WISE MNEY

Allahabad Bank (ALBK

Voltas Limited (VOLTAS)

WEEKLY VIEW OF THE MARKET

The rollover of nearly 1 crore 42 lakh shares was witnessed in Nifty from February to March series, which is lowest as compared to January and December expiry. Nifty has been rollover within range of 10800- 10850 to March series. Market began the new series with a positive note as smart recovery was seen from lower levels. However, from derivative front options data reflects that calls writers and put writers were actively selling OTM options. The maximum open interest buildup of more than 25 lakh shares at 10600 puts was seen, which should act as strong support zone moving forward whereas at 11000 call option sellers are active in monthly and weekly series which will act as resistance in upcoming sessions. The Implied Volatility (IV) of calls closed at 16.18% while that for put options closed at 16.03%. The Nifty VIX for the week closed at 18.28% and is expected to remain sideways. Next week, we expect that Nifty is most likely to trade in the range of 10600 to 11000 with high volatility and some stock specific action. The PCR OI for the week closed up at 1.34 which indicates OTM put writing. On the technical front, 10800-10750 future levels is strong support zone and current trend is likely to remain sideways with stock specific moves.

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

The gains due to lower level buying seen in turmeric futures (Apr) is likely to be temporary as the overall fundamentals are bearish due to oversupply. Turmeric prices have slumped nearly 11% in the past 2 months thanks to mounting stocks at wholesale markets. Apart from the aforesaid, one of the major factors that is hitting the turmeric farmers is increased yield in Maharashtra and other state. Jeera futures (Mar) is likely to witness an upside momentum & test 15800-15900 taking support near 15300 levels. The reason being is that there is a possibility of damage to the cumin seed crop due to unfavorable weather over the growing regions. It is reported seasonal diseases are beginning to occur in jeera crop due to mixture of all weather conditions from sun-shadow to moisture and hot weather. The growers have started putting pesticides in fields. However if the clouds rinsed again, then owing to the dew, the cumin seed will be blackened. Thereby, there will be a substantial loss of cash crop in the crop. Coriander futures (Apr) is expected to hover sideways in the range of 6000-6400 levels. The downside may remain capped and the supply concerns are expected to support prices. Further, export demand for Indian coriander too has been high from countries such as Malaysia, Egypt, UAE and Saudi Arabia. This demand is likely to go even higher in the remaining months of the fiscal as the output by the other producers are going to be lesser. It is estimated that the global coriander production is estimated to decline by 40 per cent this year.

BULLIONS

Bullion counter may witness selling pressure at higher levels as bounce back in greenback amid better than expected US GDP numbers. The US economy grew at 2.6% as compared to estimates of 2.2%. Weakness in the gold could be restricted after US president Trump walked out prematurely on second day of talks with him and the North Korea leader. Both the leaders had disagreement on their negotiation talk and it ended up a “no deal” event. With failed summits, investors focus returned to US- China talks, where Trump administration is also having problems reaching a closure to its tariffs war with Beijing. Gold (April) can test 32400 while facing resistance near 33500 while silver (May) can dip towards 39000 while facing resistance near 40600. UK Prime Minister Theresa May put off a vote in parliament on her Brexit deal until as late as March 12 - just 17 days before Britain is due to leave the EU. Federal Reserve’s chairman reiterated that the U.S. central bank would stay patient on further interest rate hikes. Rising risks and recent soft data shouldn’t prevent solid growth for the U.S. economy this year, but the Fed will remain “patient” in deciding on further interest rate hikes, Fed Chair Jerome Powell stated recently. The U.S. Mint sold 12,500 ounces of American Eagle gold coins in February, down 81.1 percent from the previous month. China’s net gold imports via main conduit Hong Kong doubled in January from the previous month, as banks in the world’s top consumer likely stocked up at the beginning of the year.

OIL AND OILSEEDS

Soybean futures (Mar) is likely to break the support near 3615 & plunge further to test 3550-3500 levels. In the present scenario, the South America meal prices are at much cheaper rate compared to Indian soymeal, hence the export demand for Indian origin meal is likely to remain down in coming weeks. The same shall continue to pressurize domestic market sentiments in coming sessions. CPO futures (Mar) may witness a decline for the third consecutive week towards 545-540 levels due to situation of oversupply in the domestic market. The imports of RBD Palmolein (finished product) have doubled in just two months to almost 275000 in February 2019 from 130,000 tonnes in December 2018 owing to reduction in duty difference from 10% to 5% for Malaysia. Going ahead, the main focus of Malaysian market will be on supply side as the February data will be reported by the Malaysian Palm Oil Board on March 11. Mustard futures (Apr) is trading near its one month low & this downtrend is expected to continue till 3740 levels. India's mustard output in 2018-19 (Jul-Jun) is estimated at 85 lakh tons, up 19% on year. This season yield is also good due to supportive weather conditions in key growing regions. The yield is likely to be around 1,281 kg/ha against 1,120 kg/ha on 63.93 lakh hectares last year. Fresh arrivals of mustard crop have already started in some parts of Rajasthan. According to the trade bodies, so far, about 20-25 per cent of the overall crop has been harvested and the entire harvest is expected to be completed in the next 3-4 weeks.

