Oil & Natural Gas Corporation Limited (ONGC)

PVR Limited (PVR)

WEEKLY VIEW OF THE MARKET

Long rollover was witnessed in May series. Average rollover price is in the range of 11700 – 11750 levels. Smart recovery was seen led by short covering from lower levels. Calls writers covered their short positions and put writers were actively selling puts. Maximum put open interest buildup of more than 32 lakh shares is at 11700 puts, which should act as strong support zone. Next week, nifty is most likely to trade in the range of 11700 to 11800 with positive bias. Nifty has multiple strong supports at lower levels. Various supports are 11700 & 11650 spot levels. Option put writers were active in recent rally. Put writing is seen in 11600 & 11700 puts. The Implied Volatility (IV) of calls closed at 21.32% while that for put options closed at 22.00%. The Nifty VIX for the week closed at 23.23% and is expected to remain up trending. Among Nifty Call options, the 11800-strike call has the highest open interest of more than 26 lakh shares, and in put side 11700-strike put has the highest open interest of over 32 lakh shares in open interest respectively. The PCR OI for the week closed up at 1.28 which indicates OTM put writing. On the technical front, 11600-11620 spot levels are strong support zone and current trend is likely to continue towards 11800-11850 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

We may see lower level buying in turmeric futures (May) in the range of 6300- 6400 levels. The positive sentiments prevailing on the spot markets may lift the counter to 6700-6750 levels. In the present scenario, buyers are reported to be active in the spot as new crop supply continued. New turmeric supply to Andhra Pradesh Duggirala market has started. Local traders are likely to become active in coming days at lower price levels as Maharashtra production estimate reported lower as a result of drought condition. Demand for the new crop arriving in Nanded, Hingoli and Basmath, the key markets in Maharashtra, is seen higher. On the supply side, as per trade information, currently, all India turmeric stocks are reported around 15 - 18 lakh bags in the spot. Cardamom on the national bourse is trading at two year high owing to anticipation of severe supply shortages in the ongoing season. Going ahead, we may see more upside of 2000-2100 levels. At the auctions, the premium variety touched Rs.2,000 per kg. The local prices have been ruling above Rs 1,200 per kg for several months. Last time the prices touched such a level was back in 2011. The prolonged dry weather in the past few months led to drying of the plants. On the demand side, small quantities are getting exported to other Gulf countries like Dubai, Kuwait and Doha. The exporters are willing to buy at higher rates as no other good quality cardamom is available in the market now. Coriander futures (May) may rise further towards 7900 levels tracking bullish sentiments prevailing on the spot markets. The market participants are expecting shortages & anticipating higher demand day’s ahead.

BULLIONS

Bullion counter may trade with upside bias as investors focused on signs of economic weakness after dismal data from Germany and Asia. Japan’s industrial output fell 0.9 percent in March from the previous month, down for the first time in two months. Continuing jobless claims, the number of people already receiving benefits and reported with a one-week delay, increased by 1,000 to a seasonally adjusted 1,655,000 during the week ending April 13. At present bullions counter is moving in tandem with dollar index as it hovered near a 22-month high against its peers, after strong U.S. housing data further eased concerns of a slowdown in the world's biggest economy. Gold can further recover towards 32400 levels while taking support near 31600 levels while silver can improve towards 38200 levels while taking support near 37000 levels. Meanwhile North Korean leader Kim Jong Un said during his summit with Russian President Vladimir Putin peace and security on the Korean peninsula depend entirely on the future U.S. attitude. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, holdings stood at 747.87 tonnes. Russia raised its gold holdings by 19.4 tonnes in March, data from the International Monetary Fund showed recently. According to data from the International Monetary Fund, so far this year India's central bank bought 8.2 tonnes of gold, this comes after the RBI added a total of 42.3 tonnes of gold in 2018. Newmont Goldcorp, the world’s biggest gold miner, reported a higherthan-expected first-quarter profit, as a boost in gold production and lower costs countered lagging gold prices.

