WISE MNEY

Century Textiles & Industries Limited (CENTURYTEXT)

Tata Elxsi Limited (TATAELXSI)

WEEKLY VIEW OF THE MARKET

Indian markets remained under pressure in the week gone by as traders took profits at higher levels on back of weak growth concerns. Sell off was seen in later part of the week in heavyweights like HDFC twins, SBI, ICICIBANK along with Tata Motors and Maruti. Nifty indices ended the week well below 11950 mark while Bank Nifty also witnessed loss of more than 1.5% (week on week basis). From derivative front put writers at 12000 strike seen unwinding their positions while call writers added hefty open interest at 12000 strike. Now 12100 call strike holds with the maximum open interest of more than 26 lakh shares followed by 12000 strike. It clearly indicates that selling pressure on every bounce will likely to remain intact in coming sessions as well. However, as far Bank Nifty is concern now 31600-31700 (SPOT) levels should act as crucial hurdle and on downside 31100-31000 will act as immediate support. The Implied Volatility (IV) of calls closed at 11.79% while that for put options closed at 12.10%. The Nifty VIX for the week closed at 14.31% and is expected to remain volatile. PCR OI for the week closed at 1.25. On the technical basis, now both the indices have entered into short term bearish channel, which indicates towards limited upside.

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 witness sell on every rise & hence trade with a downside bias in the range of 5700-6000 levels. This season, there is a dearth of demand as the stockists are not showing interest in buying due to arrival of low quality stocks. The spot prices have dropped near Rs.5900 per quintal in Nizamabad, lowest in two and half years. From cutting to processing the yellow spice, per acre, it would cost roughly Rs.1.50 lakh. According to farmers, an acre can produce around 20 to 25 quintals. Hence, the cost of production per quintal of turmeric is Rs.6000. The downtrend in jeera futures (Jan) is likely to see a pause by taking support near 15500 levels, while the short covering accompanied with lower level buying may lift the counter towards 16230-16475 levels. This season the sowing is delayed & the acreage is also down as compared to previous year. The latest statistics shows that as on December 2, 2019, Rabi sowing for jeera was undertaken on 1,31,561 hectares in Gujarat, nearly 70,000 hectares down from 1,99,455 hectares reported around the same time last year. The three-year average jeera acreage in the State is 3.36 lakh hectares. The trend of cardamom futures (Jan) has again turned bullish & in days to come it is seen to move higher to test 3200 levels. Export enquiry from Gulf markets has boosted sentiments in the cardamom auctions market at Spices Park at Puttady. According to traders, buying enquiries are flowing in both from exporters and their intermediaries for the purchase of quality cardamom. Buyers including from North India were also active, witnessing an aggressive buying

BULLIONS

Bullion counter may trade with mixed bias as lack of clarity regarding initial trade deal between US and China is keeping investors on the edge. Multiple comments from various sources have increased the volatility in safe haven assets as well as riskier assets recently. US President Trump mentioned that the trade talks are moving right along and on other hand China remained fixed on their stance reiterating that roll back of tariffs should be a part of ‘phase one’ deal. Earlier last week, though, Trump rattled global markets when he said a deal might have to wait until after the 2020 election. Completion of a phase one deal between the world’s two biggest economies had been initially expected in November, ahead of a new round of U.S. tariffs set to kick in on Dec. 15, covering about $156 billion of Chinese imports. Gold may remain in narrow range of 37800-38600 whereas on the other had silver may recover towards 46000 while taking support near 43500. Meanwhile trade delegations on both sides remained locked in discussions over “core issues of concern,” with rising bilateral tensions over non-trade issues such as the protests in Hong Kong and Beijing’s treatment of its Uighur Muslim minority clouding prospects for a near-term deal to end a trade war. Central bank gold demand officially hit a new multi-decade record and although purchases have slowed recently. India's gold imports in November jumped 78% from a month earlier to 71 tonnes the highest level in five months as jewellers restocked after a fall in prices.

