Bharti Airtel Limited (BHARTIARTL)

Coal India Limited (COALINDIA)

WEEKLY VIEW OF THE MARKET

Nifty dragged down due to liquidation of long positions. Recent data has turned cautious and is indicating probability of further profit booking. Call writing and put unwinding are seen in recent trading sessions. Call writes were active in 12000, 11900 strike calls indicating limited upside. This clearly indicates lack of buying interest and discomfort in the market. The levels of 12000 will remain crucial for this week as indicated by option open interest concentration. If Nifty falls below the 11800 mark, it could correct to 11700 levels on the back of further selling. On bounce, the index will face strong resistance at 11950-12000 levels. The options open interest concentration is at the 12000-strike calls with the highest open interest of above 38 lakh shares; among put options, the 11800-strike taking the total open interest to 34 lakh shares, with the highest open interest among put options. The Implied Volatility (IV) of calls closed at 13.52% while that for put options closed at 13.00%. The Nifty VIX for the week closed at 15.53% and is expected to remain sideways. The PCR OI for the week closed at 1.39 which indicates put writing. Next support is placed around 11800-11770 levels.

DERIVATIVE STRATEGIES

NIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN NIFTY OPTION OI (IN QTY) (MONTHLY)

BANKNIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN BANKNIFTY OPTION OI (IN QTY) (MONTHLY)

SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

Top 10 Rollover

Bottom 10 Rollover

SPICES

Turmeric futures (July) may witness further correction towards 6600-6500 levels. The sentiments of the market participants related to this spice are pessimistic because of weak demand from stockists amid higher arrivals of the spice in the spot markets. Additionally, the outlook for turmeric is seen bearish as sowing of the spice has begun in Sangli, and it will begin from the upcoming week in parts of Telangana. Taking a look at the weekly charts, it is observed that jeera futures (July) is facing resistance near 18000 levels & reversing its gains owing to profit booking. This week also is it expected that the counter may see further selling & move lower towards 17250-17030 levels. The fundamental attached to this weakness is the sideways movement of Rupee & giving a higher closing against Dollar. This phenomenon is capping the export demand & elevating supplies in the spot markets. It is reported that arrivals at the benchmark market in Unjha, Gujarat, are steady at 10,000 bags (1 bag = 55 kg). The bullish trend of cardamom futures (July) is likely to take a pause & the upside may remain capped near 2390 levels. The reason is that the India Meteorological Department foresights that conditions are favourable for the onset of the southwest monsoon over Kerala in the next 48 hours. The projections of sufficient rains may aid to the crop growth & send bearish signals to the counter in days to come. Dhaniya futures (July) is trading near 9 weeks low & this downtrend may extended towards 6575 levels. On the spot market of Ramganj, Rajasthan is witnessing higher amount of arrivals near to 7000 bags (1 bag = 40 kg) on daily basis.

BULLIONS

Bullion counter may continue its upside momentum amid safe haven demand on fear of global recession due to trade war and talks of rate cut by fed and falling global stock markets. Also supporting gold price is dovish tilt of major central banks and increasing economic uncertainty amid growth slowdown and trade conflict. Meanwhile, ECB indicated willingness to take measures to support economy while delaying possibility of first rate hike until mid-2020. Fed officials have indicated that they may act if trade concerns hurt US economy. This has increased expectations that the central bank may cut interest rate soon. U.S. officials had held talks on trade and migration amid reports U.S. President Donald Trump might delay the imposition of tariffs that was due this week. However, the White House stated that it is standing firm on its position that Mexico must make take significant new steps to halt the surge of Central American migrants or face tariffs on its exports to the United States. Gold can take support near 31800 levels and recover towards 33000 levels while silver can test 37800 levels while taking support near 36200 levels. U.S. Vice President Mike Pence stated that he was encouraged that Mexican officials were willing to do more to curb migration flows to the United States, but it was up to President Trump to decide if they went far enough to avert threatened tariffs. Meanwhile Trump stated that he would decide whether to carry out his threat to hit Beijing with tariffs on at least $300 billion in Chinese goods.

OIL AND OILSEEDS

Soybean futures (July) may witness a steep correction towards 3550-3500 levels due to lack of demand side fundamentals. Indian soybean exporters have asked the government to issue guidelines about the system of payments for exports to Iran because they are unable to sign contracts in the absence of clarity after the US ended India’s waiver from sanctions against Iran. The exporters have been exporting 1 lakh tons soymeal every month, which has now come to a standstill because of no clarity on remittance. On CBOT, U.S. soybean futures (July) is facing resistance near $8.94 a bushel as the market participants are cautious ahead of the World Agricultural Supply and Demand Estimates data release by the U.S Department of Agriculture on Tuesday. The potential of switching acres to soybeans and the ongoing threat of African swine fever reducing overall demand, is keeping prices in a limited range. Soy oil futures (July) might follow the bearish footsteps of soybean & trade with a negative bias in the range of 725-740 levels. CPO futures (July) will probably break the support near 508 & plunge further towards 500-495 levels. The outlook of Malaysian palm oil futures is bleak owing to bearish trend of oil prices & a stronger ringgit deterring the positive sentiments. Traders are also stay cautious ahead of a stockpiles report next week, which could weighed on the palm oil prices. Mustard futures (July) may show some weakness towards 3890 if breaks the support near 3950-3935 levels. The demand for this oilseed from the crushers is slowing down due to lack of fresh supplies. Stocks with farmers, processors, stockists and state-run agencies were at 5.5 million tons in May, compared with 4.4 million tons last year.

