WISE MNEY

Balkrishna Industries Limited (BALKRISHIND)

Tata Global Beverages Limited (TATAGLOBAL)

WEEKLY VIEW OF THE MARKET

After testing record highs in November series, Nifty indices begin December series with negative note as traders lock profits at higher levels. However, on weekly basis both the indices nifty and banknifty ended on a positive note with gains of more than 1% and 2.5% respectively. On derivative front, call writers were seen adding open interest at 12100 strikes, which may act as crucial hurdle for the index moving forward. On the downside, 12000 & 11950 should act as immediate support levels. From technical front, Indian markets currently maintaining their uptrend and seen trading in a rising channel with formation of higher highs and higher lows on daily and weekly charts. However, secondary oscillators suggest that we might witness some consolidation at higher levels after last week sharp upside. Never the less some stock specific action would remain on radar with sector specific moves. The Implied Volatility (IV) of calls closed at 12.19% while that for put options closed at 13.15%. The Nifty VIX for the week closed at 13.99% and is expected to remain volatile. PCR OI for the week closed at 1.27. For coming week, we expect that the consolidation in index at higher levels is likely to happen in coming sessions, and any dip into the prices should be use to create fresh longs as broader trend is still intact in favor of bulls. On a higher side 12100 in Nifty can act as immediate resistance level and any decisive move above that should trigger follow up buying which can Nifty towards new record highs.

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 (Dec) is hovering near its yearly low of 5560 & this bearish trend is likely to get extended towards 5400 levels, due to weak fundamentals of excess poor quality supplies on the spot markets against subdued demand. It is reported that the turmeric farmers are not getting remunerative price as the traders are not coming forward to purchase turmeric citing low quality. The producers are not even being able to preserve their turmeric produce in godowns because the quality of produce would start declining further as worms begin to eat it. On the spot markets these days, only medium and poor quality turmeric are arriving for sale. Jeera futures (Dec) is expected to consolidate & trade with an upside bias in the range of 15800-16700 levels. The factor of slower pace of sowing in the ongoing 2019-20 (Oct-Sep) season may add gains to the counter. The acreage in Gujarat, was at 59,710 ha as on Nov 25, compared with 1,22,249 ha in the corresponding period last year, data from the state farm department showed. Dhaniya futures (Dec) may trade sideways to down in the range of 6500-6900 levels. The sowing has picked up in Gujarat, and sluggish demand will also weigh on the prices. Coriander acreage in Gujarat, the second-largest producer, was at 9,623 ha as on Nov 25, compared with 7,602 ha in the corresponding period last year, data from the state farm department showed. Cardamom futures (Dec) is expected to trade with an upside bias in the range of 2750-3000 levels. The farmers have almost harvested their last round of stocks in the season and this will have an effect on arrivals.

BULLIONS

Bullion counter may trade with mixed bias as uncertainty regarding initial trade deal between US and China and geopolitical tensions to keep investors jittery. Gold may trade in a wider range of 37500-38200 whereas on the other hand silver may recover towards 45000 while taking support near 43800. December being a crucial month we will be getting more clarity on the tentative meeting that will be held between US and China and UK elections that is scheduled on 12th December. Also boosting risk appetite was robust U.S. economic data, which assured investors of the health of the country's economy and bringing justice to the Fed Governor positive statements. U.S. economic growth picked up slightly in the third quarter and weekly jobless claims also declined, while core capital goods ordered posted their biggest gain in nine months. U.S. President Donald Trump last week signed into law congressional legislation backing protesters in Hong Kong, prompting Beijing to warn of “firm counter measures”. Gold, considered a safe store of value during economic or political uncertainties, has gained more than 13% this year, mainly due to the tariff dispute. Recently Fed governor Powell mentioned that monetary policy is in a good place which indicates that there is no possibility of a rate cut in the last policy meeting for this year scheduled this month in December. Gold holdings with SDPR ETF, the world's biggest gold-backed fund, were steady at 896.47 tonnes. Gold has been stuck in the $1450-1480/ounce and may continue in this range unless we get more clarity on US-China trade issue and Fed’s monetary policy.

