Gujarat State Petronet Limited (GSPL)

HeidelbergCement India Limited (HEIDELBERG)

WEEKLY VIEW OF THE MARKET

After six consecutive sessions of fall and throbbing July series, Indian markets started August series on a positive note, supported by short covering in Auto, PSU bank & Pharma sector. The options open interest concentration is at the 11400-strike calls with the highest open interest of above 16 lakh shares; among put options, the 11200-strike taking the total open interest to 21 lakh shares, with the highest open interest among put options. The Implied Volatility (IV) of calls closed at 12.08% while that for put options closed at 12.39%. The Nifty VIX for the week closed at 12.64% and is expected to remain sideway. PCR OI for the week closed at 1.50, which indicates OTM put writing. From derivative front, 11200 levels should act as a strong support for Nifty going forward as put writers were seen adding open interest in 11200 strike. On higher side, however 11300-11350 levels will act as an immediate resistance for Nifty. After a steep fall from 11650 till 11250 levels, we expect markets to consolidate in broader range of 11200-11350 before taking another decisive move.

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 (Aug) is expected to trade with a downside bias in the range of 6650-7050 levels. The sowing operations are almost inching to close with 87% done in the state of Telegnana. It is reported by the agriculture department that as on 25h June, turmeric has been sown on 42466 hectares against the target area of 48673 hectares. Giving a negative reaction, the spot prices have started dipping further in the major spot markets. Jeera futures (Aug) is on the verge of breaking the support near 17550 levels and thereafter may witness correction towards 17200-17000 levels. The spot prices are not showing firmness due to slowdown in overseas and domestic demand. High moisture content in the spice due to rains in key-growing regions has discouraged fresh buying despite slowdown in arrivals. The trend of dhaniya futures (Aug) trading near three months low has reversed its trend to bearish after the steep correction that occurred last week on the reports of higher imports from overseas markets. In days to come, we may see an extended downtrend towards 6000- 5800 levels. Cardamom futures (Aug) is ready to get skyrocketed to test 3500-3700 levels. Arrivals of the new crop of cardamom have started at the auction centres in Bodinayakanur in Tamil Nadu and Vandanmedu in Kerala. Planters are plucking cardamom even before the fruit is mature to avail of the record-high prices. Although there has been a correction of 50 rupees per kg since the new crop started arriving in markets, prices are unlikely to fall much in the long term even when arrivals double in Sep-Oct due to huge shortage of the spice in the domestic market.

BULLIONS

Bullion counter may remain on a volatile path as some profit booking can be seen at higher levels amid surge in greenback and the fact that expectation of rate cut in this week by Fed is already discounted in the prices. Market participants are now looking ahead to the U.S. central bank's July 30-31 monetary policy meeting where it is expected to trim its interest rate by at least 25 basis points. The Fed committee will be thinking about two main factors. One is that inflation continues to be low, despite the fact that unemployment is also low by historical standards. Nearly eight years ago, Fed adopted an inflation target of 2 percent, which has largely remained out of reach. The ECB signaled its intention to explore monetary easing, but left interest rates unchanged, and bank President Mario Draghi struck a more upbeat tone on the economy than investors expected. Gold can dip lower as it can test 34200 in MCX while taking resistance of 35500 while silver can test 40500 while taking resistance near 42000. In the United States, manufacturing activity slowed to a 10-year low in early July with production volumes and purchases falling. Weak housing and manufacturing are offsetting strong consumer spending, holding back the economy and posing a threat to the longest expansion in history. In India, the world's second-biggest gold consumer, dealers were forced to offer the highest discounts since August 2016, at about $33 over official domestic prices. This compared with $20 discounts in penultimate week.