OIL AND OILSEEDS

Soybean futures (May) is expected to trade sideways in the range of 3650-3850 levels. The buying pace of stockists and millers are sluggish in the current scenario due to surplus imported veg oil stocks at domestic front along with bearish global market keeping the overall sentiments on lower end. A surge in the import of vegetable oils in India has prompted the domestic oilseed crushing and refining industry to cut operating capacity to a historic low in order to sustain in the business for future. On CBOT, U.S soybean is under pressure as the Chinese soybean imports are slowing down, feeling the effect of the African Swine Fever on livestock and as a result the soybean-based feed meal. Further, the US-China trade talks have not provided much confidence to the soybeans global outlook. Mustard futures (May) will probably remain stable in the range of 3735-3810 & the trade with an upside bias. There is pickup in demand from mustard meal exporters based on the talks that China will start importing Indian mustard meal in July, about eight months after it lifted a ban on mustard meal of Indian origin. Soy oil futures (May) may trade in the range broader range of 730-750 levels, while CPO futures (May) may decline towards 530, if breaks the support near 535 levels. The sentiments attached to edible oil counter are mixed due to the tug-of-war amid a weaker rupee and one sided correction in U.S soy oil futures on CBOT. The dollar hovering near a two-year high against its peers is also making the market nervous & this is the reason the participants are opting to sell on rise.

ENERGY COMPLEX

Crude oil prices may continue to remain on upside path but profit booking at higher levels cannot be denied. Crude futures rose to 2019 highs earlier last week after the United States stated that it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action from Washington. The Trump administration stated recently that it will not renew exemptions granted last year to buyers of Iranian oil, a more stringent than expected decision that caught several key importers who have been pleading with Washington to continue buying Iranian oil sanctions-free. The U.S. reimposed sanctions in November last year on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. Washington, however, granted Iran’s eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for half-a-year. International Energy Agency (IEA) stated that global oil markets are adequately supplied and spare production capacity remained at comfortable levels while highlighting the need to avoid higher oil prices amid fragile global economic growth. Crude oil can further move towards 4800 while taking support near 4450. Natural gas may remain on weaker path as it can take support near 170 and resistance near 180. U.S. natural gas futures dipped to their lowest level in nearly three years as higher production and a drop in demand weighed on prices. The prices are expected to trade until favorable weather conditions and production improves.

OTHER COMMODITIES

Cotton futures (May) will possibly remain trapped in a sideways range of 22100- 22700. The reason being is that the cotton in the international market is in a consolidation zone 77-79 cents per pound. The counter is facing the heat of the tussle between the higher dollar index pressuring the ICE cotton futures & on the contrary a weaker rupee giving support to the domestic prices. The overall bias will be negative owing to reports that China will sell 1 million tons of cotton from its state reserves as part of a scheme to replace old stocks, marking the biggest reserve auction in at least 13 months. About 10,000 tons of cotton will be auctioned on every workday between May 5 and Sept. 30, the administration said. On the demand side, the market participants would also judge the U.S export sales numbers & take further cues for the direction of prices. Chana futures (May) is expected to crash further towards 4300-4270 levels on estimates of higher pulses output in the upcoming Kharif season. For pulses in 2019-20, the government has set Kharif output target of 10.1 MT, higher than 9.01 MT production pegged in 2018-19. According to official reports, Centre has 964,845 tons pulses seed for sowing in 2019-20 (Jul-Jun) kharif season, higher than the requirement of 821,242 tons. Guar seed futures (May) is expected to consolidate in the range of 4300-4400, while guar gum futures (May) may trade with a negative bias & descend towards 8550 levels. The correction in oil prices in the international market & a declining guar gum-guar seed ratio is giving a signal that demand for the commodities will be sluggish.

