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FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

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SPICES

Turmeric futures (Apr) is expected to trade with an upside bias holding on the support near 5700, while the upside may remain capped near 6100. India's agriculture exports of spices including this yellow herb used for medicinal properties have seen a surge in March, with the Covid-19 outbreak prompting people across the globe to stock up. Hence, looking at the supply worries, there might be shortage in consuming centres and this will cushion the prices. Jeera futures (Apr) is likely to consolidate & hold its gains in the range of 13500-14800 levels. The frequent dark clouds bringing unseasonal rain in the major growing districts has, to some extent, adversely affected cumin seed crop. The quality of the cumin crop has been completely affected due to the strong wind with the rains in the midst of sudden change of weather. Now the farmers are busy covering this cumin crop so that it can be properly stored and preserved in time. Farmers told that there is more complaint of change of color in cumin. The market participants are optimistic that it would have a positive impact on the prices. Anticipating the double whammy of crop failure and present scenario of scarcity in supply due to lock down, will add support the counter. Coriander futures (April) would probably trade with a positive bias in the range of 5800-6500. This season the farmers who had grown coriander have been affected as their crops are lying in the fields and not being picked up. While, initially, most States announced that mandis will open from April 1, it now appears as if they will be closed till April 14 due to the nationwide lock-down.

BULLIONS

Bullion counter may continue its bounce back as decline in greenback, safe haven buying amid fear of global slowdown amid wide spread coronavirus pandemic is boosting the price higher. Meanwhile silver is outperforming gold as gold silver ratio has declined from above 125 to below 113 which can further decline towards 108.Meanwhile global central banks have been turning to quantitative easing (QE), or large-scale purchases of government bonds and other financial assets to pump money into the economy. Gold can move towards 44500 while taking support near 42500 while silver may move higher towards 43500 while taking support near 38000 levels. Gold got boost recently after data showed a record high of more than 3 million Americans filed claims for unemployment benefits as strict measures to contain the pandemic hit economic activity. Extraordinary steps by the Fed last week, including uncapping the size of asset purchases and buying investment grade bonds, should push real interest rates deeper into negative territory and in turn support demand for real assets like gold. India’s sales of gold jewelry to bars are set to plunge to the lowest in a quarter of a century as a lockdown to combat the rapidly spreading coronavirus brings the industry to a standstill. Demand in the world’s second-biggest gold consumer has already tumbled, slammed by record high domestic prices and an economy headed for the slowest pace of growth in 11 years. Meanwhile three of the world's largest gold refineries had suspended production in Switzerland for at least a week after local authorities ordered the closure of non-essential industry to curtail the spread of the virus.

OIL AND OILSEEDS

Soybean futures (April) is expected to trade with a positive bias in the range of 3700-4000 levels. The gains may remain intact due to waning supply in domestic markets as mills are shut following the nationwide lockdown. Moreover, U.S Soybean is gaining grounds on the American bourse due to rising demand for the US crop from China. The Asian nation is expected to import more soybeans in 2020 as it recovers from African swine fever. China's soybean imports are forecast to reach 86 million mt in 2020-21, up 2.4% on the year, based on a recovery in crush volume for animal feed as the swine herd rebuilding continues, the USDA said. Mustard futures (April) taking support near 4000 can again retest 4200 levels on the higher side. This Rabi oilseed crop across many parts of North India has witnessed heavy damage due to the repeated spells of heavy rain accompanied by hailstorm and strong winds this month. This year’s mustard crop seemed to be in good shape and may had witness one of the highest crops in recent times. However, rains in some growing areas may have damaged the crop and the final number may be lower. Soy oil futures (April) would probably continue to remain in positive territory in the range of 780-820 levels. While, CPO futures (Apr) may consolidate in the range of 625-675 levels, maintaining its upbeat. The reason being is due to insufficient stocks in physical markets following tepid imports and rising demand due to the lockdown. It is being estimated that India’s edible oil imports could come down by 5 per cent this year to 14.2 million tonnes as weakening rupee combines with supply chain disruption due to outbreak of coronavirus