OIL AND OILSEEDS

Soybean futures (Aug) is likely to cling on the support near 3540 levels, while an upside of 3665-3680 can be seen on account of short covering coupled with lower level buying. This oilseed's yield is under threat in Maharashtra, Madhya Pradesh, and Rajasthan. Some soybean-growing regions in Maharashtra's Vidarbha and Marathwada are yet to start sowing, which is already delayed by five to six weeks. Mustard futures (Aug) is expected to show an upside momentum towards 3970-3990 levels, taking support near 3900 levels. The arrivals on the spot markets are slowing down gradually and on the flip side, it is anticipated that looking at the crunch on the supply side, demand may pickup from oil millers and mustard meal exporters. Soy oil futures (Aug) is expected to retest the contract high near 745 levels, while CPO futures (Aug) may gain further strength and head towards 535, if it breaches the resistance near 520 levels. It has been reported recently that the Farm ministry has proposed a cess on imported edible oils to discourage the influx of cheaper oil and support domestic oilseed farmers. In a new development, the agriculture ministry has proposed a cess on imports of all edible oils to check huge arrival of cheaper oil in the country, adding that quantum of the cess is yet to be decided. The government already levies higher import duties, ranging between 40% and 54%, on edible oils to prevent cheap imports from flooding the domestic market. Despite the high duties, imports of crude palm oil have been on the rise due to a sharp fall in global prices, hurting the domestic refining industry.

ENERGY COMPLEX

Crude oil prices may continue to witness volatile movement as global economic growth is likely to slow further amid the U.S.-China trade war, although tensions in the Middle East will limit the downside. Crude oil may take support near 3800 levels while taking resistance near 4100 levels. While concerns over Middle East supply disruptions have led to recent price spikes, oil has generally been under pressure from worries about global economic growth amid growing signs of harm from the rumbling Sino-U.S. trade war over the past year. Crude stocks at the Cushing, Oklahoma, and delivery hub fell by 448,000 barrels, although gasoline stocks rose by 4.4 million barrels, compared with expectations for a 730,000-barrel decline. Iran’s capture of a British oil tanker recently sparked worries about supply disruptions in the Strait of Hormuz, through which about a fifth of the world’s oil flows. The tensions come as the United States aims to cut off Iran’s oil exports and against the backdrop of supply cuts led by the Organization of the Petroleum Exporting Countries since the start of the year to prop up prices. U.S. shale producers are poised to further trim spending this year, that provide drilling and hydraulic fracturing services. Natural gas may witness selling pressure and it can test 145 while taking resistance near 165. EIA forecasts that Henry Hub natural gas spot prices will average $2.50 per million British thermal units MMBtu in the second half of 2019 and $2.77 per MMBtu in 2020.

OTHER COMMODITIES

Cotton futures (Aug) may give a good buying opportunity near 20750, eyeing a target of 21550 levels. The optimism is returning to the market participants after the news that the Chinese government has approved several domestic companies to buy U.S. cotton, corn, sorghum and pork without being subject to hefty retaliatory tariff. Even some textile mills have been given permission to purchase a total 50,000 tons of U.S. cotton without paying the 25% retaliatory duty. Back at home, cotton prices are still elevated owing to better quality and lower output in the last season. The trend of cocud futures (Aug) is bullish & can test 3300 levels. Cotton is the primary raw material for cottonseed oilcake & there is drought-like situation in the key growing states of Gujarat and Maharashtra. The Cotton Association of India has cut its production estimate due to a sharp fall in yield to 420.7 kg per ha, the lowest in 10 years. The association sees cotton production this season at 31.2 mln bales, against 36.5 mln bales projected in the last season. Castor seed futures (Aug) is expected to consolidate in the range of 5435-5635 levels. Despite weak export demand, any sharp correction may remain limited due to a fall in the acreage of the oilseed amid rising demand from domestic stockists. Mentha oil (Aug) may remain stable in the range of 12420-1330 levels. Prices of mentha oil are steady in the key markets of Uttar Pradesh due to a fall in arrivals amid rising demand for the spice oil from overseas buyers. At Chandausi, a key market, the spice oil was sold in the range of 1,435-1,445 rupees per kg.