ENERGY COMPLEX

Crude oil prices may continue to remain on upbeat note as falling stockpiles and decline in US production supported the prices higher. Recently falling EIA oil stockpiles and indications that OPEC will not waiver in its bid to drain oversupply supported the crude oil prices higher. Meanwhile, EIA monthly report stated that U.S. crude oil production edged lower in Dec to 11.85 million Bpd, its first decline since May. Production fell 56,000 bpd from a record 11.91 million bpd in November. Crude oil can test 4250 while taking support near 3900. In Venezuela, suffering from a political and economic crisis, oil exports have plunged by 40 percent to around 920,000 barrels per day (bpd) since the U.S. government slapped sanctions against its petroleum industry on Jan. 28. This drop comes as the Organization of the Petroleum Exporting Countries (OPEC), of which Venezuela is a member, has led efforts since the start of the year to withhold around 1.2 million bpd of supply to prop up prices. Oil markets have generally received support this year from supply curbs by the Organization of the Petroleum Exporting Countries (OPEC), which together with some non-affiliated producers like Russia, known as OPEC+, agreed late last year to cut output by 1.2 million barrels per day (bpd). Natural gas counter may witness short covering at lower levels as it may take support near 180-185 range and recover towards 220 levels. According to Natgasweather the West in US will be cool and stormy as weather systems continue to bring rain and snow this week.

OTHER COMMODITIES

A consolidation can be seen in cotton futures (Mar) in the range of 20250- 20750 levels. On the spot markets, cotton prices have softened, despite a lower crop, on weak demand from both yarn mills and overseas markets. From the total 330 lakh bales of crop, cotton farmers have brought 50% & the balance will be bringing into the markets over the next couple of months. On the demand side, the cotton export from the country is expected to slow down in coming months due to comparatively higher domestic prices than the world. On the international market, market participant’s activity in cotton continues to be handcuffed by the U.S-China trade dispute. Chana futures (Mar) will possibly see 4000 levels this week amid slackened physical trade activity, ongoing new arrivals. Sentiments are weak due to rise in selling of chana by the NAFED. The latest report on Nafed sale report of Chana Procured under PSS during Rabi-18 season as on 27 February, 2019 shows that the total procured Qty. (Net) is 27,24,051.17 MT, progressive quantity sold is 7,81,115.16 MT, leaving a surplus of 19,42,936.01 MT. Mentha oil (Mar) is expected to hold above 1560 levels on reports of delayed sowing in the major growing regions due to the ongoing weather disturbances. As per reports, farmers are worried as untimely rains and inclement weather conditions may affect the crop yield. The market participants are holding on to the optimistic view that prices of mentha oil should rise because of demand from local consumers due to falling stocks of the previous crop. The new crop of mentha oil is likely to hit markets by June.

BASE METALS

In base metal counter, prices are expected to trade with positive path as falling stockpiles and increase in cancelled warrants may support the sentiments further. Recently weak Chinese data capped the upside to some extent. China factory activity in China contracted to a three-year low in February. Copper may find some support near 445 and can recover towards 485. Supply of copper looked tight after on-warrant stocks available to the market in LME-registered warehouses fell to 21,600 tonnes from around 300,000 tonnes a year ago. They are now the lowest since 2005. Cash copper has also risen to a premium of $46.50 a tonne over the three-month contract from a discount around $20 a tonne earlier in February. Copper inventories in LME-registered warehouses, near 130,000 tonnes, are close to their lowest in 10 years. China imports of copper scrap fell 11.5 percent year on year to 180,000 tonnes in January. Meanwhile Lead may take support near 146 levels and can recover towards 158 levels. Lead hit the highest since late July 2018. On-warrant LME lead inventories slid 42% this week to 44,150 tonnes. Aluminium can remain on firm note as it can recover towards 155 taking support near 146. China’s imports of primary aluminium from Russia rose tenfold year on year in January, data released by the General Administration of Customs showed recently. Global aluminium production contracted in China and the rest of the world in January. Zinc may find support near 192 levels and can recover towards 205 levels. Nickel can also find some support near 880 levels and can recover towards 960 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

11

NEWS DIGEST

• Chile's Chuquicamata underground copper mine is due to start operations in middle of this year.

• Glencore has lodged a complaint with LME about the company’s inability to take speedy delivery of aluminium from warehouses owned by ISTIM UK in Port Klang, Malaysia.

• U.S. President Donald Trump has warned OPEC not to tighten the oil market too much and risk another spike in prices that could harm the global economy.

• Russia remained China's largest crude oil supplier in January, with imports rising 25% year on year to hold off rival Saudi Arabia.

• Cabinet approves up to Rs.10,540 crore soft loan to sugar mills for clearing cane arrears.