OIL AND OILSEEDS

The outlook of soybean futures (Jan) is bullish & it is expected to test 4250- 4300 on the higher side. Skymet estimates the soybean production in the upcoming Kharif season to be around 12.15 million tons, 12 per cent lower than the last year's production estimates of 13.78 million tons due to excess rains in Madhya Pradesh and Maharashtra towards the fag end of monsoon rains. The sentiments of mustard futures (Jan) are buoyant amid higher demand from crushers and this may take the counter higher towards 4500 levels. However, the market participants should be cautious as the sowing is in progress. A poll by Cogencis has highlighted that India's mustard acreage is likely to rise 2.9% on year to 7.1 mln ha in 2019-20 (Jul-Jun). The likely higher area under mustard in Madhya Pradesh, Uttar Pradesh and Gujarat may offset the fall in acreage in Rajasthan. Mustard yield could rise to 1.42-1.45 tn per ha this season, up from 1.40 tn per ha last year, due to ample moisture content in the soil and better farm practices. Soy oil futures is making a new life time high every week & this trend is likely to persist in days to come. The January contract is expected to soar towards 855-870 levels. With sowing being slow in the current Rabi season it has triggered an upward trend in edible oil prices in the domestic market. On similar lines, the stellar rally in CPO futures (Dec) will possibly continue as it is seen to be headed for 720-725 levels. On the international market, high demand from the bio-diesel sector has been boosting prices this year

ENERGY COMPLEX

Crude oil prices may remain on upside path as Organization of the Petroleum Exporting Countries and Russia agreed to make further small cuts in oil production to firm up crude prices. Russian Energy Minister Alexander Novak stated that a panel of key energy ministers including Saudi Arabia and Russia had recommended the OPEC+ group deepens existing supply curbs of 1.2 million barrels per day by another 500,000 bpd. The cut of 1.7 million bpd would amount to 1.7% of global supply. Recently fall in inventories also supported the prices. EIA showed a drawdown of 4.9 Mbpd compared to expectations for a 1.9 Mbpd decline. On other hand, gasoline and distillate stocks surged by a similar amount as crude’s decline, with refinery runs increasing ahead of winter stockpiling. Crude oil may move upwards towards 4300-4350 levels while taking support near 4100 levels. Saudi Arabia suggested that it would flood market if the other members don’t abide by any production rate quotas. It is expected that production cut would last through the first quarter of 2020, a much shorter timeframe than suggested by some OPEC ministers, who have called for extending cuts until June or December 2020. Weather related developments to keep natural gas on volatile path as prices can take support near 165-160 range and recover towards 180-185 in near term. Meanwhile Natgasweather stated that GFS model is coming in “quite cold” for the December 11 to 17 time frame. Inventories remain near the 5-year average for this time of year according to the Energy Information Administration.

OTHER COMMODITIES

Cotton futures (Dec) may continue to consolidate in the range of 18800-19300 levels. The spot prices are trading range bound at major markets in Central and South India due to selective demand. According to traders, prices are unlikely to fall further as the quality of arrivals in the mandis has improved to a large extent. However, the upside may remain capped as the arrivals are getting stronger in the mandis, and also the demand from mills is only according to their needs. In the international market, ICE cotton futures (Mar) is likely to remain trapped in the range of 64-67 cents per pound. The sentiments are continuously getting hurt by lack of clarity in trade talks between the United States and China. The market participants are now awaiting USDA’s monthly World Agriculture Supply and Demand Estimates (WASDE) report due on Dec. 10. Chana futures (Jan) is expected to trade sideways to up in the broader range of 4350-4550 levels. In the current scenario, there are various news affecting the prices of pulses. Among pulses, chana acreage is lagging behind at 61.59 lakh hectares as compared to 68.40 lakh hectare achieved in the same period last year. Secondly, there are talks that the government is likely to impose stock-holing limit on urad to check soaring prices. Guar seed futures (Jan) is expected to take support near 4000 levels, while guar gum futures (Jan) may manage to remain above 7200 levels. Factors of lower crop and demand side improving on account of lower level buying would possibly keep these counter is the positive territory

