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WEEKLY VIEW OF THE MARKET

In the week gone by, Nifty closed in red after making all time high due to profit booking. Only energy index managed to close in green. On the derivative front, call writers were aggressively writing ATM and OTM call option whereas put writing on lower strike was observed. The maximum call open interest buildup of more than 31 lakh shares at 12000 strikes has been observed, which should act as strong resistance zone in this series. However, on downside Nifty has multiple strong supports at lower levels, which are placed at 11700-11650 spot levels. The Implied Volatility (IV) of calls closed at 13.42% while put options closed at 13.87%. The Nifty VIX for the week closed at 21.69% and is expected to remain sideways. The current PCR (put call ratio) closed at 1.46, which indicates more OTM put writing and is a bullish sign. Among Nifty put options, the 11500-strike call has the highest open interest of more than 28 lakh shares. On the technical front, 12000-11950 spot levels is resistance zone and support is at 11500-11600 levels. Nifty is expected to trade in this range and is likely to consolidate at higher 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

In turmeric futures (May), consolidation with a downside bias can be seen in a broader range of 6200-6700. The sentiments of the market participants are not encouraging as the farmers are in a hurry to sell their produces since the spot prices are trading near to 3 months low. It is reported that nearly 80% of turmeric farmers of Nizamabad district are selling their crop had sold the crop as the yield is fetching them below Rs.7,000 a quintal, much below their cost of cultivating of Rs.8,000 per quintal. Taking advantage of the lower price, the traders are buying this yellow spice from Nizamabad & selling in the Sangli market, making a profit of at least Rs.2,000 per quintal. The bull-run is likely to prevail in jeera futures (May) and in days to come it may test 17100-17400 levels. The increase is attributed to peak in export demand. March and April are the prominent period for cumin exports from India. In the present scenario, we are witnessing a shift in demand to India as output in major producers Syria and Turkey is seen lower. Shortages in the international market have given the Indian exporters an edge to become the sole suppliers & become a price setter. Coriander futures (May) is trapped in the range of 7050- 7250 since past two weeks. This commodity is seeing selling pressure from higher levels, while on the contrary also witnessing buying on dips. However, the overall bias is positive amidst due to concerns of output & the supply constraints may drive the counter to 7600, as soon as it breaches 7350 levels.

BULLIONS

Bullion counter may continue to trade on bearish path supported by better than expected economic growth reading from China. Chinese data showed that in Q1 the pace of economic growth remained steady at 6.4%, beating expectations for a 6.3% expansion. An important change in market psychology has occurred just the past few weeks result to this, Gold is trading near 4- months low as China fuels risk sentiments and investors pull their money from safe heaven and park in riskier assets. There are also signs of progress between U.S, & Sino trade negotiations and strong U.S. economic data readings have further strengthen risk appetites since the start of the Q2. In the U.S., trade deficit fell to an eight-month low in February as imports from China plunged, boosting the country's economic growth in the first quarter. The two counties have set a tentative timeline for the next round of trade talks and aim to conclude negotiations by early June. Among a string of positive economic indications were data from both United States and China that tempered concerns about global growth and took the sheen off safehaven bullion. Based on Technical chart patterns, correction in Gold may continue and find support near 31200 levels a breach below 31200 levels opens the doors towards 30900 levels, whereas immediate resistance holds at 31600-31650 levels. Higher volatility is expected in the counter. On the other hand, Silver bears have overall near-term technical advantage. Prices could faces resistance near 38200 levels and may find support near 36500-36200. Overall bias is bearish for the bullion counter as risk aversion in marketplace that is seeing monies flows into riskier asset classes than safe heaven.

