SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

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SPICES

Turmeric futures (Mar) is expected to consolidate in the range of 6500-6900 levels on account of mixed cues from the spot markets. According to traders, because of the damage crop due to bad weather, prices are stable. Otherwise, the turmeric that the farmers are bringing to the mandis is still unripe and hence demand for such quality is weak. The stockists are waiting to buy turmeric with less than 12% moisture. Meanwhile, the farmers are still waiting for the state government's MSP, which has not been announced yet. The farmers have demanded a support price of 14,000/quintal for turmeric, while the price of the old crop in the market is around Rs.6000-7000/quintal. At the same time, the price of new turmeric with high moisture is around Rs.4000/quintal. Jeera futures (Jan) is likely to plunge further to test 15800- 15600 as the demand is weak due to expected rise in production this season. This time, there has been an increase in the area under cultivation due to favourable weather. Total area sown under jeera/cumin in Gujarat, the largest producing state, was at 4.36 lakh hectares as on December 30 in the current 2019-20 Rabi season, up 29 percent or 97,663 hectares from 3.38 lakh hectares over the year-ago period, as per the state agriculture department's data. Cardamom futures (Feb) will probably continue to maintain its uptrend and witness 4100-4200 levels. The demand side being robust and the harvest season coming to an end, this queen of spices is unlikely to give its crown away, in other words is unlikely to fall.

BULLIONS

Bullion counter may continue its recent upside momentum as increased safe haven demand amid rising geopolitical tensions, investment demand, central bank buying and falling US treasury yields. Gold prices climbed to a fourmonth high last week, as tensions mounted in the Middle East after a senior Iranian military official was killed in a U.S. air strike, while a weaker dollar also provided some support to the metal. Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport, the Pentagon stated. Investors will also focus on the global trade developments after President Donald Trump stated last week that the U.S. and China would soon sign a long-awaited trade pact. The so-called “phase one” deal is set to be signed at the White House on Jan. 15, though the precise details of the agreement have not yet been shared publicly. Gold may continue its swift upside run as can test 40600 by taking support near 39200 whereas silver may recover towards 50000 while taking support near 46800. India's gold imports fell about 7 percent, to 20.6 billion dollars during April to November period of the ongoing financial year. Slack demand and an oversupply of gold in domestic market have prompted bullion dealers to offer a higher discount on the precious metal to jewellers. Discount on gold has doubled in the first week of 2020 from the previous week to $8 per troy ounce.

OIL AND OILSEEDS

Soybean futures (Jan) is expected to hold on to the strong support near 4350- 4320 levels, while the upside may remain capped near 4500-4520 levels. Overall, the counter will maintain its uptrend on the back of firm demand from crushing plants and stockists, and lower availability of the oilseed in physical markets. This season the arrivals are on the lower side and yields are seen hit as 15-30% of crop was damaged due to heavy rain in top growers. Mustard futures (Jan) is likely to trade with an upside bias in the range of 4580- 4750 levels. The market participants are cautious and closely keeping a watch on the impact of the severe winters in the Northern region of the country on the flowers. This season there is a slight drop in mustard area in Uttar Pradesh and Madhya Pradesh. However, corresponding rise in area under cultivation in Rajasthan more or less made up for the shortfall in other States. The total planted area under this Rabi oilseed crop is 65.68 lakh hectares, lower by merely 1.08% as compared the same week last year, according to sowing data released by the Agriculture Ministry. The bull-run in edible oil complex is seen to remain intact on the back of positive cues coming from international markets amid news that output of palm oil in Malaysia will stay weak due to dry weather and optimism that U.S-China will sign the phase on deal in midJanuary, which will boost the soy oil prices on CBOT. Saying this, soy oil futures (Jan) may run up to test 960-970, while CPO futures (Jan) may test 830-840 levels on the higher side.