BASE METALS

Base metal counter may trade with sideways path with some short covering can be seen at lower levels. Copper may take support near 425 levels and recover towards 440 levels. Copper is getting support from lows as stocks in LME-registered warehouses as they fell to their lowest in nearly seven months, shedding 1,100 tonnes to 114,000 tonnes. However, spreads were unaffected by LME supply tightness, with the discount between LME cash copper and 3M deepened to $25 a tonne from $7.50 nearly a month ago. Meanwhile, lead may remain sideways as it can move in the range of 150-160 levels. Primary lead output in China increased more than expected in November as smelters including Henan Yuguang, Henan Jinli, Xing’an Silver & Lead, and Haicheng Chengxin recovered from maintenance and phase-two production lines at Hunan Shuikoushan Zhihui smelter commissioned. Zinc may recover towards 190 levels while taking support near 180 levels. Nickel prices can move with weaker path and may dip lower towards 950 levels while taking resistance near 1040 levels. Nickel prices continue to slide on concerns of dented demand for the key ingredient in stainless steel and EV batteries. China's steel rebar futures dropped and were on course for their biggest weekly loss in nearly four months, as both supplies and inventories picked up. Aluminium prices can trade on mixed path in range of 130-138 levels. Brazilian mining giant Vale stated that it would hike nickel production by about 70% in coming years to 360,000 tonnes a year, mainly by expanding in Indonesia.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE OILMCX (DEC) contract closed at Rs. 4161.00 on 04th Dec’19. The contract made its high of Rs. 4222.00 on 22nd Nov.’19 and a low of Rs. 3696.00 on 03rd Oct’19. . The 18- day Exponential Moving Average of the commodity is currently at Rs. 4104.35. On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.967.

One can buy above Rs. 4225 for a target of Rs. 4450 with the stop loss of Rs. 4115.

COPPER MCX (DEC) contract closed at Rs. 430.60 on 5th Nov’19. The contract made its high of Rs. 452.30 on 14th Oct’19 and a low of Rs. 427.70 on 4th Dec’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 435.90. On the daily chart, the commodity has Relative Strength Index (14-day) value of 40.048.

One can buy above Rs. 436 for a target of Rs. 456 with the stop loss of Rs. 426.

TURMERIC NCDEX (MAR) contract was closed at Rs. 5878.00 on 5th Dec’19. The contract made its high of Rs. 7600.00 on 03rd Sep’19 and a low of Rs. 5842.00 on 5th Dec’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6077.87. On the daily chart, the commodity has Relative Strength Index (14-day) value of 34.288.

One can buy above Rs. 5950 for a target of Rs. 6350 with the stop loss of Rs 5750.

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NEWS DIGEST

• Saudi Aramco announces it priced its IPO at 32 riyals per share, valuing the company at $1.7 trillion, short of $2 trillion targeted.

• The U.S. trade deficit dropped to its lowest level in nearly 1-1/2 years in October, suggesting trade could contribute to economic growth in the fourth quarter.

• The Trump administration blacklisted six oil tankers involved in the shipment of Venezuelan oil to Cuba.

• Japan is preparing an economic stimulus package worth $120 billion to support fragile growth.

• Total area sown under rapeseed & mustard in Rajasthan was at 21.15 lakh hectares as on December 4 in the current 2019-20 rabi season, as per the state agriculture ministry's data.

• State-run Cotton Corporation of India (CCI) has procured around 7.5 lakh bales (of 170 kg each) of cotton so far this year, i.e. 2019-20 at the minimum support price (MSP) from key growing states.

• As per Skymet, India may get lower Soybean crop of this season and expect total 12.15 million tonnes lower by 12% against last year record on account of heavy rains during post monsoon season.

• Mustard seed crushing by mills in India jumped 22.2% on year to 550,000 tn in November, according to Mustard Oil Producers Association of India data.

• MCX has been granted recognition by the European Securities and MarketsAuthority (ESMA) as a third-country CCP under Chapter 4 of Title III of the European Market Infrastructure Regulation. Based on the ESMArecognition, European participants shall be able to apply lower risk weightage towards their exposures to MCX CCL.

WEEKLY COMMENTARY

It was an average week for commodities where CRB tried to hold it marginally higher levels; near 190 levels. Dollar index were significantly down though it couldn’t give expected strength to the commodities prices. Bullion counter tried to trade in higher zone though it gave up some of its weekly gains on some improvement in economic data. OPEC meet was most awaited events for the week, kept energy traders on toes. Crude saw good revival from lower sides on expected cut by OPEC together with steep fall in inventories. The Energy Information Administration reported a crude oil inventory draw of 4.9 million barrels for the week to November 29, after a 1.6- million-barrel increase reported for the previous week. Natural gas which saw steep fall in the previous week saw some rebound in the prices. Base metals mostly reacted negatively as trade talk once again turned sour. Copper was four week down, the best performer of 2019 in base metals, Nickel prices dropped for straight 6th week on poor demand.

