WISE MNEY

Avenue Supermarts Limited (DMART)

Avenue Supermarts Limited (DMART)

WEEKLY VIEW OF THE MARKET

Smart recovery was seen led by short covering from lower levels. Calls writers covered their short positions and put writers were actively selling puts. Derivative data has turned positive. Maximum put open interest is buildup of more than 35 lakh shares at 10700 puts which should act as strong support zone. Nifty is most likely to trade in the range of 10700 to 10900 with positive bias in the expiry week. Nifty has support at lower levels. Various supports are 10750 & 10700 spot levels. Implied Volatility (IV) of calls was down and closed at 13.92% while that for put options closed at 13.55%. The Nifty VIX for the week closed at 16.05% and is expected to remain sideways. The PCR OI for the week closed at 1.11 indicating put writing in recent rally. Put writing was seen in 10700, 10600 strike puts. On the technical front, 10700-10720 spot levels is strong support zone and current bounce is likely to continue towards 10900-10920 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 (Apr) is expected to break the previous contract low of 6182 & descend to test 6100 levels. At the spot markets, the prices of various varieties of turmeric are witnessing a decreasing trend due to increase in the arrivals from fresh harvested crop. At the Regulated Marketing Committee and Erode Cooperative Marketing Society, the prices of old finger and root turmeric is going down day by day price due to quality issue. On the supply side, the crop is good in most parts of the country except Maharashtra. Drought in some parts of Maharashtra will impact production. Earlier, it was reported that the new crop will be higher by 20 %, but initial estimates show that that it would be more or less similar to last year’s production. The downtrend is likely to continue in jeera futures (Mar) as it can witness 15000 levels. This season, favourable weather expected to drive good output despite reduction in sowing area. Last week, the weather had turned cloudy, with unseasonal showers, caused concerns about possible crop damage. However the loss is not significant and will not impact the overall crop provided the weather remains favourable in February. Coriander futures (Apr) is likely to witness consolidation in the range of 6100-6400 levels. The upside may remain capped due to sluggish demand for the new crop, as heavy rainfall in Rajasthan last week resulted in higher moisture content. It is reported that the arrivals have dropped 65% so far this year as compared to the same period last year. New crops with moisture content were sold at Rs.4200 to Rs.4600 per quintal at major markets in Madhya Pradesh.

BULLIONS

Bullion counter may witness further profit booking at higher levels as the latest FOMC minutes showed that some fed officials were unsure regarding further interest rate hike in US. Federal Reserve officials widely favored ending the runoff of the central bank’s balance sheet this year while expressing uncertainty over whether they would raise interest rates again in 2019, minutes of their January meeting showed. Gold can test 33000 levels while facing resistance near 33800 levels while silver can take key support near 39700 levels while facing resistance near 40450 levels. Top U.S. and Chinese trade negotiators resumed high-level talks last week to hash out a deal that could end their trade war, just over a week before a U.S.-imposed deadline to reach agreement expires and triggers a new round of tariffs. U.S. President Donald Trump and North Korean leader Kim Jong Un will hold their second summit in the Vietnamese capital of Hanoi on Feb. 27-28.Meanwhile uncertainty regarding Brexit concerns will keep the investors jittery. Britain and the European Union played down the chances of clinching an immediate Brexit divorce deal but diplomats stated that they were edging closer to a legal compromise that Prime Minister Theresa May hopes will win over the British parliament. Meanwhile strong demand from China continue to support the yellow metal after the World Gold Council reported robust demand in 2018, despite dismal demand in the last three months of the year. In its 2018 full-year Gold Demand Trends report, the Chinese jewelry remand hit a threeyear high last year of 672.5 tonnes, an increase of 3% from 2017.

OIL AND OILSEEDS

Bullion counter may witness further profit booking at higher levels as the latest FOMC minutes showed that some fed officials were unsure regarding further interest rate hike in US. Federal Reserve officials widely favored ending the runoff of the central bank’s balance sheet this year while expressing uncertainty over whether they would raise interest rates again in 2019, minutes of their January meeting showed. Gold can test 33000 levels while facing resistance near 33800 levels while silver can take key support near 39700 levels while facing resistance near 40450 levels. Top U.S. and Chinese trade negotiators resumed high-level talks last week to hash out a deal that could end their trade war, just over a week before a U.S.-imposed deadline to reach agreement expires and triggers a new round of tariffs. U.S. President Donald Trump and North Korean leader Kim Jong Un will hold their second summit in the Vietnamese capital of Hanoi on Feb. 27-28.Meanwhile uncertainty regarding Brexit concerns will keep the investors jittery. Britain and the European Union played down the chances of clinching an immediate Brexit divorce deal but diplomats stated that they were edging closer to a legal compromise that Prime Minister Theresa May hopes will win over the British parliament. Meanwhile strong demand from China continue to support the yellow metal after the World Gold Council reported robust demand in 2018, despite dismal demand in the last three months of the year. In its 2018 full-year Gold Demand Trends report, the Chinese jewelry remand hit a threeyear high last year of 672.5 tonnes, an increase of 3% from 2017.