ENERGY COMPLEX

Crude oil prices may remain on firm path as the supply side risk has got elevated and tensions continue to elevate between the U.S and Iran-backed militia in Iraq. There was surprise escalation in Middle East after a fresh blow to stability in Middle East as Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis were killed in an air strike. January also marks the start of the deeper output cuts by OPEC and its partners, including Russia. OPEC and its allies have agreed to cut a further of 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd that started on Jan. 1 a year ago. Crude oil may move further higher as it can test 4800 while taking support near 4300 levels. Recently API data showed that crude-oil supplies fell by 7.8Mbpd and gasoline declined by 776,000 barrels . Over the past year, increased U.S. oil output offset the supply reductions undertaken by OPEC led by Saudi Arabia and stemming from U.S sanctions on Venezuela and Iran. Natural gas to remain downbeat as it can test 150-145 in near term. Natural gas prices traded lower following a report that showed that warmer than normal weather is expected to cover most of the east coast for the next 8-14 days. The central and southern US will be mild the next few days with highs mostly in the 40s to 60s, but then warming late week with 50s to 70s gaining increasing for light demand.

OTHER COMMODITIES

Cotton futures (Jan) may trade with an upside bias to reach 20000, taking support near 19600-19500 levels. The spot prices are improving owing to a pickup in export demand from main importers China & Bangladesh after agreements are signed for January-February deliveries. On the international market, cotton may face resistance near 70 cents per pound and cautiousness may prevail until the U.S. President Donald Trump signs the first phase of a trade deal with China on Jan. 15. On the other hand, the Chinese Ministry of Foreign Affairs spokesman Geng Shuang didn’t comment on the signing & hoped the U.S. will do more to build mutual trust. Chana futures (Jan) is likely to remain trapped in the range of 4480-4600 levels. The progress in Rabi sowing has picked up significantly with the improvement of soil moisture in almost all Rabi growing states. Among pulses crops, planting of gram has been 5 lh (or 5.64 per cent) more than the corresponding week last year. Impressive increase in sowing of gram in Rajasthan (42% higher than last year) and Maharashtra (46%) took total area under gram to 95 lh till last week. Total area under pulses crop as of now is 140 lh as against 137 lh in the corresponding week last year. This is despite subdued pulses sowing in Madhya Pradesh and Karnataka, two other major pulses States. Mentha oil futures (Jan) is expected to witness correction & test 1280-1270 levels. It is analyzed that this is due to rise in inventories at exchange-accredited warehouses. Mentha oil stocks at the warehouses were at 1,92,359 kgs as of 1st Jan, up 15,112.35 kgs from a week ago, bourse data showed.

BASE METALS

Base metal counter may remain on positive path. China’s central bank stated that it was cutting the amount of cash that all banks must hold as reserves, releasing around 800 billion yuan ($114.91 billion) in funds to shore up the slowing economy. Copper may take support near 435 levels and recover towards 450 levels. Chinese smelting industry has signaled it will cut output this year to rescue treatment fees that have sunk to near seven-year lows. Chile's vast copper mines largely maintained production and kept operations running normally through early November, amid the brunt of unrest, though there have been isolated incidents at some operations and uncertainty lingers. Meanwhile, lead may remain sideways as it can move in the range of 150-157 levels. Zinc may take support near 176-174 levels and can recover towards 185. Recently prices were under pressure caused by rising stocks and zinc production against weak demand from end-users. Meanwhile China's top steelmaking city of Tangshan, issued an orange alert for pollution due to deteriorating weather conditions. Nickel prices can move with sideways path as it may face resistance near 1050 while taking support near 1000 levels. Aluminium prices can recover towards 142 levels by taking support near 133 levels. Chinese Aluminum supply, meanwhile, continues to rise, with Henan Shenhuo Group putting its new smelter in Yunnan into production on Dec. 31. China’s Yunnan Aluminum Co Ltd. plans to build a second phase consisting of 210 thousand metric tons per annum of smelting capacity at its plant in northwest Yunnan Province.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE MCX (JAN) contract closed at Rs. 4343.00 on 02nd Jan’2020. The contract made its high of Rs. 4549.00 on 03rd Jan’2020 and a low of Rs. 3825.00 on 22st Oct’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 4338. On the daily chart, the commodity has Relative Strength Index (14-day) value of 71.14.

One can buy near Rs. 4450 for a target of Rs. 4800 with the stop loss of Rs. 4275.

LEADMINI MCX (JAN) contract closed at Rs. 151.75 on 02nd Jan’2020. The contract made its high of Rs. 159.50 on 22nd Nov’19 and a low of Rs. 150.45 on 22nd Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 152.31. On the daily chart, the commodity has Relative Strength Index (14-day) value of 34.97.

One can sell near Rs. 154 for a target of Rs. 144 with the stop loss of Rs. 159.

