Power Grid Corporation of India Limited (POWERGRID)

Titan Company Limited (TITAN)

WEEKLY VIEW OF THE MARKET

Nifty dragged down due to liquidation of long positions and profit booking. Recent data has turned cautious and is indicating probability of further profit booking. Call writing and put unwinding were seen in the recent trading session. Call writers were active in 11900, 11800 strike calls indicating limited upside. The levels of 11700 will remain crucial for this week as indicated by option open interest concentration. If Nifty falls below the 11700 mark, it could correct to 11600 levels on the back of further profit booking. On bounce the index will face strong resistance at 11800-11850 levels. The options open interest concentration is at the 11800-strike calls with the highest open interest of above 32 lakh shares; among put options, the 11700-strike taking the total open interest to 34 lakh shares, with the highest open interest among put options. The Implied Volatility (IV) of calls closed at 12.84% while that for put options closed at 13.00%. The Nifty VIX for the week closed at 14.00% and is expected to remain sideways. The PCR OI for the week closed at 1.43 which indicates put writing. Next support is placed around 11700-11650 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

During the past week, turmeric futures (July) nose-dived to a month low of 6304, taking negative cues from the spot markets. Currently, the sentiments are bearish as sowing of the spice is in progress in Sangli, Maharashtra, as well as in Telangana. The latest reports cites that in Telangana only 25% of sowing has been done till now by those who have water facility and farmers are waiting for monsoon to pick pace. Favorable conditions for the advance of monsoon are also seen in remaining parts of Tamil Nadu and northeast India over the next two-three days. Based on the above fundamentals, it is expected that the counter may continue to trade with a bearish & may test 6200-6100 levels, if breaks the support near 6300 levels. Jeera futures (July) is likely to consolidate in the range of 17100-17550 levels, with upside getting capped. The reason being its exports have fallen due to sluggish demand from China and Bangladesh. Since the beginning of the year, cardamom futures have witnessed a stellar bull-run & have posted a gain of 101% by reaching to an all-time high of 2889 from the lows of 1441. The various reasons such as absence of carry-over stocks, last year’s production loss and anticipation of a delayed production this year is being attributed to this rally. The prices of cardamom reached an all-time high of Rs.5,000 a kg at the Spices Board auctions. The 7-mm and 8-mm varieties were sold at 4,000 rupees per kg and 3,500 rupees, respectively. Taking these positive cues, the July contract may continue to head towards 3200 levels on the back of harvesting getting delayed by two months due to inadequate summer rains.

BULLIONS

Bullion counter may continue its sharp upside momentum as dovish stance by the Fed in last week meeting and geopolitical tensional in middle east continue to assist the prices higher. U.S. Federal Reserve indicated that it could cut interest rates as early as July, prompting a sharp fall in the dollar and U.S. Treasury yields. The Fed stated that it was ready to battle growing global and domestic economic risks with interest rate cuts beginning as early as next month, as it took stock of rising trade tensions and growing concerns about weak inflation. One interesting fact was that the all-time favorite word “patient” was somewhere missing in the statements; Fed sees a lot of uncertainties in the market. U.S. benchmark 10-year Treasury yields dropped below 2% for the first time in more than 2-1/2 years, while other maturities fell to multi-year lows as well, a day after the Fed flagged interest rate cuts as early as next month. Gold can further move higher towards 35500 while taking support near 33800 while silver can test 40000 while taking support near 37800. Meanwhile Russia’s gold reserves stood at 70.4 million troy ounces as of the start of June. Central banks made the headlines last week, by setting the dovish mood in the market. ECB governor Draghi stated that if inflation does not keep up with expectations we can see a rate cut. BOE also decided to maintain status quo and mentioned that if required changes in the rates can be made following Brexit issue around the corner.