Pulses futures rose on strong spot market where demand has improved on the news of crop losses. Chana traded above 4430 levels. It is reported that the government is likely to impose stock-holing limit on urad to check soaring prices. The fresh crop will hit spot markets in a month. A portion of the crop in Madhya Pradesh, Gujarat, and Maharashtra was damaged due to heavy rainfall. Cotton counter remained weak on bearish international market. ICE cotton futures settled lower, hurt by uninspiring export sales data from the U.S. Department of Agriculture (USDA), while lack of clarity in trade talks between the United States and China kept investors on edge. CCI's procurement and demand from the mills limited the downside though. Guar was weak on arrival pressure. The arrivals are expected to catch pace from the nonirrigated belts of Barmer, Jaisalmer, etc. In spices, cardamom and coriander prices moved up whereas turmeric and jeera were bearish. Both cardamom arrivals and prices are now on a higher side in the recent period and this has affected the purchasing capacity of traders. The current price realisation in the range of above Rs 2,800 per kg is the highest in the history of cardamom auctions when compared to Rs 1000 per kg registered in 2010-11. Oil seeds and edible oil counter continued its multi week rally on firm international market. CPO futures were up for nonstop 9 weeks on MCX and 10 weeks on BMD. More blending in Bio fuel in Malaysia supported the prices on higher side. Refined soya saw and CPO made new historic high in Indian market.

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 $)

Crude Oil...... tuning on global growth & supply cut

Recently the crude oil, nickname black gold, prices traded with bullish sentiment since last few weeks on account on bullish sentiment on easing of US-China trade war tensions and the surprise draw in US inventories and hope that the Opec and its allies would extend their production cuts in an effort to stabilise prices. But Oil prices are being held back by the skepticism over the chances for a near-term preliminary trade deal between Washington and Beijing due to disagreements over the removal of tariffs and recent development of US legislation for support of Honkong protestor and for against Beijing’s treatment of its Uighur Muslim minority that irked China.

Brent & WTI crude oil are hovering around $61 & $55 per barrel respectively. Prices have fluctuated throughout the year, reaching nearly $75 & $70 per barrel respectively in April after U.S. sanctions on Iran and Venezuela limited world supply, but lingering trade tensions between the U.S. and China dampened economic expectations, pushing prices back down.

In the meeting at Vienna, OPEC and non OPEC group led by Russia agreed on December 5 to cut output by an extra 500,000 barrels a day in the first quarter of 2020 but stopped short of pledging action beyond March. OPEC and non OPEC group led by Russia are already cutting 1.2 million barrels per day of output through March to bolster prices.

Global Supply & Demand of crude oil

• OPEC has downwardly revised its forecast for global oil demand growth over both the medium-term and long-term, citing tough market conditions and “signs of stress” in the world economy.

• IEA forecasts global demand growth for 2020 at 1.2 million bpd, and OPEC puts it at 1.4 million bpd. Based on the global macroeconomic challenges, and in the absence of a speedy resolution of the U.S.-China trade spat, both projections appear optimistic.

• If, as the IEA predicts, non-OPEC oil production growth will come in at around 2.3 million bpd, that alone could be three times over demand growth levels for 2020.

• The International Energy Agency (IEA) which has continually reminded the market about a possible flood of non-OPEC barrels, not just from the U.S., but Brazil, Canada, Guyana and Norway as well.

• India and China are two of big three global crude importers. China has been witnessing challenges due to trade war with US. Now even the Indian economy is showing signs of strain due to multiple reasons

OPEC has lowered its outlook numbers for global oil demand growth, to 104.8 million barrels per day (b/d) by 2024, and 110.6 million b/d by 2040. India is thought to be the country with the fastest oil demand growth and the largest additional demand over the next two decades.

• In the November, EIA forecasts U.S. crude oil production will increase to 12.3 MMBPD in 2019 from 11.0 MMbpd in 2018.

• Notably, Goldman Sachs has lowered its demand for crude in 2019 and 2020. The forecast for 2019 was lowered to 950,000 barrels per day, down from an earlier forecast of 1.25 million. The forecast for 2020 has been lowered to 1.25 million, down from 1.45 million. The direction of global demand will depend on U.S.-China trade spat, showing no signs of an immediate settlement, uncertainty over how Brexit will unfold, and a slowdown in German economic activity.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week