OIL AND OILSEEDS

Soybean futures (Dec) may continue to face resistance near 4120-4150 levels as the demand side is weak. It is being estimated that India’s soyameal exports for the oil year 2019-20, starting October, may see a sharp decline at 10 lakh tonnes, a sharp decline from the previous year’s 21.79 lakh tonnes. Indian soyameal is expensive in the world market. In addition to a lower crop, the lack of clarity in continuation of the incentive under the MEIS scheme is hurting export order bookings. Mustard futures (Dec) will possibly trade sideways to up in the range of 4250-4370 levels. The market participants are cautious & closely watching the sowing progress in the major growing regions. This season sowing has been delayed & the latest statistic show that all India as on 22nd November 50.71 lakh hectares has been sown as compared to 53.62 lakh hectares. The deficit in sowing in seen increasing week on week based on the data finding that it was -2.11% during mid of this month, but now it is widened to -5.43%. CPO futures (Dec) would probably make a new life time high on the national bourse as it has the potential to test 680-690 levels. While, soy oil futures (Dec) is also expected to trade on a bullish note towards 825-830, if crosses the previous high of 818.20 levels. There are talks in the market that the government is considering putting restrictions on the import of all kinds of refined edible oils while continuing to keep crude oils under the free category. The need to amend the existing trade policy has arisen as the duty on both crude and refined palm oil is going to be lowered from January 1, 2020.

ENERGY COMPLEX

Crude oil prices may remain on sideways path as participants have now shifted their focus on this week’s meeting on 5th and 6th December OPEC and allies including Russia, a group known as OPEC+, which have been withholding production to support prices. It is expected that OPEC+ to roll over its current production-cut deal, which is set to expire at the end of March, by three to six months. Meanwhile Russian oil companies proposed not to change their output quotas as part of the global deal until the end of March, putting pressure on OPEC+ to avoid any major policy change. They also offered to exclude production of gas condensate, light oil, from the output quotas as Russia has been struggling to meet its supply-reduction targets in recent months. Easing supply concerns, Libya's National Oil Corp said facilities at the 70,000-bpd El Feel oilfield had suffered only minor damage in fighting over the past two days, allowing production to restart. On MCX, Crude oil may trade with mixed path as it can take support at 4100 while facing resistance near 4300. The downside pressure can persist in natural gas counter as prices can dip lower towards 170 while facing resistance near 195. Not only are the weather patterns changing in US but the country is also split with winter storms on the western United States and milder temperatures elsewhere. Earlier the weather models were supportive with rising expectations for a cold December but now the models shifted to milder before trending warmer.

OTHER COMMODITIES

Cotton futures (Dec) may witness short covering towards 19500-19700. The cotton prices are ruling firm at major markets in Maharashtra and Karnataka, while remained steady in Gujarat, Madhya Pradesh and Andhra Pradesh supported by procurement by Government agency. The Cotton Corporation of India (CCI) has purchased 1.2 million bales or about one per cent of total cotton arrivals in the ongoing season that started in October. In the international market, ICE cotton futures may trade sideways in the range of 64-66 cents per pound. The investors are waiting for further developments on trade negotiations between the United States and China. The United States and China are close to agreement on the first phase of a trade deal, U.S. President Donald Trump said, after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues. Expect prices to stay range bound, but could see a spike on a trade deal announcement. Chana futures (Dec) may witness correction towards 4300- 4265 levels. The consumer affairs ministry has recommended removal of quantitative restrictions on import of pulses to preempt any price rise because of low production. Also, it is reported that the government is likely to extend the deadline for importing tur to Dec 31. Over the last few months, the government has received several representations for extension of the date of import of pulses. Guar seed futures (Dec) may trade with a downside bias in the range of 4000-4190, while guar gum futures (Dec) may break 7400 & plunge further towards 7200 levels. The arrivals are expected to catch pace from the non-irrigated belts of Barmer, Jaisalmer, etc.