OIL AND OILSEEDS

Soybean futures (May) is giving a lower closing since past two weeks & this bearishness is likely to get continued till 3650 levels.The market participants are turning more bearish in this oilseed due to hopes of higher production in 2019-20 (Jul-Jun) following forecast of "near normal" monsoon. Secondly, the decline in soybean prices on Chicago Board of Trade is weighing on sentiments. The two countries have tentatively scheduled a fresh round of face-to-face trade talks, with negotiators aiming to hold a signing ceremony in late May or early June. Mustard futures (May) is continuously testing the support level near 3755 & observing selling pressure because of sustaining supply of last season crop and lukewarm demand from oil millers. In days to come,the counter would probably come down to test 3700 levels owing to prevailing weakness in overall oilseed complex. Moreover, the absence of demand for mustard meal from China & sluggish buying by NAFED is weighing on the sentiments. Soy oil futures (May) is likely to consolidate in the range of 720-728 levels, CPOfutures (May) willremain trapped in the range of 535-550 levels. The rising vegetable oil imports are creating a supply pressure & have forced the oilseed crushing units and edible oil refineries to reduce their operating capacity steadily to below the sustainable level of 30%. There is less demand for the domestically produced oils, since the imported refined oil is cheaper. The share of refined oil in the overall import in March has sequentially risen steadily to & with profit margins narrowing for processing of CPO in domestic refineries, Indian processing units are focusing on import of more refined oilthan crude oil.

ENERGY COMPLEX

Crude oil prices rallied to its highest level this year & may continue to extend recent gains as propelled by ongoing supply cuts led by producer club OPEC + and by U.S. sanctions on petroleum exporters Iran and Venezuela. Oil markets continued to support by steady economic growth in China. China’s economy grew by 6.4 percentin the first quarter, official data showed, defying expectations for a further slowdown and assuaging global markets as a U.S.-China trade deal also appears near. Refinery throughput in China - the world’s second-largest crude user - rose 3.2% in March from a year earlier. Global supply has been tightened further by U.S. sanctions on OPEC members Venezuela and Iran. Iran’s crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington. In June, OPEC and its partners will decide whetherto extend their agreement, but Russia’s willingness to stick with the cuts now looks less clear. Based on technical chart, analysis correction is due as prices are facing hurdle at 4500 levels. A breach below 4380 levels can open the doors towards 4000 levels which can be considered as good buying opportunity in crude. On weekly basis Crude may faces strong resistance in the range of 4520-4540 levels whereas could find support near 4300 levels. U.S. Natural gas futures slipped to its lowest in almost three years. Due to a warmer than normal winter in China & spring shoulder period, demand has declined and will not likely receive a boost until June. LNG exports decline putting pressure onNatural gas price.

OTHER COMMODITIES

Cotton futures (Apr) is expected to hover range bound within 22000-22600 levels. Restricted arrivals are slowing down the pace of overseas demand due to which cotton exports from the country are pegged at 47 lakh bales (one bale weighs 170kg) in 2018-19, which is the lowest since 2009-10. Chana futures (May) may trade with a negative bias & selling from higher levels near 4570 may bring the counter down to 4430. The expectation of country importing more pulses & lack of demand in the spot markets due to absence of bulk buying will exert pressure on pulses in days to come. Recently, the Commerce Ministry has laid down a procedure for import of 2 lakh tonnes of pigeon peas/ toor dal, 1.5 lakh tonnes urad dal, 1.5 lakh tonnes moong dal and 1.5 lakh tonnes peas (including yellow peas, green peas, dun peas, and kaspa peas) for the current fiscal and has invited applications from millers. Next week, we may see more downside in guar seed & guar gum futures (May) and it may test 4250-4200 & 8600-8500 levels respectively. The reason for this bearishness is the forecast of good monsoon & guar being a rain-fed crop, this is a major negative factors for the prices. The Australian Bureau of Meteorology (BoM) has updated that El Nino would be short-lived and weak. This forecast is supporting the India Met Department (IMD) outlook that monsoon would be close to normal. The BoM has also mentioned that the Indian Ocean Dipole (IOD) could possibly turn into a positive phase during June to November, giving way to a healthy Indian monsoon.

