InterGlobe Aviation Limited (INDIGO)

Mahanagar Gas Limited (MGL)

WEEKLY VIEW OF THE MARKET

After ending September series with smart gains, Indian markets begins October series on a muted note. However, Nifty managed to hold above 11500 levels as call writers were seen active in 11600 strike with marginal open interest addition in 11500 put strike. On technical front, Nifty is taking a breather at current levels after a stunner run from 10850 to 11650 levels. The overall structure is positive for the markets as far nifty is holding above 11400 level. However some volatility may remain on cards tracking mixed global cues. The Implied Volatility (IV) of calls was up and closed at 14.86% while that for put options closed at 15.65%. The Nifty VIX for the week closed at 16.34% and is expected to remain volatile. PCR OI for the week closed at 0.98. For coming week, we believe that some consolidation may continue in index and we may witness stock specific moves. However, on higher side anytime break above 11600 (SPOT) levels in Nifty will add further follow up buying.

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

10Turmeric futures (Oct) may recover towards 6400-6500 levels taking support near 6000 levels on the back of rising festive demand. Turmeric buyers are likely to be active in spot market as the crop reported damaged in Maharashtra and Karnataka, some parts of Andhra Pradesh and also lower sowing area in Tamil Nadu. In Andhra Pradesh, Duggirala market turmeric supply reported on an average 5,000–6,000 quintals on daily basis. In Erode mandi new Turmeric supply reported around on an average daily basis 3,000 – 4,000 quintals. Jeera futures (Oct) may continue to face resistance near 17100 levels & can witness correction till 16400 levels. Quality and quantity of jeera arrivals have dropped as the season is at its fag end, hitting domestic demand. Moreover, ahead of the new season starting October and absence of strong demand from bulk buyers capped the upside. In Unjha, the benchmark market in Gujarat, exchange-quality jeera was sold at 16,927 rupees per 100 kg. In days to come, more steep correction can be seen in dhaniya futures (Oct) as it may test the support near 5200-4800 levels. Reports of higher imports from Russia and the Ukraine may continue to weigh on prices. On the spot market, coriander is being quoted at 6175 rupees per 100 kg. The overall outlook for the spice is bearish due to expectations of higher supply and tepid demand. Cardamom futures (Nov) is looking bullish towards 3000 taking support near 2520 levels. The sentiments are firm on account of rise in festival demand and supply crunch. New crop arrivals of cardamom are already delayed, and the peak arrival season is expected to start only in November.

BULLIONS

Bullion counter may continue to remain on mixed path as confusion regarding Brexit concerns and uncertainty regarding US and China trade war concerns is keeping investors edgy. Gold can test 37000 levels while taking resistance near 38000 levels while silver can test 45600 levels while taking resistance near 47300 levels. US President Trump commented that the 15 month trade war will get over sooner than people think as Chinese were making a big agricultural purchases from the US. Chinese officials even mentioned that they were willing to buy more US products and that the trade talks would yield results, if both sides “take more enthusiastic measures” to show goodwill and reduce “pessimistic language” in their trade dispute. China’s net monthly gold imports via Hong Kong in August surged nearly 61%, after falling to their lowest in more than eight years in July. Moreover gold production in Russia for the first five months of this year rose to 101.44 tonnes from 92.56 tonnes in the same period a year earlier. Chicago Federal Reserve president Charles Evans backed the Fed’s two recent rate cuts but feels the central bank is now “well-positioned” to see how economic data evolves. The British parliament resumed after the court ruled that the chamber had been unlawfully suspended by Johnson, who insists he will take Britain out of the EU on Oct.31 - with or without a deal to manage the fallout. With the divorce deal stalled, the EU is expecting another delay to Britain’s departure date after it was already postponed twice from the original March deadline

OIL AND OILSEEDS

The bull-run of soybean futures (Oct) may be seen continuously till 4300, taking support near 3950 levels. Fresh soybean arrivals generally hit markets early in September. This year, arrivals have been delayed due to heavy rains and floods in Madhya Pradesh. Concerns of damage to the crop due to the recent floods in key growing regions are also likely to support prices. The output of the oilseed is badly affected in Bhopal, Indore, Vidisha, Dhar, Harda, Hoshangabad and some other districts in western part of the state. On the CBOT, U.S soybean futures (Nov) is likely to consolidate in the range of $8.70-9.50 a bushel. The sentiments on a positive note as recent purchases by top importer China renewed optimism about a possible trade deal between Washington and Beijing. Purchases of U.S. agricultural products such as soybeans, the biggest U.S. farm export in terms of dollar value, are seen as part of efforts to improve relations during the trade war between the United States and China. Soy oil futures (Oct) is likely to trade with an upside bias & may even attempt to test 770-775, managing to take support near 755 levels taking positive cues from the rally in soybean counter. CPO futures (Oct) will possibly take support near its 200 days moving average of 542, and recover till 555 levels. There is some positive news in the international market; the Malaysian 2020 palm oil inventories is seen at 2 million tons as compared to earlier forecast of 2.5 million tons & in Oct-Dec quarter is seen between 2200-2300 ringgit per ton according to the Malaysia Palm Oil Board.

