Britannia Industries Limited (BRITANNIA)

Divi's Laboratories Limited (DIVISLAB)

WEEKLY VIEW OF THE MARKET

Nifty again closed near weekly highs, data reflects that at current levels there is lot of outstanding short position in Nifty and Index calls and we can expect another round of short covering. As per current derivative data, Nifty can move towards 11900-11950 mark this week as the market undertone remains bullish with support of consistent short covering. Derivative data indicates bullish scenario to continue with Nifty having multiple strong supports at lower levels around 11750 & 11800 spot. Currently Nifty is moving up, with decent addition in open interest and options put writing, which indicates strength in the current trend. Option writers were seen active in recent rally as we have seen put writing in 11700 & 11600 strikes along with the unwinding in calls. Among Nifty Call options, the 12000 strike call has the highest open interest of more than 40 lakh shares, while in put options 11700 strike hold the maximum open interest of more than 25 lakh shares. The Implied Volatility (IV) of calls closed at 21.73% while that for put options closed at 21.00%. The Nifty VIX for the week closed at 19.41% and is expected to remain volatile. The PCR OI for the week closed at 0.63 which indicates call writing. On the technical front, 11750-11800 spot levels is strong support zone and current trend is likely to continue towards 11900-11950 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 (Oct) is trading near its one month low & this downtrend is likely to continue till 5800-5700, if breaks 6000 levels. The reason is that the yield in the current 2019-20 (Jul-Jun) season is seen higher due to favourable rains in the key producing states. Sluggish demand and sufficient arrivals in the spot market may also weigh on prices. Finger turmeric prices are quoting lower at the Erode Turmeric Merchants Association Salesyard. At the Erode, Turmeric Merchants Association Salesyard, finger turmeric sold at Rs.5,589- 7555 and root variety at Rs.5,314-6,809. Last week, jeera futures (Oct) has witnessed a minor pull back after hitting a 5 month low at 16340. In the week ahead, this short covering may remain capped and it may face resistance near 16900 levels, since the sentiments attached to the counter are bearish. Good rains in Gujarat, the largest producer of jeera, have raised expectations of bigger crop in the upcoming season. Prices in Unjha are trading on a weaker note due to sluggish demand from domestic buyers and sufficient stocks. Dhaniya futures (Oct) may continue to consolidate in the range of 6000-6380 levels. The sentiments are dampened due to increased arrivals and tepid buying from stockists. The badami machine clean variety is being sold at 6,900 rupees per 100 kg&the eagle variety at 7,400 rupees. Reports of rise in imports from Russia and Ukraine and expectations of likely rise in sowing in the upcoming Rabi season due to good progress of rains in Rajasthan is also weighing on the counter.

BULLIONS

Bullion counter may continue to remain on sideways path as Fed decided to cut rates by 25bps but commentary was not as dovish as expected. Fed cited “uncertainties” about the outlook and pledged to act as appropriate to sustain the economic expansion. Though the U.S. economy continues growing at a "moderate" rate and the labor market "remains strong," the Fed said in its policy statement that it was cutting rates "in light of the implications of global developments for the economic outlook as well as muted inflation pressures. Also the continuous tweets from President Trump to cut rates so as to support his actions of tariffs, seemed to add more pressure on the Fed. Meanwhile Bank of Japan left the interest rate unchanged but BoJ hinted at possible action in October following a slowdown in the global economy. The progress in Sino US trade war will give direction to the prices as U.S. and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months, as the world’s two largest economies try to bridge deep policy differences and find a way out of their protracted trade war. Gold can test 37000 levels while taking resistance near 38000 levels while silver can test 45600 levels while taking resistance near 47300 levels. Rising geopolitical tensions in middle east will cap the downside in bullion counter as US President Donald Trump’s stated that it looked like Iran is behind the attack but US would not go for war.