BASE METALS

Base metal counter are expected to trade sideways with downside getting capped owing to optimistic sentiments prevailing on the international market. China's economy grew at a steady 6.4 percent pace in the first quarter, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement. Copper may trade sideways in the range of 465-445 levels on MCX. Copper prices hit a nine-month high on Wednesday as firmer-than-expected economic growth figures from China boosted expectations for higher demand in the world's top metals consumer. Benchmark copper touched its highest since July 3. Technically, Zinc may trade with bearish bias break below 220 levels can take counter towards 217-215 levels whereas it can faces resistance at 232 levels. Lead can move in sideways range of 130-136 levels; break and sustain above 136 levels can take countertowards 142 levels whereas another scenario indicates that break below 130 levels can take towards 126 levels. Nickel may hover in the negative zone in the range of 860-895 levels. Shanghai nickel and zinc fell 1.1% and 0.8 percent, respectively, mirroring a decline in the Chinese ferrous complex. Aluminum prices may trade in the range of 143-155 levels. China's aluminium production fell 3.6 percent on a daily basis in March from the previous two months to its lowest rate since October, pressured by winter curbs on industry and low prices. This pushed Shanghai aluminium up as high as 13,995 yuan ($2,092.59) a tonne, its highestintra-day level sinceDecember.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE OIL MCX (MAY) contract closed at Rs.4438 on 17th Apr’19. The contract made its high of Rs.4516 on 09th Apr’19 and a low of Rs.3942 on 08th Mar’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4339.On the daily chart, the commodity has Relative Strength Index (14-day) value of 62.03.

One can buy at Rs. 4300 for a target of Rs.4700 with the stop loss of Rs. 4200.

NICKEL MCX (APR)? contract closed at Rs. 892.50 on 17th Apr’19. The contract made its high of Rs. 973.50 on 05th Mar’19 and a low of Rs. 876.40 on 18th Apr’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 900.20. On the daily chart, the commodity has Relative Strength Index (14-day) value of 39.77.

One can sell around Rs. 895-900 for a target of Rs. 850 with the stop loss of Rs. 920.

JEERANCDEX (MAY) contract closed at Rs. 16650.00 on 18th Apr’19. The contract made its high of Rs. 16935.00 on 18th Apr’19 and a low of Rs. 15,090 on 25th Feb’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 16222.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 74.633.

OOne can buy at Rs. 16500 for a target of Rs. 17200 with the stop loss of Rs 16200.

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NEWS DIGEST

• The monsoon seasonal (June to September) rainfall is likely to be 96% of the Long Period Average (LPA) with a model error of ± 5% - India Meteorological Department

• The overall import of vegetable oils during November 2018 to March 2019 is reported at 6,309,406 tons compared to 5,931,829 tons i.e. up by 6%.

• India's cotton output estimated to fall 7.87% to 343 lakh bales. - Confederation of Indian Textile Industry (CITI)

• The Federal Reserve said US economic activity expanded at a slight-to-moderate pace in March and early April. The US trade deficit also narrowed to $49.4 billion in February from $51.1 billion in January.

• Eurozone seasonally adjusted trade surplus rose to EUR 19.5 billion in February from EUR 17.4 billion in January, figures from Eurostat showed.

• China’s economy expanded by 6.4 percent in the first quarter of 2019.

• World Steel Association forecasts global steel demand will reach 1735 million tonnes (mt) in 2019, an increase of 1.3% over 2018. In 2020, demand is projected to grow by 1.0% to reach 1752 mt.