• The Agriculture Ministry’s second advance estimates has pegged that total food grain output for 2018-19 is estimated to be 281.37 MT, nearly 3.5 MT lower than last year’s latest estimates.

• Additional margin of 5% on both long side and short side of all running contracts and yet to be launched contracts in Castor Seed (CASTOR) shall be withdrawn with effect from beginning of the day Tuesday, March 05, 2019.

• India's castor oil exports fell 13.4% on year to 39,433 tn in January. - Solvent Extractors' Association of India.

• India's mustard output in 2018-19 (Jul-Jun) is estimated at 8.5 mln tn, up 19% on year owing to better yield and favourable weather conditions. - Solvent Extractors' Association of India.

WEEKLY COMMENTARY

In the week gone by, we saw a mix trend. CRB closed down after a two weeks continuous gain. Dollar index moved down though better than expected GDP data of US offered it timely strength and it saw marginal recovery in the weekly loss. INR traded with wild swings on ongoing tension between India and Pakistan; even equity market reacted in the same manner. Overall it appreciated further, which locked the volatility in commodities to some extent. Despite geopolitical tensions and frustrations over the global economy and political headlines; bullion counter nosedived on some better economic data. In the energy counter, both natural gas and crude moved up; nevertheless the upside in natural gas was limited with the end of winter in sight, there is little prospect of a major rebound in natural gas prices. With roughly six weeks left in the winter season, the chance of meaningful storage scarcity is rapidly declining. The shale gas industry continues to ramp up production, while ongoing gains in associated gas in the Permian have added new supplies. Crude prices rose as much as 8% in February, extending their gains from January's rally. WTI jumped after the latest weekly energy data from the U.S. EIA showed a phenomenal slump in domestic crude inventories that validated OPEC's production cuts. Venezuela's oil exports sank 40% in the first full month after the beginning of U.S. sanctions designed to oust Socialist President Nicolas Maduro. Base metals counter rebounded on ongoing talk between U.S.-China talks amid downside in dollar index coupled with some better economic releases for US. Though; negative trade data from China capped the upside. In agri counter, soyabean prices touched mufti week low as investors worry about U.S.-China trade deal. U.S. soybean prices fell on Thursday despite stronger-than-expected export sales. Mustard prices traded weak too and the bearishness could be attributed the persistent weakness in the prices to cutting down of positions by participants amid weak trend at the spot market. Rising of bets by speculators, driven by surging demand from consuming industries at the spot market against limited supplies from producing regions, drove mentha oil prices higher in futures trade. Halt in arrivals from producing belts amid robust demand from guar gum makers added strength in futures as well. Good rebound witnessed in turmeric futures from lower levels. Like turmeric; coriander prices augmented as well. Lesser production in both domestic and the international market are expected to support coriander prices in the coming months.

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 $)

Rabi crops : From area-led growth to Productivity-led growth

According to data released by the Agriculture Ministry on Feb 22, 2019, the current rabi season’s total sowing reached up to 636 lakh hectares (lh), nearly 1.86 per cent lower than last year’s 648 lh. The area under wheat, main rabi crops, almost touched 300 lh, which similar to last year. But spurt in rabi crops come from last minute boost in rice sowing. The speed up in rice planting in West Bengal, Assam and Karnataka has pushed the rice-sown area to a record 49 lakh hectares (lh) as compare to 43 lh during last year’s rabi season.

AThe pulses and coarse cereals were nearly 5 and 15 per cent lower than the corresponding period last year while the area under oilseeds are at 80.4 lh, remained more or less the same as in the last rabi season, the data showed. The drought in Maharashtra has dragged down the pulses and coarse cereal cultivation. Karnataka is the state that reported a lower area under pulses cultivation. Thanks to an increase in mustard/rapeseed cultivation in Rajasthan as compared to last year, oilseeds have been able to match up in area, even though the area under oilseeds cultivation is lower than the normal in many States, including Karnataka.

More production in From lesser area

Although the total area sown to all rabi crops was lagging behind as compared with corresponding period of last year, the overall rabi crops is expected to higher than last season. According to agricultural commissioner of India, wheat production in the current rabi season would cross 100 million tonnes on improved productivity despite of similar area coverage to last year. Similarly, despite of only 3.44% increase in area, the country’s rapeseed-mustard crop is likely to provisionally increase 19 per cent to 85 lakh tonnes for 2018-19 on higher yields from 71.5 lt reported in the previous year as estimates shown by the Mustard Oil Producers Association of India (MOPA) and Solvent Extractors Association of India (SEA). The gram production too is expected to be good this year while gram cultivation is down by about 10 per cent as compared last year. This year, the total production of pulses is estimated to touch 25 million tonnes, which would be yet another year of bumper production.

This shows the scenario is emerging that India is poised from area-led growth to productivity-led growth. With better pest management and no incidence of diseases followed by lower temperature in February than last year and the latest rains received has proved a boon for getting a good plant growth for rabi crops.

Currency Table

News Flows of last week