ENERGY COMPLEX

Crude oil prices, which has witnessed steep fall in past few weeks, may see some short covering at lower levels as prices have fallen rapidly in quick span of time. Crude oil may take support near 3500 and can recover towards 3900 in near term. Recently Brent and WTI sank to their lowest levels since mid-January after U.S. crude production hit a new record-high and stockpiles climbed to their highest since July 2017. Prices had been supported by supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and some allies including Russia. Supply has also been limited by U.S. sanctions on oil exports from Iran and Venezuela. Disappointing US ADP jobs report earlier last week, IMF’s warning about impact of trade war on growth and Mexican rating downgrade on back of trade issues has fueled concerns about health of major economies. But supporting crude oil price are increased expectations that OPEC may extend production cuts at its next meeting. Lower price, higher inventories and demand uncertainty makes a case for OPEC to continue with production cuts however Russia remains uncertain. However, weighing on crude oil price is unexpected rise in US crude oil stocks and record high US crude oil production. Also weighing on price are demand concerns amid slowdown in growth in major economies and concerns about US led global trade war. Natural gas may remain under selling pressure on feeble demand as it can test 150 levels by facing resistance near 175 levels. On weather front, US forecaster NOAA says below normal temperatures expected in most of central and eastern US while higher chances of warmer weather in western US.

OTHER COMMODITIES

In cotton futures (June), we may see lower level buying near 21300, while the upside may get extended to 22200 levels. The fundamentals of the domestic market are tight as the gap between demand & supply is widening. The Foreign Agricultural Service of the US Department of Agriculture has scaled down its estimate for India's cotton production in 2018-19 (Aug-Jul) to 33.9 mln bales (1 bale = 170 kg) from 35.0 mln bales projected in April. The closing stock for 2019-20 has been scaled down to 11.23 mln bales from 12.00 mln bales projected earlier. In addition to this, the most important factor to watch will be the price movement of cotton in the international market amidst the various developments of the ongoing trade war. In a recent update, the International Cotton Advisory Committee said that the global cotton prices may remain under pressure due to escalating concerns over the US-China trade spat and on expectations of higher stocks. The trend of cocud futures (July) has reversed & is indicating that more steep correction is on the way till 2530-2450 levels. Profit booking from higher levels & withdrawal of inventories from the exchange accredited warehouses may add to the bearishness in days to come. Guar seed futures (July) is likely to break the long term support level near 4210 & descend to test 4100-4050 levels, while guar gum futures (July) may plummet further towards 8200 levels due to the bearish trend of oil prices in the international market & southwest monsoon knocking the doors of Indian farmers, which may induce the market participants to stay on the sell side.

BASE METALS

In base metal counter, prices may witness lower levels buying but upside will remain limited. US-China trade concerns are however not abating with US considering imposing tariffs on remaining Chinese goods after the G20 summit in June. IMF reduced its outlook for China, saying the trade war is tilting the balance of risks to the downside. Copper may recover lower towards 420 while taking support near 400. On copper front, unions at Chile's Chuquicamata copper mine expressed disappointment in state-run miner Codelco's latest contract offer but agreed to extend negotiations in hopes of averting a strike. Meanwhile Lead may recover towards 157 levels while taking support near 150 levels. Lead prices edged up after Nyrstar NV stated that it has halted production at the Port Pirie smelter in Australia and declared force majeure on shipments to customers. LME lead stocks fell to 66,550 tonnes, the lowest since April 2009. Nickel can trade with sideways bias as it can support near 845 while resistance near 880. Nickel remains pressurized by recent rise in stocks at LME warehouses along with weaker demand from the stainless steel sector. Aluminium may test 148 levels while taking support near 140 levels. Zinc may trade with sideways to upside bias as it can test 212 levels while taking support near 200 levels. Tightness in physical market has also underpinned zinc price. LME Cash to three month premium stood at $138.5 but is off the two decade high of $161 hit recently. According to the ILZSG, zinc is forecasted to be in deficit this year, with demand exceeding supply by 121,000 tonnes.

TREND SHEET

TECHNICAL RECOMMENDATIONS

LEAD MCX (JUNE) contract closed at Rs. 151.55 on 06th Jun’19. The contract made its high of Rs. 152.65 on 06th Jun’19 and a low of Rs.147.35 on 06th Apr’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 135.68.On the daily chart, the commodity has Relative Strength Index (14-day) value of 77.29.

One can buy at Rs. 149 for a target of Rs. 160 with the stop loss of Rs. 145.

