SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

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Bottom 10 Rollover

SPICES

Turmeric futures (Dec) is likely to remain below 6500 & move in negative direction towards 6050-5950 levels. As per trade sources, demand remained lackluster in the market as quality of spice that is being supplied reported inferior. Finger turmeric was sold at Rs.5,700-7,269 a quintal, while the root variety was sold at Rs.5,389-6,559 at the Erode Turmeric Merchants Association Sales yard. Jeera futures (Dec) will possibly trade with a downside bias, may even break the near term support of 16200 & descend further to test 16000-15800 levels. As per traders, unfavorable weather conditions in Gujarat have led to delays in sowing for the new season by around 10-15 days but output is unlikely to be affected. Instead yield may remain higher this year. Dhaniya futures (Dec) is expected to hold on to the support near 6630 levels & trade with an upside bias till 7000-7100 levels. Unfavorable weather conditions in the major growing areas have led to delays in sowing for the new season by around 10-15 days. Cardamom futures (Dec) may fall further towards 2300-2200 due to lack of fresh cues of demand from the auctions. According to the traders, the major buyers catering to northern part of the country are not aggressively buying from the market. The different qualities of cardamom traded in the auctions are also giving a negative impact to the prices. The weak trend seemed have forced planters to release more stocks to garner comfortable revenue. It is reported that cardamom traded lower with an average price realization of Rs 2,707 per kg at the auctions held at Spices Park in Puttady.

BULLIONS

Bullion counter may witness selling pressure on optimism of US China trade deal and stronger greenback but short covering at lower levels cannot be denied. Gold can further dip lower towards 37000 while taking resistance near 38400 while silver can test 43000 while taking resistance near 45400. China and the United States have agreed to cancel, in phases, the tariffs imposed during their months-long trade war, the Chinese commerce ministry stated, without specifying a timetable. In recent US economic data new orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the U.S.-China trade war. U.S. Federal Reserve cut interest rates for the third time this year to help sustain American growth, but signalled there would be no further reductions unless the economy took a turn for the worse. Minneapolis Federal Reserve Bank President Neel Kashkari stated that U.S. monetary policy is now “modestly accommodative,” a view that puts him on the same page as most of his colleagues at the U.S. central bank. According to the World Gold Council (WGC)”India's gold demand is expected to fall to its lowest level in three years in 2019”. Gold demand in 2019 could drop 8% from a year ago to around 700 tonnes, the lowest since 2016. India's gold consumption in the quarter ended September slumped nearly a third from a year ago to 123.9 tonnes. China just hit the pause button on its gold-buying spree. Meanwhile China kept holdings level 62.64 million ounces in October, unchanged from a month earlier.

OIL AND OILSEEDS

Soybean futures (Dec) is trading around its highest in around three and a half years on concerns about the crop in Maharashtra and Madhya Pradesh. This bullishness is likely to continue & day’s ahead it can test 4200 levels. Soybean prices are zooming up in spot markets on good demand from local crushing plants amid weak supply from producing regions. Sharp rise in soybean oil & soymeal is also jacking up prices. On the CBOT, U.S soybean futures (Dec) is expected to trade with a positive bias in the range of $9.10-9.40 a bushel. The market participants are optimistic about the resolution coming up in U.SChina trade war. The implementation of a trade deal in November appears set to change the nature of soybean exports over the next year. Mustard futures (Dec) is expected to trade with a downside bias towards 4200-4150, facing resistance near 4300 levels owing to declining pace of demand from crushers. Mustard seed crushing by mills in India declined 16.7% on year to 500,000 tons in October, according to Mustard Oil Producers Association of India data. Secondly, the inventories with processors, stockists, and state-run agencies were at 1.4 million tons, while farmers had 1.3 million tons in October. The trend of edible oils in the domestic market continues to remain bullish on the back of the news that the commerce ministry has asked the agriculture ministry to prepare a road map for told ‘zero edible oil import’ plan. In days to come, CPO futures (Nov) is expected to trade further to test 630, while soy oil futures (Dec) may give a break out above 800 to test 810-815 levels.