OIL AND OILSEEDS

The correction being witnessed in soybean futures (July) may take a pause taking support near 3550 levels. The market participants are cautiously watching the movement of monsoon & its impact on the progress of sowing in the major growing areas. According to Reuters, key growing areas for soybean have seen rainfall significantly below average for monsoon season. The planting of this summer sown oilseed crop has been delayed by at least two weeks as the states of Maharashtra and Madhya Pradesh have observed the lowestrainfall levels this monsoon. Days ahead, if rainfall delays further, it could change sowing patterns and could hurt crop yields as well. On CBOT, U.S soybean futures (July) is forecasted to be on course to test $9.30 a bushel on the higher side.Going ahead, the traders would remain focused on the wet weather and the potential for soybean plantings to decline. Moreover, attentions would be on G20 summit as U.S. President Donald Trump and Chinese counterpart Xi Jinping are expected to meet there. Mustard futures (July) is expected to witness an upside momentum towards 3960-3990 taking support near 3890 levels. The spot markets are witnessing a sharp decline in mandi arrivals in all its major producing states i.e. Rajasthan, Uttar Pradesh and Madhya Pradesh. Soy oil futures (July) will probably rise further to test 750-755 if breaches the resistance near 745 levels. While, CPO futures (July) is likely to take support near 512 & move higher towards 535 levels. The sentiments of the domestic edible oil prices are firm owing to firmness in the soybean oil on CBOT as well as stronger energy markets, which could boost demand for vegetable oils from biodiesel producers.

ENERGY COMPLEX

Crude oil prices may witness further recovery on tensions in the Middle East after Iran shot down a U.S. military drone and on hopes for a drop in U.S. interest rates that may stimulate global growth. U.S. President Donald Trump played down the destruction of the drone; tensions remain high after the latest incident in the Gulf, which followed tanker attacks that raised concerns about crucial oil supplies being disrupted. Tension has been rising in the Middle East, home to over 20% of the world’s oil output, after attacks on two tankers near the Strait of Hormuz, a chokepoint for oil supplies. Washington blamed Tehran for the tanker attacks. Iran denied any role. The demand-side picture has also improved, with expectations that the U.S. Federal Reserve will cut interest rates at its next meeting and with plans by Beijing and Washington to resume talks to resolve a trade war that has hit economic growth prospects. Crude oil may take support near 3800 and can recover towards 4150 in near term. The meeting of OPEC and Non-OPEC members was scheduled on 25-26 June 2018 at Vienna, Austria, which is rescheduled on 1-2 July as per OPEC sources. Natural gas may remain under selling pressure on unfavorable weather as it can test 140 while facing resistance near 165. The weather has remained milder than normal for this time of year which has weighed on cooling demand. This comes as production continues to rise and accelerate according to the EIA.

OTHER COMMODITIES

Since mid-April, cotton futures (July) is giving a lower closing week-on week due to the bearish trend of ICE cotton futures owing to ongoing failure of talks between U.S & China, raising concerns of an elevated trade war. Last week, cotton on the Intercontinental Exchange hit the lowest price since June 2016 on the front month continuation chart due to dearth in export demand for U.S cotton. Going ahead, cotton on MCX may witness a correction towards 21300- 21100, while on international market may touch 60 cents per pound if the window closes without reaching a deal when US President Donald Trump and Chinese President Xi Jinping meet at the G20 summit this week in Osaka, Japan. The trend of castor seed futures (July) would probably continue to remain bearish & it may descend towards 5175-5135 levels. The overall market sentiments are pessimistic due to tepid demand for castor oil from overseas buyers, mainly China. On the supply side, the market participants would trade with cautiousness & closely watch the impact of monsoon on the sowing progress. The primarily estimates show thatthis season the output may be 9.50- 11.50 lakh tons & with a carry-over stock of 2.49-3.80 lakh tons from last year, the total supply may amount to 12-15 lakh tons. Meanwhile, the estimated demand is expected to be 15-16 lakh tons.The rally of cocud futures (July) seems to be getting tired & hence we may see profit booking from higherlevels towards 2750.At this juncture, the volumes as well as open interests are declining which is indicating that long positions have started unwinding. Moreover, correction in cotton prices may add to the bearish sentiments.