OIL AND OILSEEDS

Soybean futures (Oct) is looking bullish towards 3850-3900 levels, taking support near 3750-3720 levels. In recent past weeks, the relentless rains that have been pounding several parts of Madhya Pradesh has dashed the hopes of a good crop this season. Due to late sowing, the soybean crop has just started to bear fruit. Now, with extensive submergence, it has turned pale, with no chance of revival in large tracts standing soybean across Hoshangabad, Mandsaur, Indore, Ujjain, Neemuch, Ratlam and other places. According to the weather office, rainfall in MP has been 28 per cent above normal so far. Between June 1 and September 30, the normal rainfall in the state is 952 mm. This year, till Thursday, it was 1,100 mm. On the CBOT, U.S soybean futures (Nov) may trade range bound within $8.85-9.05 a bushel.The market participants would be looking for chances of a breakthrough in theU.S.-China trade negotiation. Traders hope that recent goodwill gestures from Beijing, includinglong-sought U.S. soybean purchases, may move both economies closer to a deal to end the tradedispute. Soy oil futures (Oct) is expected trade with an upside bias in the range of 758-775 levels. The sentiments are upbeat due to improved demand ahead of festivals due next month coupled with crop concerns on standing soybean crop in Madhya Pradesh. In the contrary, CPO futures (Sept) may selling from higher levels towards 545. The sentiments are bearish tracking a drop in related in CBOT soyoil and slowing Malaysian palm oil exports couled with concerns of higher inventories.

ENERGY COMPLEX

Crude oil prices may trade on volatile path as supply disruptions regarding Saudi Arabia oil installations and uncertainty regarding geopolitical tensions in Middle East will keep investors jittery. Saudi Arabian supply risk came into focus on fears of longer-than-expected supply shortfalls. Saudi assurances to market with certain degree of skepticism as reports that workers have just recently been let into Abqaiq, Saudi Arabia is downplaying extent of disruption and doing everything they can to keep markets balanced and tensions tamped down. Crude oil may take support near 4100 levels while taking resistance near 4550 levels. Saudi Arabia’s energy minister has outlined an ambitious timetable for the early normalization of output by the end of the month. The United States and the International Energy Agency have also promised to make additional oil available from their emergency reserves if necessary, all of which has helped calm fears about shortages. Meanwhile in US, Gulf Coast was hit hard by Tropical Storm Imelda as flooding forced a major refinery to cut production and a key oil pipeline, terminals and a ship channel in Texas were shut. Natural gas may witness further profit booking at higher levels as it can test 170 levels while taking resistance near 195 levels. Recently bigger-than-expected storage build and forecasts for less cooling demand next week knocked prices further off their highest in nearly five months. NOAA also reported that the weather in the North East will be warmer than normal over the next 6 -10 days but become milder during the 8- 14 day period.

OTHER COMMODITIES

Cotton futures (Oct) is expected to consolidate in the range of 19200-20200 levels with upside getting capped. India's cotton output for 2019-20 (Oct-Sep) marketing year is seen at36.8 million bales, next year's output would be around 12-15% higher than the market estimate of 32.0 million bales for the current year. The market participants are very optimistic this year as, so far, the condition of the crop is good, with no reports of infestation by pests.In the international market, cotton would trade sideways until & unless there is clarity from the outcomes of U.S. and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months.The discussions are seen focusing heavily on agriculture, including U.S. demands that China substantially increase purchases of farm commodities. Chana futures (Oct) is likely to trade sideways in the range of 3975-4075 levels. Report of damage to the standing crops on account of heavy rains in Madhya Pradesh has lifted the sentiments of the market participants.It is reported that Monsoon rains in India in the recent week were above average for a third straight week, with floods hitting many districts in the central parts of the country and damaging crops majorly pulses. Castor seed futures (Oct) may witness some retracements facing resistance near 6000 levels.With sowing for the ongoing Kharif season over, castor has emerged as the crop which has logged a jump of 20.15 per cent in Gujarat. It is largely due to a very good monsoon in the state this year and the impressive price that the oilseed fetches to the farmers.

