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FII’S ACTIVITY IN INDEX FUTURE

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SPICES

Turmeric futures (April) may take support near 5350 & witness gain towards 5800-5900 levels. Exporters across India are confirming an increased interest from corona-affected countries in consuming raw turmeric. The demand for raw turmeric has risen sharply in the UK and Germany. It is reported that the demand has shot up to 3 tonnes a day this month. However, market participants are advised to take long positions cautiously as the sale of turmeric in spot market of Erode would be closed till the month end. Jeera futures (April) is seen facing resistance near 13800 and taking support around 12900. There are two factors playing around this counter, firstly, there is increased supply of the fresh crop at spot markets and forecast of higher production. Secondly, it is being reported that shipments of jeera to China have begun. Exporters have started getting fresh orders, although at slower pace. Lower level buying can be seen in coriander futures (April) around 5400 & upside momentum can be seen till 6000-6100 levels. The sentiments are positive after the recent heavy rain and hailstorm over the key growing areas of Rajasthan have damaged the crop. Cardamom futures (April) may plunge further towards 2000-1930 levels. Cardamom traders are apprehensive over the restrictions imposed in the auction hall, saying that such limitations are hindering a smooth trading process. Moreover, subdued demand for cardamom across the upcountry markets due to virus scare has also led to a slow movement in the trade. The average price realization is lower at ? 2,380 per kg, especially with the offer of present bulk that too of medium quality.

BULLIONS

Bullion counter may remain under selling pressure as investors are doing panic selling across all asset classes to hoard cash due to widespread coronavirus globally. Many central banks giving various stimulus measure to lift the dampened sentiments. Meanwhile gold silver ratio tested lift time high of above 125 as silver fell at drastic pace than silver. Silver, on the other hand, tanked and traded below $12 per ounce on March 16, the lowest price since way back in 2009 during the last significant financial crisis. Gold may move towards 38000 while taking resistance near 42000 and silver can test 32000 while facing resistance near 39500. The Fed stated that it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days.US Fed decided to slash interest rates by 1 percent to 0 percent and promised to boost its bond holdings by at least $700 billion in Treasuries and MBS securities. The Trump administration pursued a $1 trillion stimulus package that could deliver $1,000 checks to Americans within two weeks to buttress an economy hit by the virus. The European Central Bank launched a 750 billion euro ($818 billion) emergency bond purchase programme to push down borrowing costs in a bloc struggling with the economic fallout of coronavirus. Britain launched a new lending scheme to provide short-term bridging finance forlarge businesses hurt by the spread of coronavirus, which will be run and funded by the Bank of England.

OIL AND OILSEEDS

Soybean futures (April) is expected to witness consolidation in the range of 3400-3600 & trade with a positive bias. The sentiments are positive due to improved buying at lower price levels. Gains in U.S soybean on CBOT is also lending support to the domestic prices. Mustard futures (April) is likely to gain further & test 4050-4110 levels. This Rabi oilseed crop across many parts of North India has witnessed heavy damage due to the repeated spells of heavy rain accompanied by hailstorm and strong winds this month.Major producing states such as Punjab, Haryana, Uttar Pradesh and Rajasthan have seen maximum loss. Soy oil futures (April) will possibly continue to show upside momentum & move higher towards 780-800 levels. The demand in the domestic market is catching up as the end consumers are indulging in physical buying ahead of Navaratri. Also, U.S soy oil on CBOT is seen stabilizing near 25 cents per pound as demand from China has started coming into the international market. CPO futures (April) is expected to trade with an upside bias & test 660-680 levels. Lower level buying accompanied with rising gap between demand & supply may fuel the upside. The overall import of vegetable oils during November 2019 to February 2020 is reported at 4,563,791 tons compared to 4,862,849 tons i.e. down by 6.1%. Currently total stock at ports and in pipelines is reported at 1,530,000 tons, decreased by 205,000 tons from 1,735,000 tons as on 1st Feb., 2020. India’s monthly requirement is about 19.00 lakh tons and ordinarily operates at 30 days stock against which currently holding stock 15.30 lakh tons equalto 24 days requirements.