BASE METALS

Base metal counter can trade on sideways path as lead negotiators for China and the United States will meet in Shanghai on Tuesday this week for two days in the next round of trade talks aimed to end their year-long trade war, China’s commerce ministry stated. China will further ease its economic policy to deal with a prolonged and costly trade war with the United States, but it would save more aggressive measures as last resorts should the dispute get uglier. Copper may move take support near 440 levels while facing resistance near 460 levels. The global world refined copper market showed a 96,000 tonnes deficit in April, compared with a 42,000 tonnes deficit in March, the International Copper Study Group stated. Meanwhile, Lead may continue its recovery as it can test 165 while taking support near 152 levels. The lead deficit, meanwhile, rose to 42,000 tonnes from 34,000 tonnes. Lead has been supportive as investors were worried about a supply shortage amid some maintenance activities in China along with falling LME inventories and that is reflecting on the cash -3m spread which are at a $10.50 premium indicating nearby supply shortage. Zinc may test 197 levels while taking support near 188 levels. Nickel prices can move sideways in range of 970-1020. Aluminium can trade also trade sideways as it can take support near 140 levels while taking resistance near 148 levels. Global aluminium production fell by 0.5% in the first half of this year, according to the International Aluminium Institute (IAI).

TREND SHEET

TECHNICAL RECOMMENDATIONS

CHANA NCDEX (AUG) contract closed at Rs. 4292.00 on 25th Jul’19. The contract made its high of Rs. 4828.00 on 20th May’19 and a low of Rs. 4171.00 on 3rd Jul’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4370.30. On the daily chart, the commodity has Relative Strength Index (14-day) value of 49.054.

One can buy near Rs. 4240 for a target of Rs. 4400 with the stop loss of Rs. 4170.

NICKEL MCX (AUG) contract closed at Rs. 979.90 on 25th Jul’19. The contract made its high of Rs. 1049.40 on 18th Jul’19 and a low of Rs. 869.00 on 18th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 989.40. On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.161.

One can buy near Rs. 970 for a target of Rs. 1050 with the stop loss of Rs. 930.

DHANIYA NCDEX (AUG) contract was closed at Rs. 6295.00 on 25th Jul’19. The contract made its high of Rs. 7820.00 on 21st May’19 and a low of Rs. 6228.00 on 25th Jul’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 7100.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 23.262.

One can buy above Rs. 6350 for a target of Rs. 6600 with the stop loss of Rs 6225

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NEWS DIGEST

• The CME Group will launch Black Sea Sunflower Oil Financially Settled (Platts) futures on Aug 26, 2019.

• ECB signaled its intention to explore monetary easing but left interest rates unchanged last week.

• Brazil's Vale SA second-quarter iron ore production plunged almost 34% from a year ago.

• Chilean miner Antofagasta Plc reported a nearly 22% jump in copper output in the second quarter, helped by an expansion at its flagship Los Pelambres mine.

• IMF cut its forecast for global growth this year and next, warning that further U.S.-China tariffs or a disorderly exit for Britain from the European union could further slow growth.

• The water level in India's 91 key reservoirs was about 37% lower on year at 40.836 bcm, according to data released by the Central Water Commission. The water level is now 25% of the total live storage capacity of 161.993 bcm.

• The country has received 325.5 mm rainfall so far this monsoon season, against the normal of 394.3 mm, 17% below normal.

• SEBI has renewed the recognition for Multi Commodity Exchange Clearing Corp Ltd to act as a clearing corporation by three years.