BASE METALS

Base metal counter can witness some recovery at lower levels amid positive development in US and China trade war. The People’s Bank of China extended 200 billion yuan ($28.27 billion) of loans from its medium-term lending facility to maintain liquidity but kept the one-year lending rate unchanged at 3.3%. Copper may witness recovery from lower levels as it can test 455 levels while taking support near 440 levels. Peru expects its copper production to grow 27% in the next three years by 2022. Meanwhile, Lead may also remain sideways as it can move range of 151-159 levels. Rising supply outlook after Belgium’s Nyrstar stated that it had temporarily reopened an old lead-processing plant in Australia can support the prices. Zinc may remain on weaker path as it can test 182 levels while taking resistance near 192 levels. Nickel prices can move with upside bias as it can test 1300 levels while taking support near 1200 levels. The global nickel market deficit widened to 6,700 tonnes in July from a revised shortfall of 2,700 tonnes in the previous month. In first seven months 2019, there was a global deficit of 48,200 tonnes compared to a deficit of 100,900 tonnes in same period of 2018, as per INSG. Nickel cash metal was still commanding a significant $105 premium over three-month price. A nickel mining hub in the southern Philippines, which produces mostly high-grade material, has suspended extraction operations indefinitely as the regional government conducts an industry audit. Aluminium can trade with sideways to weak bias as it can take support near 136 while facing resistance near 143 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

NICKEL MCX (OCT) contract closed at Rs.1241.20 on 19thSep’19. The contract made its high of Rs.1315.20 on 02ndSep’19 and a low of Rs.1044.00on 05th Aug’19. The 18-day Exponential Moving Average of the commodity is currently at Rs.1223.98.On the daily chart, the commodity has Relative Strength Index (14-day) value of 62.245.

One can buynearRs.1230 for a target of Rs.1300 with the stop loss of Rs. 1195.

COPPER MCX (OCT) contract closed at Rs. 451.45 on 19thSep’19. The contract made its high of Rs. 460.95 on 13thSep’19 and a low of Rs.438.55 on 03rdSep’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 451.43. On the daily chart, the commodity has Relative Strength Index (14-day) value of 49.701.

One can sell near Rs. 452 for a target of Rs. 432 with the stop loss of Rs. 462.

CPO MCX (OCT) contract was closed at Rs. 564.40 on19thSep’19. The contract made its high of Rs. 579.00on 26thAug’19 and a low of Rs. 531.00 on 06thAug’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 560.47.On the daily chart, the commodity has Relative Strength Index (14-day) value of 53.191.

One can sell near Rs. 565 for a target of Rs. 535 with the stop loss of Rs 580.

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NEWS DIGEST

• Electricity futures trading kicks off in Japan with launch of Tokyo Commodity Exchange.

• According to National Bureau statistics “China's zinc output rose by 18.9% YoY to 528,000 tonnes in August”.

• Azerbaijan’s leading gold mining company, Anglo Asian Mining gold output rose 3.3% year-on-year in the first half of 2019 to 34,349 ounces from 33,255 ounces.

• China's Dalian Commodity Exchange has introduced a brand-based system for iron ore contracts slated for delivery September 2020 onwards.

• U.S. homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction accelerated.

• MCX is to launch 4 ton Kapas futures on sept 30 with delivery in Rajkot.

• Commodity market participants asked Finance Minister Nirmala Sitharaman to consider steps to reduce transaction cost to make Indian markets internationally competitive and improve ease of doing business.

•• MMTC Ltd and NAFED will import 200,000 tn of maize each under the tariff rate quota during the current financial.

WEEKLY COMMENTARY

The week started with massive wild swings owing to attack on oil field in Saudi Arabia. CRB surrendered some of its gains amid geopolitical tension. Crude prices erupted on the news of attack happened on Saturday and knocked out almost half of Saudi Arabia’s production. The U.S. and Saudi Arabia blamed Iran for the assault, but Tehran denied any involvement. In NYMEX, it hit the high of $63.38 and closed in negative near $59. Crude hit the high near 4550 levels on MCX and closed near 4200 as prices got normalized after US, Saudi and Russia came forward and assured the world to keep supply side smooth. Additionally, crude inventories rose by 1.1 million barrels, compared to the 2 million barrels drawdown that energy analysts had expected. Natural gas prices saw sharp fall from the resistance near 198 levels. Gold saw volatile move throughout the week. However, on Monday it saw gap up opening on the news of attack. Meanwhile, FOMC cut interest rate by 25bps and this stimulated some selling pressure; however market recovered to some extent on the expected retaliation by Saudi on attack. The central bank has two more policy meetings for the year, in October and December, but there is no certainty it would cut rates further. Silver continued to move up marginally and ignored the fall in gold. In COMEX and MCX, both gold silver remained firm. In base metal complex, it was only nickel, which showed some positive momentum otherwise rest of them traded bearish owing to events in Saudi [Arabia] coupled with poor Chinese data. Expectation of deficit in physical market for fourth straight year, hopes of robust demand from electric vehicle (EV) sector and falling stocks at exchange warehouses have all lent support to the nickel prices.