COTTON MCX (JAN) contract was closed at Rs. 19690.00 on 02nd Jan’2020. The contract made its high of Rs. 19740.00 on 03rd Jan’2020 and a low of Rs. 18900.00 on 11th Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 19458.71. On the daily chart, the commodity has Relative Strength Index (14-day) value of 65.01.

One can buy near Rs. 19620 for a target of Rs. 20100 with the stop loss of Rs 19380.

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NEWS DIGEST

Ÿ The city of Ganzhou in China's southeastern province of Jiangxi has launched an exchange for spot transactions in rare earths and minor metals.

Ÿ The People's Bank of China (PBOC) stated that it will cut banks' reserve requirement ratio (RRR) by 50 basis points effective Jan. 6.

Ÿ U.S. oil and gas mergers and acquisitions reached a fiveyear peak of $96 billion in 2019 on the back of competing bids for Anadarko Petroleum.

Ÿ China Caixin/Markit Manufacturing PMI for December 2019 eased to 51.5 from 51.8 the previous month.

Ÿ U.S. crude oil production in October 2019 hit a record 12.66 million barrels per day (bpd), up from a revised 12.48 million bpd in September 2019.

Ÿ The government slashed import duty on refined palmolein from 50 per cent to 45 per cent, while that on crude palm oil (CPO) from 40 per cent to 37.5 per cent with immediate effect.

ŸŸ India has extended an exemption to its policy for crop cargoes to be fumigated with methyl bromide to June 2020, a move that should facilitate continued imports of pulses and wheat.

Ÿ The components of NCDEX AGRIDEX along with their weightages applicable for the period from April 01, 2020 to March 31, 2021 are (in %): Soybean (18.43), Chana (17.80), RM Seed (12.12), Guar Seed (11.16), Castor Seed (10.08), Cocud (8.68), Refined Soy Oil (8.14), Guar Gum (6.45), Jeera (3.88), Coriander (3.21).

Ÿ MCX was due to launch Mentha Oil June 2020 Futures contracts on January 1, 2020. However, as the Exchange is proposing modifications to SEBI in the said contract, the launch of the same has been put on hold.

WEEKLY COMMENTARY

CRB took a pause after nonstop four week rally. Gold, a classic haven asset, has jumped to fourmonth highs with the US and Iran moving closer to open confrontation in Iraq. The US launched an airstrike on Baghdad airport on Friday, killing Iran's most celebrated military official Qassem Soleimani. Silver also mirrored the upside trend of gold. Crude saw sharp jump last weeks for the same above mentioned reason. Upside strengthened after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies. Natural gas futures fell on Thursday to their lowest level in over four-months, weighed down by forecasts for the weather to moderate over the next two weeks as production nears record highs. In base metals, nickel and lead saw the downside whereas copper, zinc and aluminium prices surged on positive trade deal. Copper prices rose towards eight-month highs on Thursday as demand expectations were boosted by economic measures in China and optimism that the world's top metals consumer would also sign a preliminary trade deal with the United States.

Cotton saw technical breakout. Fundamentals also improved on CCI buying; nevertheless the upside was capped. Cotton prices ruled steady at major markets in Central and South India on Thursday due to limited buying support from the mills after recent rise in prices. Export shipments of cotton fabric during the first three months (Aug-Oct) of MY 2019/20 are 4% higher than same time last year, and 5% higher in October than previous month. Cotton Oil Seeds Cake saw a pause in the rally. In oil seeds, soyabean saw pause in rally whereas mustard upside prolonged. Though the market participants are cautious & closely watch the flowering stage of this oilseeds & the impact of the ongoing severe winters on the yield of this oilseed crop. Cpo continued its rally last week too. CPO has almost doubled last year, giving a return of more than 46% year-on-year. The bullish news coming from the international market that Indonesia is pushing for biodiesel mandatory to mix 30% palm-based fueling a bid to slash its fuel import bill and boost domestic palm oil consumption. In Malaysia also there is forecast a steeper-than expected drop in production. In spices, turmeric traded in range as the quality of arrivals in the mandis is lower. On the contrary, the demand from North India is continuing to be sluggish. Dhaniya futures saw sharp upside. The supplies are getting affected on the spot markets of Rajasthan due to intense cold wave. While on the other side, the adverse weather conditions in key growing areas have hit the sown crop.

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 $)

Movement of commodities in 2019 in MCX, ICEX & NCDEX

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week