ENERGY COMPLEX

Crude oil prices may continue to drop further as worries about global demand persist as the spread of coronavirus showing no sign of abating. Countries on every continent have resorted to drastic lockdowns, steps to try to tame a virus that has now infected more than 200,000 people worldwide, killing more than 8,000, with a major global recession in prospect. Crude oil may further dip towards 1800 while taking resistance near 2500. Elsewhere, Iraq's oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to help balance the oil market. The impact on oil demand is starting to show in official statistics with Japan's trade bureau saying that crude imports into the world's third-biggest economy fell 9% from a year earlier in February. Saudi Arabia and Russia started a price war after failing to agree to extend their pact to cut output to support the markets. Saudi Aramco has stated that it would likely carry over its planned higher oil output for April into the following month, and that it was "very comfortable" with an oil price of $30 a barrel. Natural gas can remain on weaker path as travel bans sparked by the coronavirus slashed the global outlook for energy demand volatile path, Overall it can move towards 110-100 range by taking resistance near 150 levels. Warmer than normal weather is expected to cover most of the United States for the next 6-10 and 8-14 days according to the National Oceanic Atmospheric Administration.

OTHER COMMODITIES

The bearish trend in cotton futures (April) is likely to get extended towards 17000-16500 taking negative cues from the international market. Exporters have already been out of the market due to the outbreak of coronavirus in 168 countries of the world, including Vietnam. While liquidity problem has also started in the market due to the fall in the price and as the deals were done earlier at higher levels. U.S cotton is trading near its 3 year low of 53.64 cents per pound due to fears of dwindling demand for the natural fiber due to the coronavirus and its impact on supply chains. Data from the United States Department of Agriculture (USDA) is showing that net sales of this natural fibre are continuously descending amid lower demand from China. Traders noted that the shutdown of two terminals at Port Houston, Texas, added to concerns about cotton shipments. Disruptions at Port Houston could have serious implications on shipping of the natural fiber from Texas, the biggest cotton growing region in the United States. Further weighing on cotton prices, is the dollar soared to its highest since 2017, rising against a basket of currencies for a third day. Mentha oil futures (April) is expected to trade with a downside bias to retest its previous week low of 1070 & if it trades below it then we may see 1020 also in days to come. The fundamentals of low demand and expectation of a rise in acreage this season is giving a bearish indication to the counter. Castor seed futures (April) is expected to witness some short covering & move higher towards 3900-4000 levels. As situation is getting better in China, the exporters have started getting order.

BASE METALS

Base metal counter may remain on under selling pressure amid fast spreading coronavirus deepened worries about a global recession and spread turmoil across financial markets. Economic data released showed that growth in industrial production in China contracted by 13.5% in January and February compared to the same period last year. But short covering at lower levels cannot be denied. Copper may test 340 levels while facing resistance near 410.Inventories of copper climbed by 34,959 tonnes from the penultimate week to 380,065 tonnes and that’s the most since March 25, 2016. Chilean copper miner Codelco stated it would reduce its operations to comply with a state of catastrophe announced by the government in a bid to curb the spread of coronavirus. China's refined copper production rose 2.8% on the year in the first two months of 2020, but the daily rate fell more than 15% from December, as smelters reduced loads amid a coronavirus outbreak. China, churned out 1.527 million tonnes of the metal in January and February combined. Meanwhile, lead may remain in red as it can test 128 while taking resistance near 147 levels. Zinc may remain on weak bias as it can test 130 levels while facing resistance near 160. Nickel prices can slip lower towards 800 while taking resistance near 950. Aluminium prices can dip towards 128 while taking resistance near 138. Norsk Hydro one of the world's largest aluminium producers, warned last week about increasing risk for its operations due to the coronavirus outbreak.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE MCX (APR) contract closed at Rs. 1980.00 on 19th Mar’2020. The contract made its high of Rs. 4186.00 on 21st Jan’2020 and a low of Rs. 1717.00 on 18th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 2659.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 30.984.