• The world merchandise trade volume growth to fall to 2.6% in 2019, as compared to 3% in 2018. Trade growth could then rebound to 3.0% in 2020; however, this is dependent on an easing of trade tensions. - WTO

WEEKLY COMMENTARY

Commodities traded in pressure with higher volatility bolstered by signs of stabilization in China. Many commodities, especially; precious metals reacted negatively as progress in USChina trade talks lifted risk sentiment. China’s economy grew by 6.4 percent in the first quarter, official data showed, defying expectations for a further slowdown and assuaging global markets. In the bullion counter, both gold and silver were weak; however, gold was comparatively weak. Dollar index stuck in sideways territory but a bearish move could happen, if the US retail sale shows a big drop in consumer spending. Brent oil surged to its highest level in 2019, backed by steady economic growth in China and a fall in US crude inventory which defied expectations and signalled firm demand, while global supply remained tight. Refinery throughput in China - the world's second-largest crude user - rose 3.2% in March from a year earlier. Global supply has been tightened further by US sanctions on OPEC members Venezuela and Iran. Iran's crude exports have dropped in April to their lowest daily level this year, tanker data showed and industry sources said, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington. In June, OPEC and its partners will decide whether to extend their agreement, but Russia's willingness to stick with the cuts now looks less clear. Due to a warmer than normal winter in China & spring shoulder period, demand has declined and will not likely receive a boost until June. LNG exports decline putting pressure on Natural gas price, the weather is expected to be normal over the next 8-14 days.

Among agro commodities, castor turned out to be the leader as it maintained its uptrend on the back of the stringent supply & estimates that production for 2018-19 is estimated to decline by 21.37% as compared to the last year. Cardamom also rose to two month high as the scorching heat and lack of summer rain are drying up the plantation as well as lowering the expectations of good crop this season. Jeera maintained it bull-run owing to the rising optimism of better exports from India, being the sole supplier in the international market. On the contrary, guar complex crashed amidst the report that monsoon is expected to be near to normal, while turmeric prices were hammered by rising arrivals from fresh ongoing harvest in the major producing regions.

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 $)

“Normal” Monsoon....... may boost business sentiment

According to India Meteorological Department (IMD) report, which was released on 15th April, Southwest monsoon seasonal (June to September) rainfall over the country as a whole is likely to be near normal. Quantitatively, the monsoon seasonal (June to September) rainfall is likely to be 96% of the Long Period Average (LPA) with a model error of ± 5%. The LPAof the season rainfall over the country as a whole for the period 1951-2000 is 89 cm. El Niño, generally associated with low rainfall, is expected to be weak during the start of the monsoon season in June with reduced intensity in the later part of the season. Overall, the country is expected to have well distributed rainfall scenario during the 2019 monsoon season, which will be beneficial to farmers in the country during the ensuing kharif season.

IMD will issue the second stage Monsoon-2019 Forecast during the first week of June, 2019

Highlights

• Forecast suggests that the 2019 Southwest monsoon rainfall is likely to be near normal. However, there is very less chance for the monsoon rainfall to be above normal or excess.

• The sea surface temperature (SST) conditions over the Pacific (El Niño/La Niña) and Indian Oceans (Indian Ocean Dipole-IOD) which are known to have s trong influence on Indian monsoon are b e i n g c o n ti n u o u s l y monitored.

The monsoon was dismal in 2018 ending with an overall deficit of 9.4%, pushing several states—including Maharashtra, Andhra Pradesh, Jharkhand, Karnataka, Gujarat, Telangana, Rajasthan and Madhya Pradesh—into drought.

Impact on Indian economy

If the forecast turn out well, this will provide much-needed relief to the rural, agriculture sector in terms of agri output, which is under stress due to previous year’s poor seasonal rainfall. Though the impact of agriculture on the economy has come down over the years, it still is an important factor to the rural economy and its cascading effect on India Inc’s balance sheet. Agriculture, which contributes 15 per cent to India's GDP and employs about 60 per cent of the country's population, is heavily dependent on the monsoon as only 40 per cent of the cultivable area is under irrigation. It also augurs well for the inflation outlook. Rice, soybean and pulses could be well benefitted by normal rainfall in central and western India; these crops are mainly grown on rainfed areas. Higher farm sector growth would push up India's economic growth. A clearer picture & detailed forecasts on regional distribution will be made in early June, by when more information on El Niño and the IOD is available. Till then, it is fingers crossed.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week