ENERGY COMPLEX

Crude oil prices may continue to witness volatile movement as positive news regarding US China trade war to lift the sentiment but surge in inventories likely to cap the upside. Crude oil may face resistance near 4200 while taking support near 3850 levels. Trade war between the world’s two biggest economies has slowed economic growth around the world and it has impacted global oil demand. U.S. crude oil stockpiles rose sharply recently as refineries cut output and exports dropped, while refined products extended a multiweek drawdown. Gasoline and distillate inventories dropped 2.8 million barrels and by 622,000 barrels respectively. Markets have been eyeing a possible extension, or even a deepening, early next year of OPEC’s current production curbs, which have been supporting oil prices. Russia lowered its oil output to 11.23 million barrels per day (bpd) last month from 11.25 million bpd in September, but again missed its obligations under a pact to curb production. Natural gas may witness further upside momentum and buy on dips should be the strategy as colder weather conditions in US will increase its demand. Natural gas can further move upside towards 215 while taking support near 185. The weather is also expected to be much colder than normal over the next 6-10 and then turn slightly milder over the 8-14 days forecast according to the latest estimates from the National Oceanic Atmospheric Administration. Large parts of US may experience record low temperatures as an Arctic blast sweeps across Midwest and Northeast through the middle of next week.

OTHER COMMODITIES

Cotton futures (Nov) may continue to take support near 19250, while on the contrary, it may face resistance near 19650 levels. Overall, it is expected to trade sideways as the market participants are watching multiple factors ranging from developments of U.S-China trade war, arrivals in the domestic market, U.S crop progress as well as export sales data & INR movement against Dollar. On the spot, cotton prices ruled steady in Gujarat, Maharashtra and Andhra Pradesh amid sluggish trading activities.While, prices are trading lower in Madhya Pradesh, Telangana and Karnataka due to higher arrivals and limited demand. This season the total new crop arrivals so far this season have reached 2,137,000 bales, down 43.09 percent from 3,755,000 bales arrived during the same period last year. In the international market, ICE cotton futures (Dec) may trade sideways in the range of 63-66 cents per pound. Positive vibes from the US-China trade front are likely to lend support to this soft commodity. China and the United States have agreed to cancel, in phases, the tariffs imposed during their protracted trade war, the Chinese commerce ministry said, without specifying a timetable. Chana futures (Dec) may witness correction towards 4450-4420, facing resistance near 4555 levels. This commodity is under pressure at major markets amid limited physical buying as per immediate requirement from crushing. Demand and sale counters in Chana dal and besan are also being reported thin. Moreover, sentiments are still under pressure as Nafed planning to sell procured stock around 10 lakh tonnes state wise in next three month. Plunging stocks at the MCX-accredited warehouses since past five consecutive weeks may act as catalyst to the upside momentum for menthe futures.

BASE METALS

Base metal counter can witness positive movement on hope of partial trade deal between China and US. Meanwhile China’s exports and imports contracted less than expected in October, providing some relief for the export-reliant economy as Beijing tries to reach a partial trade deal with Washington. Copper may trade sideways to upside bias as it can test 453 levels by taking support near 435. Antofagasta doubled its forecast production cut from Chile to about 10,000 tonnes this year due to the protests. Still, that was a tiny percentage of the company’s total production of 725,300 tonnes of copper in 2018. Meanwhile, Lead may remain sideways as it can move range of 152-160 levels. Zinc may witness lower level buying as it can test 200 levels while taking support near 187 levels. LME cash zinc’s premium over the threemonth contract rose to $62 a ton, which is the highest since July 1, as high premium indicates near-term shortages of metal in the LME system. Nickel prices can move with sideways to positive bias as it can recover towards 1210 while taking support near 1150. Indonesia has allowed some nickel ore exporters to resume shipments following a temporary halt to investigate reports of violations. Indonesia, the world’s largest nickel ore exporter, temporarily stopped ore shipments on Oct. 28 following reports that monthly exports had surged nearly three-fold after the government announced it was bringing forward an export ban by two years to January 2020. Aluminum can recover towards 138 while taking support near 130 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