BASE METALS

Base metal counter may trade with subdued path. PMI numbers from China and US due this week are likely to show activity shrank for a seventh consecutive month in November. However, profits at China’s industrial firms shrank at their fastest pace in eight months in October. Copper may trade sideways to downside bias and it can test 425 levels while taking resistance near 445 levels. Combined copper inventories in LME and ShFE warehouses, at around 350,000 tonnes, are at typical levels for this time of year. But stockpiles in Chinese bonded warehouses, at 243,800 tonnes, are down from near 400,000 tonnes a year ago and the lowest since at least 2013. Meanwhile, lead may remain sideways as it can move in the range of 150-158 levels. Zinc may remain subdued as it can test 180 levels while facing resistance near 192 levels. Nickel prices can move with weaker path and may dip lower towards 1000 levels while taking resistance near 1080 levels. Nickel has come under pressure from worries about demand from stainless steel mills, mostly located in China, which account for roughly two thirds of consumption estimated at about 2.4 million tonnes this year. Historically low inventories of nickel, at less than 70,000 tonnes, and high cancelled warrants at nearly 34% are expected to support prices. Aluminium prices can further witness bounce back as It can 138 levels while taking support 128 levels. Aluminium has been gaining strength as the Cash-3M spread stood at $US11 a tonne, around highs of the year.

TREND SHEET

TECHNICAL RECOMMENDATIONS

COPPER MCX (DEC) contract closed at Rs. 433.90 on 28th Nov’19. The contract made its high of Rs. 452.30 on 14th Oct’19 and a low of Rs.432.05 on 26th Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 436.67.On the daily chart, the commodity has Relative Strength Index (14-day) value of 37.05.

One can sell around Rs. 438 for a target of Rs.425 with the stop loss of Rs. 445.

CRUDE OIL MCX (DEC) contract closed at Rs. 4178 on 28th Nov’19. The contract made its high of Rs. 4222 on 22nd Nov’19 and a low of Rs. 3696 on 3rd Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4104.06 On the daily chart, the commodity has Relative Strength Index (14-day) value of 58.07.

One can buy above Rs.4220 for a target of Rs. 4500 with the stop loss of Rs. 4100.

JEERA NCDEX (DEC)contract was closed at Rs. 16260 on 29th Nov’19. The contract made its high of Rs. 17155 on 04th Nov’19 and a low of Rs. 15840 on 15th Nov’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 16277 on the daily chart, the commodity has Relative Strength Index (14-day) value of 48.98.

One can sell at Rs. 16600 for a target of Rs. 15500 with the stop loss of Rs 17100.

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NEWS DIGEST

• The PMO has asked agriculture and food and consumer affairs ministries to start monitoring price sensitive crops right from the sowing stage for timely price interventions.

• The CCEA has accorded its approval for mandatory packaging of foodgrains and sugar in jute material for 2019-20.

• The government has procured 305,420 tn coarse cereals so far in 2019-20 (Oct-Sep), compared with 181,450 tn in the year ago period.

• NCDEX has revised the Tick size and Lot Size of COTTON SEED OIL CAKE, GUARSEED, SOYABEAN & SOY OIL with effect from December 02, 2019 in all the running contracts and yet to be launched futures contracts.

• The Jeera contract scheduled to expire on December 20, 2019 shall now expire on December 13, 2019. Further, the tender period shall now commence from, December 09, 2019.

• The Cotton Advisory Board estimated India's 2019-20 (Oct-Sep) cotton production to rise by 9.1% to 36 mln bales (1 bale = 170 kg) due to an increase in acreage this year,

• China has just given the long-awaited green light to the trading of new commodity options including iron ore and rapeseed.

• China has brought forward 1 trillion yuan ($142 billion) of the 2020 local government special bonds quota to this year as it seeks to avert a sharper economic slowdown.

• Profits of China's industrial firms fell 9.9% in October from a year earlier to 427.56 billion yuan ($60.74 billion), compared with a 5.3% decline in September.