BASE METALS

In base metal counter, Zinc and aluminum may remain in green while rest of the pack may trade in range. Base metals sentiment was also supported by news that U.S. President Donald Trump would soon host Chinese leader Xi Jinping at the White House, setting the stage for a possible agreement on trade between the world’s two largest economies. Copper may take support near 438 and may recover towards 460. Freeport-McMoRan Inc’s copper output fell 18 percent to around 340,000 tonnes in the first quarter, while Anglo American’s production rose by 4 percent to 161,100 tonnes. Copper stocks in LME-registered warehouses rose by 8,675 tonnes to 194,800 tonnes, nearing 7-month highs touched earlier this month. Meanwhile Lead may also take support near 131 while taking resistance near 138. Nickel can witness lower level buying as it can test 890 taking support near 845. The global nickel market deficit narrowed to 2,000 tonnes in February from a revised deficit of 3,700 tonnes in January, and was much smaller than a 7,200-tonne deficit in the same month last year, the International Nickel Study Group stated recently. Aluminium may remain buoyant as it can test 158 while taking support near 147. According to the International Aluminium Institute “Global aluminium production flatlined in the first quarter of this year” China global production rose by a marginal 0.3 percent year-on-year as China remained the world’s dominant player with a 57 percent share of world production. Zinc may extend its upside as it can test 242 levels taking support near 224 levels.

TREND SHEET

TECHNICAL RECOMMENDATIONS

ALUMINIUM MCX (MAY) contract closed at Rs. 150.70 on 25th Apr’19. The contract made its high of Rs. 151.60 on 25th Apr’19 and a low of Rs. 142.20 on 25th Mar’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 148.66.On the daily chart, the commodity has Relative Strength Index (14-day) value of 61.06.

One can buy at Rs. 147 for a target of Rs.154 with the stop loss of Rs. 143.50.

ZINC MCX (MAY) contract closed at Rs. 226.45 on 25th Apr’19. The contract made its high of Rs. 232.40 on 11th Apr’19 and a low of Rs. 211.50 on 12th Mar’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 223.70. On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.382.

One can buy around Rs. 223 for a target of Rs. 232 with the stop loss of Rs. 219.

TURMERIC NCDEX (MAY) contract was closed at Rs. 6535.00 on 25th Apr’19. The contract made its high of Rs. 6968.00 on 14th Dec’18 and a low of Rs. 6000 on 26th Mar’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 6436.80. On the daily chart, the commodity has Relative Strength Index (14-day) value of 51.001.

One can buy at Rs. 6300 for a target of Rs. 6900 with the stop loss of Rs 6000.

11

NEWS DIGEST

• U.S. Census Bureau stated that new durable goods orders increased by $6.8 billion or 2.7% to $258.5 billion, last month.

• Global primary aluminium output rose to 5.414 million tonnes in March from a revised 4.916 million tonnes in February.

• U.S. retail sales increased by the most in 1-1/2 years in March as households boosted purchases of motor vehicles and a range of other goods.

• Australian miner Aurelia Metals Ltd said it was in talks about a possible acquisition of Glencore’s CSA copper mine in the state of New South Wales.

• The central government has disbursed around Rs 11,000 crore among 31 million farmers in the PM KISAN scheme so far.

• The government has set an ambitious foodgrains target of 291.1 million tonnes (mt) for 2019-20, nearly 2.6 per cent more than the previous year’s 283.7 mt at the National Kharif Campaign conference.

• IMD is working at a brisk pace to issue localised weather forecasting to all 6,500 blocks across 660 districts in the country by 2020 and help as many as 9.5 crore farmers deal with the vagaries of weather.

• China plans to buy additional 1.9 million tonnes palm oil from Malaysia, in the next five years.