ALUMINIUM MCX (NOV) contract closed at Rs. 134.95 on 07th Nov’19. The contract made its high of Rs. 142.05 on 24th Sep’19 and a low of Rs. 130.50 on 25th Oct’19. . The 18-day Exponential Moving Average of the commodity is currently at Rs. 134.39. On the daily chart, the commodity has Relative Strength Index (14-day) value of 49.130.

One can buy between Rs. 131-132 for a target of Rs. 140 with the stop loss of Rs. 128.

ZINC MCX (NOV) contract closed at Rs. 193.10 on 07th Nov’19. The contract made its high of Rs. 193.55 on 07h Nov’19 and a low of Rs. 181.25 on 03rd Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 189.80. On the daily chart, the commodity has Relative Strength Index (14-day) value of 62.918.

One can buy near Rs. 190 for a target of Rs. 202 with the stop loss of Rs. 184.

GUARSEED NCDEX (DEC)contract was closed at Rs. 4280.50 on 07th Nov’19. The contract made its high of Rs. 4319.00 on 07th Nov’19 and a low of Rs. 3841.00 on 03rd Oct’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 4143.40. On the daily chart, the commodity has Relative Strength Index (14-day) value of 66.998.

One can buy near Rs. 4220 for a target of Rs. 4500 with the stop loss of Rs 4080.

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NEWS DIGEST

• The commerce ministry has asked the agriculture ministry to prepare a road map for India to attain selfsufficiency in edible oil production.

• The export of oilmeals during October 2019 is provisionally reported at 105,085 tons compared to 233,867 tons in October, 2018 i.e. down by 55%. - The Solvent Extractors’ Association of India

• China and the U.S. have agreed to proportionally roll back tariffs on each other’s goods in phases, a Ministry of Commerce spokesman said.

• Production of Malaysian palm oil products for October 1- 31 was up 1.02% compared to the same period a month ago. - Malaysia Palm Oil Association

• US net cotton sales were at 164,500 RB for the week ended October 31 in the marketing year 2019/2020, up 52% from the previous week and 2% from the prior 4- week average.

• In October, China’s imports shrank 6.4% from a year earlier for the sixth consecutive month.

• Moody’s have downgraded India’s credit ratings outlook to “negative”.

• India is planning to impose anti-subsidy duty for a period of five years on copper wire rods from Indonesia, Malaysia, Thailand and Vietnam.

• Euro zone economic growth is set to slow more than expected as the bloc's manufacturing crisis could spill over to the larger services sector under protracted global trade tensions.

• Growth in demand for fuel in India is on course to fall to its lowest in at least six years as the economy slows.

WEEKLY COMMENTARY

CRB traded higher in the week gone by but couldn’t sustain at higher levels. Some positive move in trade talk was the major trigger for the commodities. Oil prices moved higher at the start of the week as signs of a trade breakthrough between the U.S. and China continue to gain steam and OPEC hints at making deeper production cuts. While bearish sentiment continued in oil markets, with OPEC revising down its oil demand projections once again. OPEC said that demand for its oil will be lower than expected over the next five years, due to rising U.S. shale production. The group said that demand for its oil would average 32.8 mb/d by 2024; a sharp cut from the 35 mb/d in last year’s forecast. Natural gas prices moved up, though some of the gain erased on technical weakness amid profit booking from the higher side. Some base metals reacted positively; only nickel and lead moved down. The U.S. and China are expected to sign a partial trade deal later this month, and China is pressing the U.S. to remove more tariffs. The U.S. is already expected to delay the planned tariff hike in December, but markets are trading up on rising expectations that existing tariffs could be rolled back. It was negative news for bullion counter. Gold lost as much as $30 an ounce, Treasuries tumbled the most since summer and defensive equities sank. Gold hit three-month lows on Thursday and was headed for its biggest losing week since 2017. Silver followed the negative trend of gold too.