WEEKLY COMMENTARY

In the week gone by, bullion counter remained in tight range on mixed fundamentals. Market participants are taking cues from the US President’s comments on the trade deal being close to signing quite sincerely but at the same time an uptick in the dollar is weighing on the precious metal pack. US President’s latest signing of congressional legislation backing protesters in Hong Kong has made Beijing unhappy. Chinese officials also commented that this is their internal matter and no third party interference is required on the same and market participants are hoping no further delay will happen due to this added friction between US and China. Gold took support near 37500 while silver took support near 43800-44000. Base metals after a brief rally witnesses some profit taking as uncertainty between US and China on trade war kept the metals pack volatile. Copper dipped lower below 430 levels on uncertainty regarding US trade deal. US legislation requires the State Department to certify that Hong Kong retains enough autonomy to justify favourable US trading terms that have helped it to maintain its position as a world financial centre. It doesn't look as if anything is going to be agreed any time soon. Nickel also traded lower and broke the key level of 1050. While Natural gas fell sharply lower as it went below 180 on the back of forecasts for warmer-than-normal temperatures in U.S. Crude oil traded sideways path. Crude oil remained under pressure as the official data showed that US crude and gasoline stocks rose and President Donald Trump signed into law a bill backing protesters in Hong Kong, fuelling tensions with China. Crude stockpiles in the United States swelled by 1.6 million barrels as production rose to a record 12.9 million barrels per day (bpd) and refinery runs slowed, the Energy Information Administration stated.

Cardamom prices held steady thanks to active demand from exporters in gulf countries. The exhaustion of stock following the end of the season in Guatemala has forced overseas buyers to look at Indian variety to meet their requirements. While, jeera also bounced back from its lows as the sowing pace has slowed down in major growing regions. The oilseeds counters maintained an upside bias owing to market talks that the Government is thinking to restrict the edible oil imports. While, coriander prices plunged as the sowing increase in the major producing areas. Chana also witnessed weakness due to dull demand from millers amid lesser consumption of its by-products.

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 $)

Gold Buying by Central Banks........Amazing love affairs

Gold has been a currency for thousands of years. There are no mentions of the dollar, euro, yen, pound, or any of the other currencies in any manuscript or historical sculpture, but gold and silver are prominently featured.

Gold is the ultimate hard currency. Gold is a ‘must have’ financial asset indeed’. Not only investors, but also nation’s central banks try to hoard gold in times of crisis as gold is playing a new role in the changing international financial environment.

Love affair of global central banks with gold is amazing

Central banks across the world are aggressively adding gold to their foreign exchange (forex) reserves. According to data from the World Gold Council (WGC), the net gold purchases by central banks was 651.5 tons in 2018, the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971. Notably, the centralbanks buying have also become geographically more diverse as several new countries adding gold for the first time in decades.

In 2019, the big players have been Russia, Turkey, and Poland

• According to the World Gold Council, a dozen central banks increased their gold holdings by at least one ton through the first eight months of 2019.

• Russia and China have been the leading buyers despite of significant gold producers. Russia added another 11.3 tons to its hoard in August and increased its gold holdings by 117.4 tons this year alone. The Russian Central Bank's gold reserves topped $100 billion in September.

• China bought another 5.9 tons in August, the ninth straight month of gold purchases for the People's Bank of China and increased its gold holdings by nearly 90 tons this year.

• The January to June period saw the highest levels of central bank purchases since 2010. Poland was the top buyer, with reserves growing 77 percent to 100 tonnes.

• Qatar increased its gold reserves by 11 tons in 2019.

• In August, two central banks sold gold amounts greater than one ton. Kazakhstan shrunk reserves by 2.6 tons. This was a reverse in course. The Kazakh central bank has been aggressively buying gold.

• Uzbekistan sold another 2.2 tons of gold in August after dumping 22.4 tons in July.

Why Central-Bank Gold Buying Picked Up

• Gold is a 100 percent guarantee from legal and geopolitical risks. Preserving its historical value, gold continues to be one of the safest assets in the world.

• The gold enhance the long-term stability of countries reserves and strengthen market confidence even under normal market circumstances.

• A report from the Dutch central bank “If the entire system collapses, the gold stock provides a collateral to start over. Gold gives confidence in the power of the central bank’s balance sheet. That gives a safe feeling.”

• Considering the uncertainty like volatility or a correction in the stock market as well as dollar, central bankers are adding gold to their reserves as a hedge as they don’t want to be caught unawares like they were in 2008

• Some Countries want to reduce the amount of U.S. dollar from its forex reserve portfolio and just looking for ways to diversify of reserves as they desire to move from dollar dependent global financial system to multi-polar reserve system. In the case of Russia, officials simply want to move away from the U.S. dollar. Russia has recently sold the majority of its holdings of U.S. Treasuries, and the Bank of Russia said it will continue the policy of de-dollarization.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week