State Bank of India (SBIN)

Tata Global Beverages Limited (TATAGLOBAL)

WEEKLY VIEW OF THE MARKET

In the week gone by, smart recovery was seen in the market led by short covering from lower levels before exit polls. Call writers covered their short positions and put writers were seen selling puts. Derivative data has again turned positive. Maximum put open interest buildup of more than 38 lakh shares at 11000 strike puts, which should act as strong support zone. Nifty is most likely to trade in the range of 11000 – 11800 levels with positive bias and has support at lower levels. Various supports are 11250 & 11150 spot levels. Implied Volatility (IV) of calls was up and closed at 24.42% while that for put options closed at 24.55%. The Nifty VIX for the week closed at 28.37% and is expected to remain sideways. The PCR OI (Open Interest) for the week closed at 0.97 indicating call writing in the recent rally. On the technical front, 11150-11250 spot levels is strong support zone and current bounce is likely to continue towards 11500-11550 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

Bullishness is likely to prevail in turmeric futures (June) and the counter is expected to rally towards 7300-7500 levels. The prices of turmeric are increasing on the spot markets due to strong demand amid limited supply of good-quality stock in the market. Moreover, trading activity at Sangli, Maharashtra, is increasing due to better quality of turmeric in comparison with the Erode market. There is more room for jeera futures (June) to move forward & test 18300 levels. It is reported that good quantities of jeera are being exported to China and Dubai, and more enquiries are coming for the spice. The lower output in Syria and Turkey has led to a shift in demand to India & hence, jeera is witnessing a buying spree from exporters as well as bulk buyers. The bullish trend is expected to take hold of cardamom futures (June) and drive it towards 2450-2500 levels. This season prolonged dry spell over the past month has damaged 40% of plantations in key growing areas of Kerala. Also, incessant rains, strong winds, landslides, and water stagnation have had a devastating effect on the sensitive crop and the damaged plantations are beyond recovery. Dhaniya futures (June) is expected to trade on a bullish note & test its previous high of 7675. Going ahead, if it sustains above this level, then we may see further upside of 7800 levels. The sentiments are positive because of lower supply in the key spot markets of Rajasthan and rise in demand from domestic buyers. Ideally, spot markets in Rajasthan should receive around 30,000-35,000 bags (1 bag = 40 kg) in this period. However, due to lower crop this year, only 7,000-8,000 bags are seen.

BULLIONS

Bullion counter may continue to witness roller coaster ride as uncertainty regarding US china trade war and volatile movement in greenback is keeping investors jittery. This week results of the general election in India on 23rd May will impact movement of local currency rupee, which can move in range of 69- 72. Recently firmer dollar and increased investor appetite for riskier assets due to strong U.S. data and US corporate results resulted in selling pressure in bullion counter. Gold can take support near 31700 levels while taking resistance near 32500 levels while silver can take support near 36300 levels while taking resistance near 37500 levels. US President Donald Trump’s threat to raise tariffs on Chinese imports rekindled trade tensions between the two economies and pushed investors to seek insurance in safe haven assets. Just when US-China trade war has eased off for a while, US slapped sanctions on Chinese telecom giant Huawei, although US representative will travel to Beijing to continue negotiations with Chinese counterparts.U.S. President DonaldTrump stated that he would meet Chinese President Xi Jinping next month as the trade war between the world's two largest economies intensified, sending shivers through global markets. The U.S. housing data showed homebuilding increased more than expected in April, while unemployment benefits fell more than expected pointing to sustained labour market strength that should underpin the economy. People’s Bank of China revealed the central bank bought gold for the fifth consecutive month this year, adding 480,000 ounces of the yellow metal to its reserves inApril, which now total 61.1 million ounces.

OIL AND OILSEEDS

Soybean futures is expected to trade with a positive bias & post gains for the third consecutive week taking positive cues from the estimates of lower rainfall in the major growing areas. The Private weather forecaster Skymet has projected poor monsoon rains in pockets of Marathwada and Vidharbha in Maharashtra, key soybean producing areas, which is also positive for the prices. The June contract is likely to touch 3850, taking support near 3700 levels. Secondly, the latest estimates of demand for soybean meal for first six month of the current oil year shows that exports are higher at 16.880 lakh tons & on the supply side, the balance stock of meal as on 1st May 2019 is 1.53 lakh tons, as compared to 11.78 lakh tons & 2.055 lakh tons respectively. U.S. soybean oil futures (July) may see an extended recovery till 28.65 cents per pound taking support near 27 cents as the market participants are discounting the fears of trade war, until it further escalates. Taking cues from the positive sentiments of the international market & a weaker rupee against dollar hovering near 70, soy oil futures (June) is expected to see the level of 755, while CPO futures (June) will remain steady in the range of 525-538 levels. Palm oil on the Malaysia Derivative Exchange has taken support near 1950 MYR/ton & is trading more than two-week high on better demand for the edible oil, supported by the continuation of good exports. The bullishness will prevail in mustard futures (June) & is expected to soar towards 3950-3970 levels. The sentiments are upbeat due to buying by oil millers and on hope of a pick-up in procurement at minimum support price.