Edible oil and oil seeds counters performed well; except mustard which saw some healthy profit booking after a strong upside ride. The sentiments are strong due to rise in demand for the fresh crop from stockists and oil millers. A likely disruption in supply due to continuous rainfall in some parts of Madhya Pradesh also stimulated buying. In a new development’ the commerce ministry has asked the agriculture ministry to prepare a road map for India to attain self-sufficiency in edible oil production. The aim is to help farmers and local industry, apart from reducing the current account deficit. Cotton counter was weak as the damaged crop has higher moisture content and at present. Menthe prices strengthened owing to lower level buying from the pharma industries for medicinal purpose ahead of winter season & plunging stocks at the MCXaccredited warehouses since past four consecutive weeks. Jeera was marginally higher as the rains in the key growing regions of Gujarat and Rajasthan which is likely to delay sowing by around 10-15 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 $)

Staggered Delivery

Most of the agricultural commodities traded on the domestic exchanges are under the “Compulsory Delivery” system wherein it is mandatory for sellers to deliver goods upon the expiry of the contract. The Regulator introduced a system of staggered delivery in Compulsory Delivery contracts in a move which gives the seller an option to tender delivery much before the expiry of the contract. So staggered delivery period is the period, beginning of few working days prior to expiry of any contract and ending with expiry, during which sellers/buyers having open position may submit an intention to give/take delivery. Currently all compulsory delivery commodity futures contracts (agriculture commodities as well as non-agriculture commodities) have a staggered delivery period. The minimum duration of staggered delivery period is at least five working days.

In the interest of trade and public, Exchanges have the flexibility to set higher duration of staggered delivery period for any commodity futures contract, as deemed fit, taking into account of various factors such as historical open interest, volume near expiry etc. In this regard, for the benefit of the market participants, all the exchanges jointly prepare and publish a detailed framework outlining various circumstances and factors which would generally require longer duration of staggered delivery period in any commodity.

Framework:

• Seller/buyer having open position has an option, of submitting an intention of giving/taking delivery, on any day during the staggered delivery period.

• On each day (except for the expiry day), Exchange shall allocate intentions received to give delivery during the day, to buyers having open long position as per random allocation methodology to ensure that all buyers have an equal opportunity of being selected to receive delivery irrespective of the size or value of the position. However, preference may be given to buyers who have marked an intention of taking delivery, which may be based on aspects such as location, quality etc.

• Pay-in and pay-out for the allocated deliveries shall happen within 2 working days after allocation.

• All open positions after expiry of the contract shall result in compulsory delivery and be settled at Final Settlement Price (FSP) of the respective contract and pay-in and pay-out shall happen latest by the 2nd working day after expiry.

• In staggered delivery like in Gold matching of delivery takes place in all the five days under delivery period. While in the case of Seller’s option, i.e., if the seller gives his intention to give delivery, buyers have no choice, but to accept delivery or face selling on account and/or penalty.

• However in both option contracts both buyer and seller have to match the intention and thus all outstanding short and long position are settled at the “Due Date Rate”.

Benefits of staggered delivery

• This has benefits of facilitating smooth closure of the contracts as deliveries would be spread over a period of two weeks and permitting the Seller to tender delivery and exit his position, thereby reducing his holding and margining costs.

• It also ensures that only buyers who intend to take delivery would remain in the expiry month contract during this period, thereby reducing speculative interest towards the expiry of the contract.

• It translates the increase in volume of business. It benefits monthly contracts more than long period contracts.

• Staggered delivery aims to bring in more participants and improve hedging potential on commodity exchanges.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week

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