WEEKLY COMMENTARY

CRB hovered in range with some correction. Some Improved data from US and China gave boost up to some base metals and crude. Dollar hovered near a two-year high against its peers, supported by strong U.S. capital goods orders and awaiting first-quarter GDP data which could further reinforce the greenback's bullish standing. Data on Thursday showed new orders for U.S.-made capital goods increased by the most in eight months in March. That follows other recent U.S. data that show strength in retail sales and exports which have eased concerns of the world's biggest economy sharply slowing. China's economy also grew at a 6.4% pace in the first quarter from a year earlier, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement, gave boost to the base metals prices and lead, zinc and aluminum prices strengthened. As regards to spread update, the spread of Zinc and Lead has tested record low of -96 levels as the Zinc prices rallied this year on higher infrastructure spending supported by continuous drawdown in LME inventories. Copper saw spike in the prices but couldn’t stay on higher side. Crude prices saw nonstop eight week rally as oil markets remain tight amid supply disruptions and rising geopolitical concerns, especially over the tensions between the United States and Iran. Though it shed some of its previous gain on hopes that producer club OPEC will soon raise output to make up for a decline in exports from Iran following a tightening of sanctions on Tehran by the United States. Natural gas traded in a tight range on mild temperature issue.

Mix sentiment was witnessed in oil seeds and edible oil futures. Soyabean and refined soya saw revival in the prices; mustard too followed the upside trend whereas crude palm oil futures saw correction. Cotton counter saw further correction as physical buyers refrained to buy on higher levels. News of releasing cotton stocks from strategic reserve in China also set dovish tone for cotton counter. Though kapas and cotton oilseed cake continued their upside journey. Chana saw continuous fall in the prices on fear of possibility of change in import policy. It was a very strong week for spices in which all of them saw strong upside. Jeera saw continuous 9 week rally on improved export demand amid lower stocks with its main competitor Turkey and Syria.

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 $)

GPI Vs GDP........ Quality of life Vs gross economic progress

Traditionally Gross Domestic Product (GDP) is used to measure economic progress of any country. GDP is equal to the total monetary value of all final goods and services that have been exchanged within a specific border over a set period of time. If GDP is rising, it has been considered that the economy is moving forward. If GDP is falling, the nation's economy is losing ground. It has been also assumed that a higher GDP represent greater human progress, because it means more valuable goods and services have been created.

Even some economists believe that GDP can increase after destruction such as earthquake, war or terrorist attack as the rebuilding effort just boosts GDP. But it is not true from the perspective of a citizen living with the day-to-day realities of life or who suffer with destructions. It is difficult to know the relation between the economic prosperity of a country and quality of life of citizen especially poor's. GDP is only concerned with the sum of all exchanged goods and services, not the distribution of those goods and services among the individual of that country. In other word, the rising nation's income doesn't reflect that the income of individual is also increasing.

GPI: A Genuine Progress Indicator (GPI) is considered a progressive metric to measure the economic growth of a country. The GPI indicator takes everything the GDP uses into account, but adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).

Difference between Genuine Progress Indicator (GPI) & Gross Domestic Product(GDP)

• Already said that GDP can increase after destruction such as earthquake, war or terrorist attack as the rebuilding effort just boosts GDP. GPI views destruction as a negative. It hampers the economic activity by affecting the humans.

• Pollution is good news for GDP. Industry gets paid once for the economic activity that creates pollution and again when money is spent to mitigate the pollution. GPI views pollution as a negative.

• GPI counts the value of the labor that goes into housework and volunteering. It also counts the benefit of an increasingly educated population.

• Rising crime costs money in legal fees, medical bills, replacement costs and other outlays. GDP views this spending as a positive development. GPI views it as a negative.

• Global warming, nuclear waste storage and other long-term consequences of economic activity are factored into GPI as negatives.

• GDP, on the other hand, views all spending as positive. But if spending drains the government's treasury, GPI views it as a negative.

• When wetlands or forests are destroyed by economic activity, GDP views the events as good news for the economy; GPI views these events as bad news for future generations.

• Medical insurance, auto insurance, health care bills and other expenses that are required to maintain quality of life. GPI views these as a negative. GDP views them positively.

• When a nation is forced to borrow from other nations to finance consumption, GPI factors in the result as a negative. If the borrowed money is used for investments and benefits the country, it is viewed as a positive.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week