ENERGY COMPLEX

Crude oil prices may continue to remain on upbeat note as oil prices hovered just below 2019 highs recently, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran. Hopes that talks between Washington and Beijing would soon resolve the trade disputes between the world’s biggest economies also supported markets. Prices have been driven up this year by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC). Crude oil can test 4250 while taking support near 3850. OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from growing. Another price driver has been U.S. sanctions against oil exporters Iran and Venezuela. OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling. Standing against the supply cuts and sanctions is U.S. crude output which soared by more than 2 million bpd in 2018 to a record 11.9 million bpd, thanks to booming shale oil production, which the EIA was expected to keep rising. Natural gas counter may remain sideways with negative bias as it may take support near 180-185 range and can face resistance near 205 levels. U.S. natural gas output was projected to increase to a record 77.9 bcfd in March. That would be up more than 0.8 bcfd over the February forecast and mark the 14th consecutive monthly increase.

OTHER COMMODITIES

Cotton futures (Mar) is likely to trade sideways trend & hover in the range of 20200-21000 levels with upside getting capped. The fundamentals cite that the imports are subdued as the arrival season is at its peak and there is sufficient supply in the market. For the time being, Indian spinning mills await for clarity on market trend in the wake of uncertainties over the US-China trade talks and currency moves. In the international market, a positive settlement between US-China trade talks resulted in a sharp rally & gave some support to the oversold counter near 70 cents for the time being. Chana futures (Mar) is continuously taking support near 4165 since past 5 weeks & day’s ahead it is expected to remain stable above the said levels. The selling pressure that is being seen is due to NAFED selling the government stock in the states of Madhya Pradesh and Rajasthan. However, amidst the bearish sentiments, the market participants are optimistic on rise in prices owing to the reports that yield of the chana crop in Madhya Pradesh and Rajasthan is likely to take a hit this year due to several incidents of hailstorm, while on the contrary the output is seen falling as acreage in Maharashtra and Karnataka declined sharply due to severe water stress. Mentha oil (Feb) is likely to witness selling & is expected to come down to test 1520-1505 levels. The sowing of the crop has started towards the end of last month, and with couple of weeks passing by the initial estimates are showing up that production of mentha oil is expected to rise to 48,000-50,000 tons in 2019 from 33,000- 35,000 tons last year.

BASE METALS

In base metal counter, prices can trade with sideways to positive path as hopes for further government stimulus and optimism regarding US China trade deal to support the prices. Chinese banks extended a record 3.23 trillion yuan ($476.87 billion) in net new yuan loans in January, sharply more than expected, as policymakers try to prevent a sharper economic slowdown in the world's top metals consumer. Copper may find some support near 435 and can recover towards 470. Intense rains at the start of this month in Chile, the world's top copper miner, likely hurt productivity at state-owned miner Codelco's Chuquicamata and Radomiro Tomic mines. Miner and trader Glencore lowered its 2019 copper output forecast to 1.5 million tonnes from 1.54 million tonnes, citing production cuts at its Mutanda mine in the Democratic Republic of Congo. Meanwhile Lead may take support near 142 and can recover towards 150. Aluminium can recover towards 138 taking support near 128. Global primary aluminium output fell to 5.304 million tonnes in January from revised 5.498 million tonnes in December, data from the International Aluminium Institute showed. The Malaysian government stated that it would not extend its moratorium on bauxite mining which ends on March 31 due to strong demand for the ore. Zinc may find support near 185 levels and can recover towards 198 levels. The premium for cash zinc over the three-month LME contract rose to $26.50 as stocks in LME warehouses fell to their lowest since 2017 at 83,250 tonnes. Nickel can also find some support near 860 levels and can recover towards 960 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

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NEWS DIGEST

• MCX has waived off storage charges for Base Metal inventory deposited at MCXCCL accredited warehouses (MAW) during the first expiry month of the respective Metal contract converted to compulsory delivery settlement mode.

• India's sugar production in 2018-19 season till February 15 is higher by 7.7% over same period of previous year as the total production has hit 21.93 million tonnes. - Indian Sugar Mills Association (ISMA).

• Saudi Aramco, the world's top oil exporter, is in talks on possible investments in Indian projects involving companies including Reliance Industries.

• European Central Bank policymakers took a gloomy view on the euro zone economy at their last policy meeting and asked for swift preparations for giving banks more long-term loans.

• Japan's exports fell 8.4 percent year-on-year in January a bigger decline than the 5.5 percent fall expected by economists.

• Output of cotton in Haryana in 2018-19 (Jul-Jun) is likely to rise 5% on year to 1.7 mln bales (1 bale = 170 kg) because of higher yields, according to the state's second advance estimate.