ENERGY COMPLEX

Crude oil prices may continue to remain on upside path as rising tensions in the Middle East stoked fears of potential supply disruptions. Crude prices continue to rally as Persian Gulf tensions remain elevated. ASaudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier last week. U.S. President Donald Trump has told his top advisers he does not want to get the United States involved in a war with Iran. Iran, under U.S. sanctions that prevent its oil from being sold anywhere in the world, has warned the other oil producers in the Middle East as well as the United States in recent weeks of "consequences" for their actions, prompting Washington to move a warship and bombers to the region. Geopolitical tensions in the Persian Gulf can often cause oil prices to rise very quickly as they raise fears about the security of crude supplies coming out of the region, which supplies about half of the world's oil needs. Crude oil can move higher towards 4600 levels while taking support near 4300 levels. IEAstated that due to weakened demand, the global oil market was in a surplus of about 700,000 barrels in the first quarter despite WTI and Brent gaining about 30% in prices. Natural gas may remain sideways as it can move in range of 170-190 levels. The U.S. Energy Information Administration (EIA) added 106 billion cubic feet (bcf) of gas to inventories during the week ended May 10.

OTHER COMMODITIES

The fear of escalating trade war will continue to keep the upside capped of cotton futures on the domestic bourse. Sluggish business activities are being observed in the spot markets as both buyers and sellers are cautious trading. Hence the May contract is expected to witness a consolidation in the range of 20800-21400 levels. On the international market, ICE cotton futures (July) is trapped in a sideways range of 65-68 cents per pound. Escalations in the trade war come at a time when expanding production meant American inventories were forecast to reach a decade high. Guar seed futures (June) is likely to witness selling pressure & plunge towards 4350-4300 levels, while guar gum futures (June) is expected to witness correction towards 8800-8725 levels. The sentiments have turned bearish after the estimates by the Rajasthan State Agriculture department show that guar production to increase by 45.5% in the coming 2019-20 (Jul-Jun) season from an output of 1.03 mln tn estimated in the current year due to sharp rise in yields. Yield in the coming season is seen at 500 kg per ha, compared to 334 kg this year. Wheat futures (June) will probably maintain its uptrend taking support near 1955 levels. Demand for spot wheat is seen firm in coming days as prices of the grain sold under the government's open market sale scheme has been higherthan the spot. Maize futures on the national bourse is making a new life time high every week & going ahead this bullish trend is expected to stay intact. The June contract would probably rise towards 2000- 2050 in days to come supported by robust purchases by feed makers while adding that uncertainty overimports ofthe grain.

BASE METALS

In base metal counter,further volatility is expected to remain high on the back of uncertain environment regards to US and China trade tensions. Base metals got support as U.S. new-home construction rose for a second month and topped estimates in April in a sign of positive momentum for the housing sector. Copper may take support near 420 levels while its upside is capped near 445 levels. The group has in fact lifted its 2019 deficit assessment to 189,000 tonnes from a forecast 65,000 tonnes at its last biannual meeting in October 2018. The ICSG is expecting mine supply to be “essentially unchanged” this year, up just 0.2% at 20.64 million tonnes. Meanwhile Lead may take support near 125 levels and can recover towards 135 levels. Nickel can take support near 820 levels and can recovertowards 880 levels.Global miner BHPwill hold on to theAustralian nickel operations it previously put up for sale, while Rio Tinto,is working on copper and lithium projects as the mining industry bets on demand for electric vehicle (EV) batteries. Aluminium may test 158 levels while taking support near 142 levels. Aluminium prices moved higher as alumina refinery shutdowns in northern China's Shanxi province raise production costs for the metal used in everything from cans to cars. Alumina prices in northern China have now exceeded 3,000 yuan a tonne and touched their highest since Dec. 10. Zinc may remain sideways as it can take support near 205 levels while facing resistance near 222 levels. Zinc has been supportive as premium of cash zinc over the 3M contract hit its highest since 1997 at $US141, signaling worries about nearby supply owing large holdings of warrants and cash contracts.

TREND SHEET

TECHNICAL RECOMMENDATIONS

NICKEL MCX (MAY) contract closed at Rs. 856.70 on 16th May’19. The contract made its high of Rs. 975.70 on 6th Mar’19 and a low of Rs. 825.60 on 9th May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 855.32.On the daily chart, the commodity has Relative Strength Index (14-day) value of 43.317.

One can sell at Rs. 860 for a target of Rs. 800 with the stop loss of Rs. 887.

COPPER MCX (JUN) contract closed at Rs. 428.40 on 16th May’19. The contract made its high of Rs. 473.95 on 27th Feb’19 and a low of Rs. 421.35 on 14th Jan’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 434.81. On the daily chart, the commodity has Relative Strength Index (14-day) value of 34.459.

One can sell around Rs. 431 for a target of Rs. 420 with the stop loss of Rs. 436

DHANIYANCDEX (JUN) contract was closed at Rs. 7605.00 on 16th May’19. The contract made its high of Rs. 7676.00 on 25th Apr’19 and a low of Rs. 6183.00 on 13th Feb’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 7347.30. On the daily chart, the commodity has Relative Strength Index (14-day) value of 63.080.