ENERGY COMPLEX

Crude oil may remain under pressure as the coronavirus pandemic sharply dented global fuel demand but some recovery can be seen as world leaders promised a massive injection of funds to limit the economic fallout from the coronavirus pandemic, despite fears the outbreak will destroy demand for oil. Leaders of the Group of 20 major economies pledged to inject over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic. Fuel demand is expected to fall sharply worldwide in the second quarter with aviation largely at a halt and road travel severely curtailed. Crude oil can weaken towards 1700-1600 range by facing resistance towards 2100. Threats of increasing supplies by OPEC and Russia are other downside risks for the market after the Organization of the Petroleum Exporting Countries and Russia failed to extend an agreement to cut production and support prices beyond end-March. Moreover the demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns to curb the spread of the coronavirus, putting a lid on oil price gains. International Energy Agency stated that with the pandemic shutting in around 3 billion people around the world, crude-oil demand was setto plunge by 20 million barrels a day in the first half of 2020. Natural gas can remain on sideways path in range of 120-140. The weatheris expected to be warmerthan normal overthe next 2-weeks, according to the mostrecentforecast by the National Oceanic Atmospheric Administration.

OTHER COMMODITIES

Cotton futures (Apr) is likely to trade with a downside bias towards 16000- 15500 on the bearish footsteps of the overseas market. The price outlook for ICE cotton futures (Apr) is negative as there are possibilities that it may breach 50 and nose dive to 45 cents per pound. The market participants are keeping more visibility on the demand-supply figures by keeping a note of the weekly export sales report given by the US Department of Agriculture. Back at home, the Cotton Corp of India has halted procurement of the fibre at its centres due to closure of spot markets after the Centre imposed a 21-day nationwide lockdown to curb the rapid spread of coronavirus in the country. On the demand side, coronavirus pandemic has affected the exports badly. China uses India’s cotton to make finished products, which are then exported to the United States. A slump in India’s exports to China has hit the global cotton industry. Castor seed futures (April) might witness lower level buying near 3900 and later during the week may rise to test 4400-4600 levels. The market sentiments have turned positive after China in a major milestone lifted the lock down in the Hubei lockdown. It is important to note here that China accounts for a roughly 30% share of India’s total export of castor oil and derivatives. In days to come, we may see more export demand from China as demand would be growing for castor oil by manufacturers of automotive biopolymers, lubricants, and paints. Mentha oil (April) is expected to take sport near 1050, while the upside may get extended towards 1250. The stockists are indulged in lower level buying at it is trading near its 2 year low.

BASE METALS

Base metals may trade with mixed path with some recovery can be seen amid stimulus measure given by various countries to lift the dampened economic sentiment. Copper may recover towards 390 while taking support near 355. Top copper miner Codelco stated that it would suspend construction of some projects including the Chuquicamata mine in a bid to halt the virus from spreading. Meanwhile top listed copper producer Freeport-McMoRan Inc stated that it will slash output due to the pandemic. Zinc may recover towards 150 by taking support near 140. The global zinc market flipped to a surplus of 356000 tonnes in January, while lead market deficit shrank to 3,100 tonnes in January, industry data showed. Lead may remain in range as it can face resistance near 138 while taking support near 128. Nickel may trade in range as take support near 840 while taking resistance near 890. The global nickel market surplus widened to 13,100 tonnes in January from a surplus of 5,200 tonnes in the previous month. China’s nickel ore imports in the first two months of 2020 fell 5.1% from a year earlier, according customs data as the ban on exports from top miner Indonesia came into force. Aluminum also may remain in narrow range of 131-136. Aluminium stocks in warehouses monitored by the Shanghai Futures Exchange are at a 10-month high of 533,994 tonnes, while inventories in LME approved warehouses have risen to a one-month high of 1.1 million tonnes. Data showed recently that year-on-year global output of the Aluminium rose 3.8 per cent in February even though month-on-month production declined 6.2 per cent.

