseeds pack & trade sideways to down in the range of 3900-3400. The reason being is thatthe demand from millers is slowing down amid negative crush margin. Since the beginning ofthis year,the crushing figure has come down from 9.50 lakhs MTto5.25lakhsMTinthemonthof July.Thetotal stockswithfarmers,Govt.onMSP (NAFED & HAFED), processors as well as with stockiestis estimated to be 43.25 lakh tons.

ENERGY COMPLEX

Crude oil prices may witness volatile movement as one the side it is supported by expectations of more production cuts by OPEC but U.S.-China trade row could lead to a global slowdown, curbing demand for crude. Crude oil may take support near 3500 levels while taking resistance near 4100 levels. Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the recent slide in crude prices as oil prices have still lost more than 20% from their peaks reached in April. Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries (OPEC), planned to maintain its crude oil exports below 7 million barrels per day in August and September to bring the market back to balance and help absorb global oil inventories, a Saudi oil official stated recently. Crude production grew 100,000 bpd to 12.3 million bpd, just under its weekly record high at 12.4 million hit in May. In EIA ShortTerm report it forecast U.S. crude oil production to average 12.3 Mb/d in 2019 and 13.3 Mb/d in 2020, both of which would be at record levels. Natural gas may under selling pressure as it can test 140 while taking resistance near 160. U.S. gas futures recently collapsed to a three-year low, while spot prices were on track to post their weakest summer in over 20 years. The weather is expected to be cooler than normal in the east coast and mid-west over the next 8-14 days which should reduce cooling demand during the heart of the summer.

OTHER COMMODITIES

Cotton futures (Aug) is likely to see 20600-20800 on the higher side if trades & sustains above 20300 levels. On the ICE, cotton may recover towards 62 cents per pound helped by a positive export sales data. The catalyst for this rally is China could be China for the new crop. The country may not buy a lot of cotton, but the psychology of having China in the market buying U.S. cotton during this crisis period of trade war may prove to be price friendly. On a cautious note, the market participants would be cautious ahead of the release of the U.S. Department of Agriculture's (USDA) monthly World Agriculture Supply and Demand Estimates (WASDE) report, due on August 12 & weekly export sales on August 15. Guar seed futures (Sept) is expected to stay above the strong support zone near 4320, while guar gum may hold on to 8400 levels. These duos are likely to trade with a strong upside bias in days to come towards 4500 & 8810-8985 levels. The market participants have a reason to cheer with Argentina recently approving phyto-sanitary protocol to allow import of the commodity from India. Guar gum will help Argentine oil and gas industry replace sand water during drilling of shale oil wells. Castor seed futures (Sept) may trade with a bullish bias & test 5760, taking support near 5625 levels. The overall sentiment remains bullish due to a fall in acreage of the oilseed. As of Aug 8, area under castor in the country was at 1.89 lakh hectares ha, as compared to 2.43 lakh hectares last year, according to farm ministry data. In the major markets of Gujarat, there is robust demand from domestic stockists and oil millers.

BASE METALS

Base metal counter can trade on mixed path amid uncertainty regarding US China trade dispute. Copper may find support near 435 levels while facing resistance near 455 levels. LME Copper stocks have more than doubled this year to 277,975 tonnes and those in ShFE warehouses have risen 40% to 155,971 tonnes. Imports of copper ores and concentrates surged 41% to 2.074 million tonnes in July, the highest on record. Meanwhile, Lead may recover towards 160 while taking support near 150 levels. Zinc may remain on weaker side as it can test 180 levels while taking resistance near 188 levels. The zinc market was in deficit by 123,000 tonnes over the first five months of the year, according to the ILZSG. January-May zinc mine production hit 5.27 million tons, up 1.4% from 5.20 million tonnes during the equivalent five-month period in 2018. Nickel prices can move with sideways to upside bias as it can move in rage of 1080-1180 levels. Indonesia relaxed a ban on ore exports in 2017, but said at the time the moratorium would last only five years and that export would be restricted again in 2022. Indonesia's nickel miners association (APNI) urged the government not to bring forward a ban on raw mineral exports from 2022. Aluminium can trade with weak bias as it can take test 138 levels while facing resistance near 145 levels. Russian aluminium giant Rusal stated that lifting the share of high value-added products in its sales might prove to be tough in coming months due to the weaker market for the metal.

TREND SHEET

TECHNICAL RECOMMENDATIONS

COPPER MCX (AUG) contract closed at Rs. 442.75 on 8th Aug’19. The contract made its high of Rs. 464.65 on 29th Jul’19 and a low of Rs. 432.30 on 5th Aug’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 436.67. On the daily chart, the commodity has Relative Strength Index (14-day) value of 53.035.

One can buy between Rs. 436-438 for a target of Rs. 455 with the stop loss of Rs. 429.

TURMERIC NCDEX (SEP) contract closed at Rs. 6694.00 on 8th Aug’19. The contract made its high of Rs. 7288.00 on 16th Jul’19 and a low of Rs. 6546.00 on 5th Aug’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6948.30. On the daily chart, the commodity has Relative Strength Index (14-day) value of 52.000.

One can buy near Rs. 6750 for a target of Rs. 7200 with the stop loss of Rs. 6525.

DHANIYA NCDEX (SEP) contract was closed at Rs. 6014.00 on 08th Aug’19. The contract made its high of Rs. 7397.00 on 16th Jul’19 and a low of Rs. 5902.00 on 07th Jul’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6900.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 30.114.