• The wheat output might cross 100 million tonnes (mt), an all-time-high level. - Indian Council of Agriculture Research (ICAR)

WEEKLY COMMENTARY

More buying emerged in commodities last week and CRB inched higher for the continuous second week. Oil extended gains from a three-month high on signs that the U.S. and China are moving closer to a trade deal. Crude has rallied about 25 percent this year as the OPEC+ coalition got off to a strong start with their output cuts, led by higher-than-pledged reductions by Saudi Arabia, the world's top oil exporter. Natural gas was consolidating after a steep fall on the colder weather forecast in first fifteen days in March together with dropdown in inventories. The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles decreased by 177 billion cubic feet for the week ending February 15. Gold slipped from a 10-month peak on Thursday, pressured by signals the U.S. Federal Reserve will not adopt as dovish a stance on monetary policy as previously thought and as investors booked profits. In the minutes of its Jan. 29- 30 meeting, the Fed said the U.S. economy and its labour market remained strong, prompting some expectations of at least one more rate hike this year. Gold made a high of $1350 and gave up its weekly strength and closed sideways though in Indian market it closed in negative territory on appreciation in rupee. Silver followed the footsteps of gold and traded higher near $16.2, in similar fashion it gave up its weekly strength and closed sideways. Some better economic data boosted up the prices of base metals; most of them closed up excluding lead. Dollar index traded weak amid ambiguity in the market regarding Sino-US trade talk; gave further strength to the base metals prices. Copper prices hit a seven month peak overnight as the market worried about low stocks ahead of seasonally strong demand in top consumer China, while rising hopes of an end to the USChina trade dispute also lent support. Lead was down on increasing supply issue. As per the ILZSG, the global lead market is forecasted to remain in surplus in 2019 on account of increasing mine production and falling demand in China.

In agri commodities; chana, guar counter and mentha saw profitbooking from higher levels. Mentha continued to trade down on rise in production concern amid lower export demand. Turmeric traded sharply down on early arrivals of fresh crop in the market. Jeera is too victim of lower export demand despite lower availability in turkey and Syria. Cotton counter traded mix whereas soyabean and R M Seed were down on swelling supply.

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 $)

Diamond... “Beauty of Jewellary & Investment both”

Diamonds have been valued and desired for thousands of years. Diamonds are precious, beautiful, magical and romantic tokens of love. Diamonds are unique product of Mother Nature, refined by artisans to create artifacts of desire. Diamonds are also an investor’s best friend as well. It is mostly considered as a secure investment. The online trading of diamond futures is available at platform Indian Commodity Exchange (ICEX), the only exchange in the world, started in August 2017 to provide exporters with a hedging tool.

Global scenario of diamond

Major Diamond mines are in Botswana, Zimbabwe, Namibia, South Africa, Angola, Russia, Canada and Australia. Major cutting and Polishing countries of Diamonds are Belgium, Israel, USA, India and China. Important centres of diamond cutting and trading are Surat (India), Antwerp (Belgium), London (UK), New York (USA), Tel Aviv (Israel), Amsterdam (Netherlands). More than 50% of the world’s production of rough, polished and industrial diamond passes through Antwerp. USA, Japan, China, Gulf region and India constitutes approximately 70% of Diamond Jewellery sales. Total diamond production in 2018 is expected to fall slightly from 2017 levels, due largely to Alrosa’s suspension of operations at the Mir mine and Rio Tinto’s guided fall in production at its operations.

Indian scenario of diamond

Production or mining of rough diamond in India is negligible. But India is the world’s largest cutting and polishing centre for diamonds where 14 out of every 15 rough diamonds in the world are polished. Surat is the major centre for cutting, polishing and processing of rough diamonds. It contributes more than 85% of diamonds trading in India.

India is the world's third largest diamond consumer with 8% market share. India ranks first with 16.7 % market share in total export of diamond. India exports 95 per cent of total imported rough diamond the world’s diamonds, as per statistics from the Gems and Jewellery Export promotion Council (GJEPC).

India Trade Data for January 2019

• India’s polished-diamond exports dropped 16% to $1.75 billion in January, continuing their recent weakness. A slide in the volume of shipments outweighed a higher average price, according to the Gem & Jewellery Export Promotion Council (GJEPC). Rough imports also plunged, mirroring a similar trend in the Belgian market in January as demand from manufacturers slowed.

Latest update

• Russian diamond producer Alrosa this month sold 92 rough diamonds of a special size (more than 10.8 carats) weighing 1,570 carats in total at an auction in Israel. It was Alrosa’s first auction of 2019. The total sales revenue was $9.6 million.

• Belgium’s shipments of rough and polished slid in January amid a slowdown in the global industry. A 10% drop in the volume of polished exports outweighed growth in the average price, with the total value down 4% for the month, according to data the Antwerp World Diamond Centre.

Currency Table

News Flows of last week