ENERGY COMPLEX

Crude oil prices may trade on a volatile path as some lower level buying can be witnessed on geopolitical tensions in Middle East and US Iran relations. Crude oil prices fell recently as demand concerns and worries of weak global economic growth and its effect on oil demand are once again back in markets with sluggish economic data out of Europe and Japan. Oil bulls have been discouraged by quicker-than-expected return of Saudi oil output. Saudi has now restored production capacity to 11.3Mbpd and has managed to maintain supplies to customers at levels prior to attacks by drawing from its inventories. The attacks, which knocked out 5.7 million bpd of production, initially sent oil prices up 20% although they dropped soon after as the kingdom pledged to bring back output by the end of September. The expected lower demand for U.S. oil inputs into refineries led to U.S. U.S. announced it would send air defense systems and troops to Saudi Arabia following attacks on the country’s oil production facilities that shut half of its output. Crude inventories buildup and poses significant downside risk for prompt oil prices. Crude oil may take support near 3900 while taking resistance near 4300 levels. Natural gas may witness further profit booking at higher levels as it can test 160 while taking resistance near 185. Natural gas got under pressure as EIA showed a build of 102 billion as opposed to an expected 90 billion. The weather is expected to be much warmer than normal over next 6-10 days, but then it will turn cooler reducing cooling demand over the 8-14 day forecast

OTHER COMMODITIES

Cotton futures (Oct) may show consolidate in the range of 19400-19800 levels, with upside getting capped. Indian traders have been struggling to sign export contracts for the new season crop as local prices are prevailing above global prices. Traders usually seal contracts to export around 800,000 bales before the start of the season on Oct. 1, but this year they managed to sell around 300,000 bales for shipments. Indian supplies are uncompetitive due to higher prices. Buyers are giving preference to Brazil and U.S. Indian cotton is being offered around 77 cents per lb, cost and freight-basis, to buyers in Bangladesh and Vietnam for November to December shipments, versus around 70 cents for those from the United Sates and Brazil. In the international market, ICE cotton futures (Dec) may trade sideways to down facing resistance near 61.30 cents a pound. Lack of China buying is disappointing, while good harvest weather and harvest expectations are adding pressure. A lower level buying near 4250-4200 may again emerge in chana futures (Oct) on account of festive demand & this fundamental may drive up the counter till 4450-4500 levels. Buying is likely to increase ahead for the short term period with rise in consumption demand during festive period till Diwali. Kabuli chana is gaining grounds amid buying from besan flour millers due to cheaper prices as compared to White Peas. Mong futures (Oct) may also catch up pace to test 6010 on account of lower output this season. As per first advance estimates for 2019-20, moong production is estimated to be lower at 1.42 million tons, as compared to 1.58 million tons in 2018-19

BASE METALS

Base metal counter can witness range bound movement as market participants will refrain from taking big positions as China markets will remain closed for week-long holiday in China from Oct. 1 -7 due to National day holidays. Copper may witness recovery from lower levels as it can test 452 levels while taking support near 435 levels. ICSG data shows global refined copper market recorded a 21,000-tonne deficit in June, compared with a 70,000-tonne deficit in May. Meanwhile, Lead may also remain sideways as it can move range of 150-158 levels. Zinc may witness lower level buying as it can test 188 levels while taking support near 177 levels. Zinc prices ended with gains bolstered by concerns about supply on the back of news of environmental restrictions. Global zinc market swung into a 4,200 tonne deficit in July from a revised surplus of 13,800 tonnes in June. Nickel prices can move with upside bias as it can test 1280 while taking support near 1200. China's refined nickel imports more than doubled YoY in August and were up 35.3% from the previous month. China's nickel ore imports from Indonesia rose 26.5% YoY, as stainless steel producers stocked up on raw materials ahead of a ban. Aluminium can trade with sideways to weak bias and can test 132 while facing resistance near 140 levels. Aluminium prices dropped despite the Chinese city of Luliang imposing a temporary 50% production cut on alumina refineries. Stocks of aluminium at three major Japanese ports at the end of August rose 5.6% from the previous month to 326,100 tonnes

TREND SHEET

TECHNICAL RECOMMENDATIONS

ALUMINIUM MCX (OCT) contract closed at Rs. 136.55 on 26th Sep’19. The contract made its high of Rs. 143.90 on 05th Sep’19 and a low of Rs. 136.00 on 27th Sep’19. The 18-day Exponential Moving Average of the commodity is currently at Rs.140.42. On the daily chart, the commodity has Relative Strength Index (14-day) value of 18.648.

One can sell near Rs. 138 for a target of Rs. 130 with the stop loss of Rs. 142.

GOLD MCX (OCT) contract closed at Rs. 37794.00 on 26th Sep’19. The contract made its high of Rs. 39885.00 on 04th Sep’19 and a low of Rs. 31520.00 on 23rd May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 37,968. On the daily chart, the commodity has Relative Strength Index (14-day) value of 45.189.