In spices, turmeric turned weaker day by day on higher production issue amid mediocre demand. Rest of the spices viz jeera, dhaniya and cardamom saw some bounce back; supported by improved offtake in spot market. Despite the bearish news of distributing pulses through PDS, chana futures showed some marginal upside. Cotton prices have started rising the past one week due to lower production estimates this year, following reports of crop damage on erratic rainfall and pink bollworm attack on standing crops in major growing regions. After moving in a long consolidation, castor saw good upside last week amid strong fundamentals. Oil seeds and edible oil futures mostly traded up, except mustard on the fear of crop damage due to flood in MP and Maharashtra.

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 $)

COMTRACK………….. A platform for commodity and warehouse management

COMTRACK is an electronic web-based system developed and implemented by the NCDEX which facilitates electronic accounting of commodities deposited in the warehouses approved by the Exchange. This is indigenously designed and userfriendly web based application connecting the exchange, warehouses, assayers, members, CPs, investors and clients. NCDEX, in its endeavor to offer better services for everyone associated with the Exchange, has developed this application, which offer unique benefits associated with commodity and warehouse management

Why COMTRACK ?

The Exchange, over a period of time has observed that commodities have to be electronically accounted in a unique way and also the movement of the commodities needs to be tracked. The old accounting system was unable to cater the intricacies of the commodity markets. Hence a need was always felt for an indigenous electronic accounting system and COMTRACK is the answer to this need. COMTRACK facilitates transfer of such deposited commodities against the obligations arising out of the trades executed on the Exchange trading platform under the Clearing and Settlement process of the Exchange

Unique features of COMTRACK

• Reduced cost and time for depositors

• Unique lot number for all the deposit

•• On line viewing of warehouse charges

• Stacking and weight tracking information available in detail

• Fungibility between spot and futures

• Secrecy, flexibility, control and confidentiality

• Real time view of warehousing charges

It is thus imperative to note that all clients and members desirous of delivering commodities on the Exchange platform would have to open Accounts in COMTRACK. By designing and implementing its own software application for maintaining electronic record of commodities deposited in the accredited warehouses, the Exchange is not totally dependent on third parties for such services such as NSDL and CDSL for same. The Depository system is basically tuned to cater to the requirements of the securities market. Some of the requirements unique to commodities are not fulfilled by these depositories, such as tracing of original depositor for a particular lot, Flexibility for acceptance of smaller quantities from farmers and On-line calculation and viewing of warehouse charges. The process in COMTRACK is almost similar to the process that is followed in the depository systems of NSDL/ CDSL. COMTRACK is not a depository or a warehouse. It is not covered under the Depository Act or the WDRA. Since NCDEX is regulated by the SEBI, all its activities, systems and processes also come under the ambit of SEBI.

Guaranty of stock shown in COMTRACK

COMTRACK reflects the record of ownership and transactions in respect of commodities deposited in the warehouses approved by the Exchange for the purpose of effecting deliveries in the futures contracts traded on the Exchange platform. The details include commodity, quantity, place of storage, validity certification and other details and parameters as may be prescribed or modified by NCDEX from time to time. The respective warehouse service providers are accountable for the stocks deposited in the warehouses. The Exchange has put in place suitable controls for monitoring the functioning of the approved warehouses. So COMTRACK is also guaranty for the physical presence of stock (Quality and quantity) deposited at the exchange accredited warehouse

Comtrack Participant (CP)

Comtrack Participant (CP) is a bank or a financial institution that has executed an agreement with NCDEX and is approved for opening and maintaining accounts of its clients in the electronic accounting system known as COMTRACK. More than 75 COMTRACK Participants (CPs) have been empanelled in COMTRACK.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week