One can buy near Rs. 6050 for a target of Rs. 6350 with the stop loss of Rs 5900.

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NEWS DIGEST

• SEBI has directed all stock exchanges dealing in commodity derivatives to set up a product advisory committee for each group or complex of commodities, to be represented by value chain participants.

• The daily turnover in bullion derivatives on the MCX hit a one-month high of 187.97 bln rupees on 5th August as gold hit a new high in the domestic market amid growing economic and geopolitical tensions.

• Since Jun 1, the country has received 512.0 mm rainfall, 2% below the normal weighted average of 525.1 mm, according to the IMD data.

• The water level in India's 91 key reservoirs was nearly 42% higher on week at 76.845 bcm today, according to data released by the Central Water Commission.

• OPEC’s seaborne crude exports nosedived last month, returning to May levels after a small rebound in June.

• Russian aluminium producer Rusal suspended operations at its Achinsk alumina plant and evacuated all but essential staff after a fire broke out a nearby Russian military base.

• U.S. oil output is expected to rise 1.28 million barrels per day to 12.27 million bpd this year, the U.S. Energy Information Administration stated.

WEEKLY COMMENTARY

It was the historic week; big moves in many commodities were seen owing to many political tensions amid some important economic releases. Overall CRB closed in negative as commodities reacted negative on US and China trade tensions though the downside was capped on better Chinese trade data’s. Oil prices tumbled up to 5% on Wednesday to a fresh sevenmonth low, on an unexpected build in US crude stockpiles and fears of lower crude demand due to deepening US-China trade tensions. US crude stockpiles rose last week by 2.4 million barrels, US crude oil inventories are about 2% above the five-year average for this time of year. On Thursday prices revived from lower levels due to expectations that falling prices may lead to production cuts. Reports that Saudi Arabia, the world's biggest oil exporter, had called other producers to discuss the slide in oil prices might also have supported the market. Brent has plunged more than 12% after additional tariff to China news by US. Natural gas tried to make a base near 149 levels and saw pause in the fall after a decline of three weeks. Gold saw massive move in across the board but it was magical in India as sharp depreciation in INR added extra premium in it. It made a new historical high of 38488. Gold soared more than 2% on Wednesday to breach the $1,500 ceiling for the first time in over six years as investors rushed to safe havens, spooked by a host of uncertainties including U.S.-China trade and a slowing global economy. Other precious metals also caught the rally and silver broke the level of $17 in COMEX. Base metals saw some revival except zinc which continued its downward trend. Some revival in export import data of China also cushioned up base metals prices amid some fall in dollar index.

It was a good week for soyabean, refined soya and crude palm oil; all of them saw good revival tracking a steep rise in Chicago soybeans, on worries that forecasts for dry weather in the U.S. Midwest could harm the soybean crop. Mustard noticed some weakness though the spot prices of mustard are showing a steady to firm trends due to improved demand from local crushers. In spices, it was only turmeric which showed some strong moves, other spices traded weak. The sentiments of jeera dampened because of high moisture content in the spice, due to rainfall in the key producing areas of Gujarat. It is being anticipated that this winter crop will be good this year as rains are just as farmers wanted

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)

Brent Crude...........Fuel of Growth

Crude oil , the world’s most important energy, is the most reliable indicator of global growth. So the smooth availability of oil and its prices play an importantrole in industrial and economic development. Crude oil is also an essential raw material for manufacturing plastics and also used in cosmetics, fertilisers, detergents, paints and medicines. There are different types of crude oil. The most important type of crude oil used in Europe is Brent Crude.Here we talk about brent crude oil as the leading exchange of India, NSE, has launched trading in brent crude oil a few months back. India is the 3rd largest consumer of crude oil in the world, afterUnited States and China.

Brent Crude as a benchmark pricing

The Brent Crude is extracted from the North Sea and its prices serves as a benchmark price for purchases of oil worldwide. Brent crude oil, classified as sweet light crude, has relatively low sulfur content and a relatively high gravity on the American Petroleum Institute’s standard scale. The lower the sulfur contents the easier and cheaper it is to refine into various products. Therefore, they tend to fetch higher prices on commodity markets. This large North Sea Brent crude deposit is bounded by the United Kingdom, Norway, the Netherlands, Germany, France, Denmark, and Belgium. The pricing mechanism for Brent dictates the value for roughly two-thirds of the world's crude oil production. OPEC, a group of 14 of the most powerful oil exporting countries, uses Brent as their pricing benchmark.

Factors affecting Crude prices recently

Recently Crude oil prices traded negatively despite central banks like U.S., India, New Zealand and Thailand cut their interest rates. The oil market took the rate cuts as just another sign that global oil demand will fall as markets are worried that the demand side of the oil trade will take a hit from tariffs and a slowdown in world economies. Generally, global central bank easing is not bearish for oil, however bullish. Even during the 2008 recession, rate cuts and the Fed’s quantitative easing provided one of the biggest oil price rebounds in history. The market is even ignoring the data from the different sources that suggests that U.S. oil supplies are falling at the fastest pace in years. The API reported U.S. crude supply recently fell by 3.43 million barrels, which is the eighth crude draw in a row, the longest stretch of supply drops since January of 2018. The brewing Sino-U.S. trade war is weighing on global growth and could further dampen demand-of oil this year.

WEEKLY STOCK POSITIONS IN LME (IN TONNES)

PRICES OF COMMODITIES IN LME/ COMEX/ NYMEX (in US $)

Currency Table

News Flows of last week