One can sell below Rs. 37340 for a target of Rs. 36100 with the stop loss of Rs. 37840.

RMSEED NCDEX (OCT) contract was closed at Rs. 4006.00 on 26th Sep’19. The contract made its high of Rs. 4061.00 on 25th Sep’19 and a low of Rs. 3921.00 on 24th Sep’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 3978.36. On the daily chart, the commodity has Relative Strength Index (14-day) value of 54.371.

One can buy near Rs. 3980 for a target of Rs. 4100 with the stop loss of Rs 3920.

11

NEWS DIGEST

• NCDEX has withdrawn the imposition of additional margin of 5% on both long side and short side in castor futures.

• As per First Advance Estimates for 2019-20 (Kharif Only), total foodgrain production in the country is estimated at 140.57million tonnes.

• Malaysia has exempted export duty for crude palm kernel oil and RBD palm kernel oil from Oct. 1 until June 30, 2020, in a bid to reduce stockpiles in its domestic market.

• For the country as a whole, cumulative rainfall during this year’s southwest monsoon season upto 25th September, 2019 is above LPA by 6%.

• The U.S. Treasury Department on Tuesday imposed sanctions on four maritime firms and vessels transporting Venezuelan oil to Cuba.

• China has issued a fourth batch of quotas for imports of recently restricted types of scrap metal, including another 31,658 tonnes of high-grade copper scrap.

BoJ board member said the central bank would ease policy further without hesitation if momentum for hitting its 2% inflation target was lost.

WEEKLY COMMENTARY

With mixed data amid upside in dollar index, commodities surrendered some of its previous gain. CRB closed near 185 levels after making high near 193 levels few days back. With some surprise increase in home sales data amid some expectation of positive trade talk, dollar index moved high and traded above 99 levels and the same stimulated selling pressure in commodities. Bullion counter faced resistance from higher side and closed sideways whereas silver saw fall in both MCX and COMEX. On MCX, gold prices fell for nonstop fifth week with limited downside; taking support near 37500. In energy counter, both natural gas and crude prices saw further downside. Oil prices were down almost by 6% so far this week, marking the largest weekly loss in two and a half months. The fall in prices came after the kingdom said it has recovered from the September from the Sept 14 attack on its energy facilities which briefly disrupted about 5% of daily global crude production. The attacks initially sent oil prices surging about 20%, before giving back some of their gains this week. A surprise 2.4 million-barrel build in U.S. crude inventories last week also weighed on prices. Base metals were under pressure as economic activities have been shrunk. China’s growth reached 6.2% in the second quarter, the slowest pace in almost three decades. BDI continuously moved down for third week which measures the shipping activities. BDI saw decline as Beijing has imposed output curbs on steel mills, coking coal producers and other industries to improve air quality as the nation prepares to celebrate the 70th anniversary of the founding of the People’s Republic of China on Oct. 1. Copper has slid 14% from this year’s high in mid-April on the back of a manufacturing slump and warnings that major economies are heading into recession.

In agri commodities, cotton counter was weak due to lack of demand amid higher production expectation. India's cotton output for 2019-20 (Oct-Sep) marketing year is seen at 36.8 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. Chana prices improved on crop damage news and crossed the mark of 4400 last week. Report of damage to the standing crops on account of heavy rains in Madhya Pradesh has lifted the sentiments of the market participants. Castor saw speculative selling; later exchange has withdrawn the imposition of additional margin of 5% on both long side and short side. In spices, turmeric prices recovered on fresh lower level buying after a fall of five week in continuation.

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 $)

Kapas ..........................In MCX

Kapas is one of the oldest natural fibers under human cultivation. It is referred as “white gold” indicating the importance in human life. After receiving approval from SEBI, the Multi Commodity Exchange (MCX) of India has launched futures contracts of Kapas on Sep 30, and contracts for the months of February 2020 and April 2020 are available for trading. The contracts have trading and delivery units of 4 tonne each, and basis delivery centre is Rajkot in Gujarat. In MCX, Cotton contract is already trading successfully with record delivery. Kapas is raw cotton without separation of seeds while in Cotton, seeds has been separated.

Contract Specifications of Kapas

MCX Cotton contract has concluded another successful Cotton crop season i.e. from October 2018 to August 2019 with record delivery of 398,600 bales (valued at Rs 853.12 crores), which surged 119 percent vis-à-vis 182,300 bales the previous Cotton season. (Each bales = 170 Kgs). During the season, Cotton deposits, at MCXCCL 42 designated warehouses logged all time high of 2.14 lakh bales compared to 1.81 lakh bales last year, signifying an increase of 18.23%. The increase in overall participation from cotton value chain has led to higher delivery and deposits of Cotton at the exchange accredited warehouses.

During this crop year (till Aug 2019) average daily traded volume increased to 1,01,125 bales as against 84,112 bales during the corresponding period last year, whilst daily average open interest increased to 3,45,580 bales from 2,53,963 bales last year. The period witnessed a 5-year record daily OI of 5,63,475 bales.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week