SILVER MCX (JULY) contract closed at Rs. 36866 on 06th Jun’19. The contract made its high of Rs. 38281.00 on 26th Apr’19 and a low of Rs. 35826.00 on 28th May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 37775.00 On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.34.

One can buy at Rs. 36800 for a target of Rs. 38800 with the stop loss of Rs. 35800.

DHANIYA NCDEX (JULY) contract was closed at Rs. 7017 on 06th Jun’19. The contract made its high of Rs. 7791 on 22nd May’19 and a low of Rs. 6967 on 07th Jun’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 7393.33 on the daily chart, the commodity has Relative Strength Index (14-day) value of 34.39.

One can sell at Rs. 7220-7250 for a target of Rs. 6700 with the stop loss of Rs 7500.

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NEWS DIGEST

• US ADP Non-Farm Payrolls rose by 27,000 last month as against market expectation of 188,000; the slowest pace in more than nine years.

• The ECB ruled out raising interest rates in the next year and even opened the door to cutting them or buying more bonds.

• U.S.-China tariffs could slash global economic output by 0.5% in 2020, the International Monetary Fund (IMF) warned.

• India's gold imports in May jumped 49% from a year earlier to 116 tonnes.

• India commodity F&O turnover is up by 9% YoY at 13 trillion rupees in Apr-May, 2019.

• India's gold imports from Switzerland were at a near-two year high of 58.6 tons in April.

• The government has so far sold 44,150 tons of the 1.6- mln-tn wheat on offer under its open market sale scheme for 2019-20 (Apr-Mar).

• There is about a 60-65% probability of the weak El Nino condition in the tropical Pacific Ocean region persisting during Jun-Aug, and is likely to decrease to 50% from September onwards. - World Meteorological Organization

• The National Agricultural Cooperative Marketing Federation of India bought 13,832 tons of urad harvested in the 2018-19 (Jul-Jun) Rabi season, as of 27th May, 2019.

• NCDEX has modified the specification of cotton (29 MM) contract by increasing the trading unit to 100 bales (1 bale = 170 kg) from 25 bales, w.e.f 10th June, 2019.

• The export of oilmeals during May 2019 provisionally reported at 58,549 tons compared to 263,644 tons in May, 2018 i.e. down by 78%.

WEEKLY COMMENTARY

In the week gone by, CRB saw correction for second straight week on massive fall in crude oil prices. Base metal prices dipped down further on trade war tension amid some weak economic data. Fall in dollar index capped the downside of some commodities though. U.S. dollar slipped after data showing weak private-sector job creation in May strengthened expectations of an interest rate cut from the Federal Reserve. Prices of safe-haven gold rose for a seventh-straight day on Thursday, getting some residual support by expectations that the Federal Reserve will have to cut rates this year to maintain economic growth. Gold made a high of 32834 in MCX while in COMEX; it hit the higher side of $1348. Silver was just few points shy away from 37000 levels. India's gold imports in May jumped 49% from a year earlier to 116 tonnes as a correction in local prices during a key festival boosted retail demand Silver also managed to trade up despite fall in base metals prices. Copper prices on the Shanghai Futures Exchange (ShFE) dropped to their lowest in two years, as weak Chinese factory data and a U.S. threat to impose tariffs on Mexican goods sparked fears of weaker global growth and demand for metals. Oil has entered a bear market as fears of an economic downturn mount. It made a low of $50.6 in NYMEX and 3522 in MCX. The EIA report was exceptionally weak, showing a strong build in crude oil (+6.8 million barrels), gasoline (+3.2 million barrels) and distillates (+4.6 million barrels). Natural gas prices were remained in bearish territory on comparatively lower demand.

In agri commodities, cotton prices slipped as unfavorable planting weather for grains increased the likelihood of increased cotton planting, while U.S.-China trade talk concerns loomed. Mostly oil seeds and edible oil turned weak last week on dull trade. According to a source, China will stockpile up to 7 million tonnes of soybeans bought from the United States during an earlier truce in the trade war between the nations, rather than crush them for immediate sale as a feed ingredient. In spices, jeera prices augmented further due to heavy purchases being made by the exporters and wholesalers. Good news for India's cumin exporters is that its yield in Syria will be lower this year & the crop usually comes in the middle of June. Cardamom futures trend is bullish on account of crop losses over last couple of years & expectation of decline in arrivals in the coming days.

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 $)

3rd Advance Estimates of major crops for 2018-19

The 3rd Advance Estimates of production of major crops for 2018-19 have been released by the Department of Agriculture, Cooperation and Farmers Welfare on 03rdJune, 2019. As per 3rd Advance Estimates for 2018-19, total Food grain production in the country is estimated at 283.37 million tonnes which is higher by 17.62 million tonnes than the previous five years’ (2013-14 to 2017-18) average production of food grain. Although the cumulative rainfall in the country during the monsoon season (June to September, 2018) has been 9% lower than Long Period Average (LPA), most of the major crops producing states have witnessed normal monsoon rainfall. Accordingly, the production of most of the crops for the agricultural year 2018-19 has been estimated higher than their normal production.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week