One can buy around Rs. 7200 for a target of Rs. 7700 with the stop loss of Rs 6950.

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NEWS DIGEST

• U.S. housing starts rose 5.7% in to a seasonally adjusted annual rate of 1.24 mln units in Apr.

• Polish mining company KGHM may produce more copper than planned at its Sierra Gorda mine in Chile in 2019.

• A Brazilian federal court has lifted one of two production embargoes on a key plant owned by Norwegian metals maker Norsk Hydro.

• State miner Codelco, the world's top copper producer, had agreed on a new labor contract with the union of supervisors at its small Salvador mine in northern Chile.

• US net cotton sales were at 226,900 RB for the week ended May 9 in the marketing year 2018/2019, down 4 percent from the previous week, but up 8 percent from the prior 4-week average.

• Import of vegetable oils during April 2019 decreased by 11% to 1,232,283 tons compared to 1,386,466 tons in April 2018, consisting 1,198,763 tons of edible oils and 33,520 tons of non-edible oils. - Solvent Extractors’ Association of India.

The latest estimates of Supply and Demand of Soybean and Soybean Meal for the current oil year i.e. October 2018 to April 2019 shows that 101.830 lakh tons is still available for crushing as compared to 86 lakh tons during the same period last oil year. - Soybean Processors Association of India.

WEEKLY COMMENTARY

In the week gone by, CRB saw some rebound after a multi week fall on some fresh buying in crude, base metals and some agri commodities. Market reacted on some improved fundamental and geopolitical tensions ignoring the upside in dollar index. Oil took support from heightened tensions in the Middle East, with helicopters carrying U.S. staff from the American embassy in Baghdad on Wednesday out of apparent concern about perceived threats from Iran. It added risk premium in crude and world paid little attention on surprise rise in inventory in US. OPEC said that world demand for its oil would be higher than expected this year as supply growth from rivals including U.S. shale producers slows, pointing to a tighter market, if the exporter group refrains from raising output. Natural gas prices saw some rebound. In base, all base metals moved up except copper, which saw multi week low on rise in inventories in LME. Copper futures hit a fresh 14 week low following the fall in Dow Jones Industrial Average is down 450 points all due to the fact of no trade agreement has come about with China. Gold futures moved sharply lower, pressured by a batch of upbeat U.S. domestic data as equities traded broadly higher, dulling the appeal of the haven metal. Gold had found support earlier in the week from modest, haven-related demand as investors kept an eye on an escalating U.S.-China tariff battle and rising tensions in the Middle East. Silver also closed the week in bearish territory.

Spices noticed magical upside, especially turmeric. The sales of the yellow spice on the spot markets is increasing against the daily supplies of new crop in Erode market and thus strong trend witnessed in futures too. Jeera continued to trade strong on improved demand from overseas market. According to trade sources, cumin seed production in Syria is estimated lower at 25,000 tons this year as major part of their crop has been damaged and discolored due to heavy rains. While, in Turkey jeera production is estimated at 8,000 tons as rains have damaged 25% of the crop. Oil seeds saw strong rebound across the board after a multi week fall. The market participants are looking for a ray of opportunity after the Ministry of Commerce and Industry and General Administration of Customs of China (GACC) discussed issues related to India’s pending request for the clearance of more farm products for the Chinese market. The resultant was that the draft protocol for is expected to be finalized soon for soybean meal. In edible oil, ref soya prices propped up further while CPO also saw marginal buying.

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 $)

MCX COMDEX…….a barometer for the performance of commodities

MCX COMDEX is a significant barometer for the performance of commodities market and would be an ideal investment tool in commodities market over a period of time. This is the maiden flagship real-time Composite Commodity Index in India based on commodity futures prices of an exchange launched in June 2005.

MCX is India's leading commodity derivatives exchange with a market share of 91.6% per centin terms ofthe value of commodity futures contracts traded in FY2019.

MCX COMDEX is designed & developed by the Research & Planning Department of Multi Commodity Exchange of India Ltd. (MCX) in association with the Indian Statistical Institute (ISI), Kolkata. Also Group Indices for MCX AGRI, MCX METAL & MCX ENERGY on commodity futures prices have been developed to represent different commodity segments as traded on the exchange.

Advantage of MCX COMDEX

• The COMDEX gives users the ability to efficiently hedge commodity and inflation exposure and lay off residual risk.

Liquidity is most essential eligibility criteria for commodities to be included in the index. It means number of contracts traded on MCX of individual commodities (including all varieties) in a specified period is taken as eligibility criteria. The constituents of the Index are liquid commodities traded on the Exchange.

MCX COMDEX weighting approach is equally relying on factors that are endogenous to the futures market (liquidity on the exchange) and exogenous to the futures market (physical market size). The rebalancing is done annually or as and when deemed necessary by the Index management team on price-percentage basis. The last weightage has been rebalanced on September 20, 2018.

Weightage of commodities in MCX COMDEX

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week