TREND SHEET

TECHNICAL RECOMMENDATIONS

COPPER MCX (APR) contract closed at Rs. 374.95 on 26th Mar’2020. The contract made its high of Rs. 439.45 on 20th Feb’2020 and a low of Rs.337.55 on 19th Mar’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs. 396.70 On the daily chart, the commodity has Relative Strength Index (14-day) value of 26.83.

One can sell around Rs. 385 for a target of Rs.360 with the stop loss of Rs. 395.

CRUDE OIL MCX (APR) contract closed at Rs. 1787 on 26th Mar’2020. The contract made its high of Rs. 4186 on 21st Jan’2020 and a low of Rs. 1717 on 18th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 2296 on the daily chart, the commodity has Relative Strength Index (14-day) value of 25.68.

One can sell around Rs.1900 for a target of Rs. 1600 with the stop loss of Rs. 2030.

SOYA REF OIL NCDEX (APR) contract was closed at Rs. 799.80 on 26th Mar’2020. The contract made its high of Rs. 938.40 on 02nd Jan’2020 and a low of Rs. 687.20 on 13th Mar’2020. The 18-day Exponential MovingAverage ofthe commodity is currently at Rs. 771.18 onthedailychart,thecommodityhasRelativeStrengthIndex(14-day)valueof57.65.

One can sell at Rs. 810 for a target of Rs. 760 with the stop loss of Rs 840.

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NEWS DIGEST

Ÿ SEBI and exchanges have decided to reduce the trading ours in commodities and commodity derivatives till 5pmh

Ÿ The Finance Minister said thatthe government will provide 5kg ofrice or wheat- whateveris preferred - along with 1kg ofpulses,according to regional preferences.

Ÿ Gujarat government orders all the APMCs in the state to resume operations of auctions for agri food commodities including grains and pulses.

Ÿ U.S. exchange launched a new gold futures contract with expanded delivery options that include gold bars.

Ÿ China, the world’s top importer of the oilseed, brought in 6.101 million tonnes of U.S. soybeans in January and February, up from 1.044 million tonnes in the same months in 2019.

Ÿ The World Bank and the International Monetary Fund urged official bilateral creditors to provide immediate debt relief to the world's poorest countries as they grapple with severe consequences of the virus.

Ÿ Saudi Arabia is struggling to find customers for its extra oil as demand plummets due to the coronavirus and freight rates surge.

Ÿ Glencore PLC halted a number of smaller mines due to government restrictions to curb the spread of the coronavirus.

Ÿ The ECB has ditched a cap on how many bonds it can buy from any single euro zone country, clearing the way for potentially unlimited money-printing as it scales up its response to the coronavirus outbreak.

Ÿ U.S. exchange operator CME Group announced a new gold futures contract to combat price volatility caused by the shutdown of gold supply routes.

WEEKLY COMMENTARY

After a sharp fall in last four week in CRB, it saw some value buying from lower levels, nevertheless stability at higher levels still questionable. Agri commodities saw more buying as supply concern rose on lockdown issues in many parts of the world, including India, which has 1.3 billion people to feed. Fall in dollar index also stimulated buying. The dollar is on track for its biggest weekly fall in more than a decade as a series of stimulus steps around the world, including a $2.2 trillion U.S. package, calmed a panic over a global recession following the coronavirus outbreak. Bullion counter saw major movements which jumped on safe haven buying but important is that silver outperformed gold and gold silver ratio improved to 110:1from 125:1. Gold prices rose as a record increase in U.S. jobless claims encouraged expectations of yet more stimulus, a process that many gold investors will ultimately lead to the debasement of fiat currencies. The Senate already approved a $2 trillion stimulus package on Wednesday, the biggest of its kind ever. The number of Americans filing claims for unemployment benefits surged to a record of more than 3.28 million last week as strict measures to contain the coronavirus pandemic unleashed a wave of layoffs. It eclipsed the previous record of 695,000 set in 1982 and was up 3 million from last week. Crude gave up its weekly upside on Thursday and closed in sideways to negative territory. Goldman Sachs expects oil demand to fall by 10.5 million barrels per day (bpd) in March and possibly by as much as 18.7 million bpd in April. Natural gas was sideways. Industrial metals gave some respect to the stimulus given by major economies and saw pause in fall. Some of the saw lower level buying. Rebound in equity market also supported the upside.