• MCX will not to launch any further contracts in crude oil mini (10 barrels) future. The existing December contract expiring on Dec 18 would be the last contract available for trading,

WEEKLY COMMENTARY

CRB witnessed further decline as selling pressure was everywhere in the commodities counter. Gold prices edged lower in MCX, reflecting the global trend. Investors locked in profits ahead of major central bank meetings this month. A higher US dollar, which hovered near multi-week highs against a basket of currencies, also weighed on gold prices. The US Fed is widely expected to lower interest rates, its first cut in a decade. A series of purchasing manager index (PMI) readings in US came in weaker than expected; further boosting hopes of lower interest rates. Silver maintained its upside journey for the third week on strong technical across the board. ECB left interest rates unchanged Thursday, but policymakers said they envision a “highly accommodative stance of monetary policy for a prolonged period of time. Crude remained surrounded with negative as well as positive triggers and closed the week on little higher side; while natural gas surrendered its previous gains and closed in weaker territory. Oil prices rose, extending gains after an industry group reported a much bigger than expected drop in US inventories, while the US Navy said it may have downed a second Iranian drone last week. Signs of rising tensions in the Middle East offset a weaker global growth outlook from the International Monetary Fund. U.S. crude inventories dropped by 10.8 million barrels for the week ended July 19, according to data from Energy Information Administration released Wednesday. Natural gas prices posted a steep decline last week in a move that may have confused traders. Extremely hot temperatures nearly covered the entire United States, but buyers remained scarce and support eroded. Even the previous weekend’s passing of Hurricane Barry couldn’t give prices a boost due to lower demand. Almost all the base metals turned weak, except lead on weak sentiments.

In agri, castor was weak on lower export. India's castor oil exports plunged 11% on year to 50,577 tonnes in June. Fall in exports are primarily due to eroding demand from traditional buyers, mainly China. Cotton oil seed cake saw magical highs in past few trading sessions. In spices, dhaniya prices crashed on speculative selling. Jeera saw some profitbooking after few week of upside trade. Soybean futures took support on reports of lower sowing data this season. Farmers in the country have sown soybean on 7.98 mln ha as of Thursday, down 11% on year, according to farm ministry data.

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 $)

Basmati Paddy 1121..... Premium rice on premium price

Basmati is one of the unique specialty rice varieties and famous for its quality like attractive aroma, soft texture of cooked rice, high volume expansion during cooking, easy digestibility and longer shelf-life. Recently the NCDEX & ICEX both has launched futures trading in Basmati Paddy to provide effective risk management tool for market participants and a fair price discovery platform forthe highly volatile basmati paddy.

Domestic scenario of Rice

India is the second largest producer of rice in the world, producing nearly 23 percent of the Global rice production with approximate production of 116 million tonne. But India is the largest producer of Basmati rice in the world, producing nearly 70 percent of the global Basmati production. India produces about 5.5 million tonne Basmati about 5% out of its total paddy production.

Major Basmati rice variety produced in India is PUSA 1121. Haryana is the leading Basmati Rice producing state in India while Punjab is largest producer of Basmati Pusa-1121. Haryana & Punjab both contribute about 83% of basmati rice production and about 89% of Pusa-1121 production of India. Other Basmati rice producing states includes Uttar Pradesh and Uttarakhand. During the 2018-19 kharif season, basmati was sown across 1.52 mln ha, lower from 1.55 mln ha in the year ago period.

Global rice production

Globally China is the leading rice producer with more than 30% share of global production of more than 500 million ton. India, Indonesia and Bangladesh are the top rice producing countries. Basmati contributes 8-9 million tonne of total global rice production. After major contribution of India, Pakistan contributes about 30% share of global basmati production.

Global trade of Basmati Rice

India is the leading exporter of the Basmati Rice to the global market both in terms of value as well as volume. Export of Basmati rice is increasing at a CAGR of 6%. Nearly 80 percent of the total Basmati production is exported. Basmati rice fetches a premium price in the international market. According to APEDA data, India exported basmati rice worth Rs.32,806 crore in 2018-19, which is 22% higher than the Rs26,870 crore achieved during 2017-18. Volume-wise also, India shipped 4.88 million tonnes of basmati, which is a record in itself. India has earned over Rs 18,000 in foreign

exchange every year from export of Pusa b a s m a ti 1 1 2 1 ri c e v a riet y. Almos t 1 3 2 countries have been importing Basmati from India every year. Out of which, Iran, Saudi Arabia, UAE and Iraq are the major importers. Apart from India, Pakistan also exports Basmati to many countries.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week