One can buy near Rs. 2050 for a target of Rs. 2500 with the stop loss of Rs. 1825.

REF. SYO NCDEX (APR) contract closed at Rs. 746.80 on 19th Mar’2020. The contract made its high of Rs. 938.40 on 02nd Jan’2020 and a low of Rs. 687.20 on 13th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 754.77. On the daily chart, the commodity has Relative Strength Index (14-day) value of 49.118.

One can buy near Rs. 750 for a target of Rs. 850 with the stop loss of Rs. 700.

TURMERICNCDEX (APR) contract was closed at Rs. 5524.00 on 19th Mar’2020.The contract made its high of Rs. 6780.00 on 04th Nov’19 and a low of Rs. 5354.00 on 16th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 5721.71. On the daily chart,the commodity has Relative Strength Index (14-day) value of 40.628.

One can buy near Rs. 5650 for a target of Rs. 6000 with the stop loss of Rs 5475.

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NEWS DIGEST

US stated that it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR), and other countries and companies are planning similar measure to fill storage tanks.

Ÿ Saudi Arabia will continue to supply a record 12.3 million barrels per day (bpd) to the oil market in the coming months.

Ÿ China's retail salesof consumer goodsdeclined20.5percent year on yearin the firsttwo months ofthis year as the novel coronavirusoutbreaktookits tollontheeconomy

Ÿ China's industrial output contracted at the sharpest pace in 30 years in the first two months of the year.

Ÿ SEBI has proposed, ‘one commodity, one exchange’ plan even though currently multiple exchanges are allowed to launch contract on the same commodity to create competition and give choice to investors.

Ÿ The trading in bullion derivatives at Multi Commodity Exchange (MCX) recorded its highest daily turnover at Rs 35,112.35 crore on March 16, 2020.The turnover for gold options was at one and a half year high at Rs 3,917 crore (9.49 MT).

Ÿ MCX has modified the Trading Unit and Delivery Unit in Mentha Oil futures contracts effective from June 2020 expiry contract and onwards. Accordingly, MCXCCL has announced modifications in delivery unit of Mentha Oil from 2160 kg / 12 drums to 1080 kg / 06 drums with effect from June 2020 contract

Ÿ Exports of Malaysian palm oil products for March 1 - 20 fell 21.2 percent to 644,421 tonnes from 817,314 tonnes shipped during February 1 - 20, cargo surveyor Intertek Testing Services.

Ÿ China has approved the launch of liquefied petroleum gas (LPG)futuresandoptionsontheDalianCommodityExchange

WEEKLY COMMENTARY

It was another week in which commodities saw high volatility. Financial market saw turmoil and dollar index soared above 102 on safe haven buying. Among all commodities, crude caught the most attention as it was acting on the tune of COVID-19 amid tensions among oil producers. U.S. crude prices closed up 24% on Thursday, in a u-turn to the previous day’s losses, after the Trump administration said it will buy oil to top up the nation’s reserves and support American drillers hurt by the coronavirus crisis and ill-timed production hikes by Saudi rivals. Traders also responded positively to the announcement by leading U.S. shale oil producer Continental Resources that it will halve its capital expenditure and slash rigs in the Bakken and Oklahoma drilling fields where it operated. Open interest in the precious metal, a tally of outstanding futures contracts, has plunged to the lowest in more than seven months. Pressure to dump bullion to raise cash and cover losses in other markets has sent the metal tumbling this month. Industrial metals saw panic selling. LME copper declined, heading for a weekly drop of almost 13%. It is the biggest weekly slump since September 2011. Chile’s top producer Codelco will operate at reduced capacity for the next 15 days to help contain the virus. Aluminum fell for a fifth straight session, heading for a weekly drop of 3.2%. It touched an almost 4-year low of $1,579.50 yesterday. Rusal may have to close its Irish alumina refinery, which supports many European aluminium smelters with feed, due to the coronavirus. On Wednesday’s announcement of the European Central Bank’s €750 billion ($821.23 billion) Pandemic Emergency Purchase Programme to purchase securities to support European economies limited the fall of metals.