Agri commodities saw good rebound. Spices consumption has increased and it reflected in futures movements. Most of them saw good upside but the bid and ask gap increased due to low volume. Exporters across India are confirming an increased interest from corona-affected countries in consuming raw turmeric. The demand for raw turmeric has risen sharply in the UK and Germany. Oil and oil seeds futures gained as sentiments were positive due to improved buying at lower price levels. Gains in U.S soybean on CBOT also lent support to the domestic prices. China’s soybean imports from the United States in the first two months of the year rose sixfold from the same period last year. Castor prices saw good jump. As situation is getting better in China, the exporters have started getting order.

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 $)

Crude oil … “Brunt by coronavirus (COVID-19)

Crude oil continued to slide as demand dwindled in most countries as they have gone under lockdown to check the spread of Covid-19. Currently the benchmark brent crude & WTI crude prices has slide below $30 and $ 25 per barrel separately. Oil prices has dropped about 55% as the pandemic has cut demand at the same time the collapse of coordinated output cuts by OPEC and Russia.

Demand impact of the virus is unclear

Although the full demand impact of the virus is still unclear, but oil consumption is certainly under severe pressure as countries continue to escalate measures to stem the spread of the virus. Demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns to stop the spread of coronavirus. Fuel demand is expected to fall sharply worldwide in the second quarter with aviation largely at a halt and road travel severely curtailed. Even after the travel bans are lifted, it will be take some time of full return to normal business for the airline and cruise industry. The same can be said about gasoline and diesel consumption, given the large scale quarantines currently in place in the US, India, Italy, Iran, South Korea, and with more European cities likely to follow suit in the weeks ahead.

Supply glut due to price war

Except virus-related demand concerns, oil prices are also sliding due to an imminent surge in supplies from Saudi Arabia and Russia as the two nations failed to agree on extending output cuts. In fact, the Saudis announced extreme measures in recent days in response to Russia’s unwillingness to participate in deeper supply cuts by drastically slashing “Official Selling Prices” (OSPs) to Asian refiners for April, thereby kicking off a three-way market share war between the US, Russia, and Saudi Arabia.

Saudis and other Middle East producers choose to sell their barrels on a formula basis and as a discount or premium to global benchmarks rather than in the spot market. The Saudis slashed this discount to Asian refiners by $6/barrel from March levels, the biggest month-on-month change in history. The move was an abrupt about-face as the Saudis were ironically the ones leading the charge to implement deeper cuts of up to 1.5mb/d in the lead up to the meeting. In our view, the bold move is likely to lead to mutually assured destruction as all those involved will be feeling severe pain at current price levels.

Stimulus is not enough to shore up economic activity

Traders believe that demand is likely to continue to erode as emergency stimulus by global central banks will not be enough to shore up economic activity. Goldman Sachs predicted oil demand to fall by 10.5 million barrels per day in March and by as much as 18.7 million bpd in April. Such demand loss will increase the supply glut. Looking forward, we expect the oil market to stay under pressure until specific fiscal measures are not able to address the economic impact of the coronavirus pandemic or until the OPEC+ members return to the negotiating table to correct the current oversupplied conditions. Only encouraging news is coming from China where spread of viruses checked and economic activity picking up. However, if the Saudi and Russian governments can come together and end this price war, it’s very likely that the market could bounce significantly.

INTERNATIONAL COMMODITY PRICES

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News Flows of last week