Agri commodities were not in exception but they noticed limited fall as compared to metals and energy. Chan, mentha spices except cardamom saw some lower level value buying. Soyabean, refined soya oil, mustard seed also some gain on fresh buying. The upside in mustard was capped as it is reported that NAFED was offloading old mustard stocks amid higher fresh supplies. The trend of cotton futures reversed to bearish owing to weakness in international cotton market. Export demand has also come to a standstill due to the rapid spread of coronavirus globally. The demand in chana dal and besan from wholesale/retailer counters was reported to be good. Good buying from besan flour millers was witnessed at lower rates.

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 $)

Unseasonal rain fade out the bumper rabi harvest

Rabi crops-wheat, mustard, chickpeas, chana, masur and barley- are sown during the winter and harvested by farmers in summer. But recent unseasonal rain and hailstorms this month in several part of north-western and central India damaged these rabi crops and left farmers praying for a miracle to happen.

India registered an over 80 per cent increase in rainfall in the first two weeks of March — from an average of 9.3 mm to 16.9 mm. Major wheat and mustard producing states such as Punjab, Haryana, Uttar Pradesh and Rajasthan bore the maximum damage.

Uttar Pradesh, which is the largest wheat-producing state, recorded 23.8 mm rain in March. This is 667 per cent higher than the normal rainfall level of 3.1 mm during this period. Similarly, Punjab, Madhya Pradesh, Haryana, Rajasthan and Bihar have also recorded much higher rainfall than is normally recorded during this period — 311 per cent, 168 per cent, 702 per cent, 685 per cent and 604 per cent, respectively

The government has pegged the rabi food grain output in 2019-20 (Jul-Jun) at a record high of 149.6 mln tn, with wheat production seen at a new high of 106.2 mln tn and chana crop at 11.2 mln tn. Output estimates of both these crops are now under a cloud, as the recent rains are seen taking a toll on yield as well as quality

While Uttar Pradesh has been the worst hit, crops have also been hit in parts of Rajasthan, Punjab, Haryana and Bihar. The extent of the damage is not yet officially known, since governments are yet to collect data. Preliminary reports, however, officials in the state agriculture ministry said, that 70% mustard and 60% wheat have been damaged in north-west India.

According to Punjab Agriculture department, wheat on 2.02 lakh hectares has flattened. At least 20 per cent of wheat crop have been damaged in Punjab.

Heavy rain and hailstorm over the weekend in key parts of Rajasthan damaged rabi crops planted over 400,000 ha. Apreliminary report showed total 19 districts in the state had been affected and ready-to-harvest crops like mustard and wheat were the worst hit. Of the total 2.4 mln ha under mustard in the current 2019-20 (JulJun) season, standing crop on 188,000 ha has been affected due to untimely rains, and wheat over 164,000 ha has been damaged. Around 10% of the mustard yield is likely to be hit in key growing parts of Rajasthan, which is a leading producer of the oilseed. In Rajasthan, about 60% of the mustard crop is yet to be harvested. The ripened crop of mustard has been hit hard by inclement weather in Haryana and Uttar Pradesh also.

Among pulses, around 38,000 ha under chana has been damaged. Acreage under chana in the current season is estimated at 2.1 mln ha, and wheat at 3.3 mln ha.Total rabi sowing in Rajasthan was pegged at 9.97 mln ha in the ongoing season, according to the Rajasthan farm department data

In Bihar Masur and mustard crops were the worst-affected and is likely to fall by 25%-30% because of the rains. Pulses are cultivated in 5 lakh hectares across Bihar, with the masur crop covering 1.5 lakh hectares, according to the state government’s data.

This untimely shower and hailstorm may also delay harvest of rabi crops in the affected areas by about a fortnight and raising concern about a low food grain output, and a spike in food prices in the coming months.

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