BASE METALS

In base metal counter, copper and Nickel may witness more gains on supply concerns while zinc, lead and aluminum may trade sideways. Additionally one more support for the base metals is that, US-China trade talks which were hanging in the air are set to resume later in this month. Copper may further recover lower towards 430 levels while taking support near 410. Unions at Chile's Chuquicamata mine called on members to reject a sweetened contract offer from Codelco, the world's largest copper producer, amid a nearly weeklong strike that has halved output from the sprawling copper mine. Meanwhile Lead may trade sideways as it can face resistance near 160 levels while taking support near 148 levels. Across January-April of this year, lead mine production climbed up by 0.7% to 1,544,000 tonnes from 1,534,000 tonnes over the same period in 2018. Zinc may trade with sideways bias as it can take support near 198 levels while taking resistance near 210 levels. Nickel can further recover towards 930 while taking support near 865 amid worries that floods in Indonesia could disrupt supplies of nickel. In the first four months of the year, the global nickel deficit narrowed to 27,200 tonnes from a deficit of 59,400 tonnes in the same period of 2018. Widespread flooding in Indonesia’s nickel hub on the island of Sulawesi has halted some mining operations in Indonesia. Aluminium may take 148 levels while taking support near 140 levels. Global primary aluminium output rose to 5.438 million tonnes in May from a revised 5.222 million tonnes in April.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDE OIL MCX (JUL) contract closed at Rs. 3977 on 20th Jun’19. The contract made its high of Rs. 4694 on 24th Apr’19 and a low of Rs.3540 on 06th May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 3838.38.On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.44.

One can buy around Rs. 3930 for a target of Rs.4180 with the stop loss of Rs. 3800

NICKEL MCX (JUN) contract closed at Rs. 901.30 on 20th Jun’19. The contract made its high of Rs. 960.00 on 04th Apr’19 and a low of Rs. 844.00 on 06th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 870.32 On the daily chart, the commodity has Relative Strength Index (14-day) value of 62.30.

One can buy at Rs. 885 for a target of Rs. 915 with the stop loss of Rs. 870.

JEERA NCDEX (JULY) contract was closed at Rs. 17225 on 20th Jun’19. The contract made its high of Rs. 18195 on 16th May’19 and a low of Rs. 17160 on 20th Jun’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 17406 on the daily chart, the commodity has Relative Strength Index (14-day) value of 49.72.

One can sell at Rs. 17550 for a target of Rs. 17000 with the stop loss of Rs 17800.

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NEWS DIGEST

• SEBI has allowed exchanges to launch futures trading in commodity indices.

• BSE will launch Turmeric futures contract on 28th June, 2019.

• The government plans to spend 25 trillion rupees in "the coming years" to boost agricultural productivity, President Ram Nath Kovind said, while addressing a joint sitting of Parliament.

• Gulf OPEC producers will keep their July oil production within their OPEC target.

• Steelmakers in Europe have been hit by falling demand and rising supply as auto-sector consumption has fallen and U.S. steel tariffs have disrupted shipments.

• US Initial claims for state unemployment benefits dropped 6,000 to a seasonally adjusted 216,000 for the week ended June 15.

• OPEC's share of global production fell to just 41.5% last year, the lowest since 2003.

• The government has drafted a contingency plan for 2019- 20 (Jul-Jun) Kharif crops as the delay in monsoon rains are taking a toll on sowing.

• The Cotton Advisory Board made a sharp 7% downward revision in estimate for India's output in 2018-19 (OctSep) to 33.7 million bales (1 bale = 170 kg) from 36.1 million bales it forecast in its first estimate in November.

WEEKLY COMMENTARY

Some price movements were noticed in commodities last week, which sent CRB higher, above the mark of 185 once again. A decline in benchmark 10-year Treasury yields below 2% and a rise in gold above heavy technical resistance to a near six-year high has sent dollar index lower. Oil prices saw solid rebound from lower side, with Brent crude heading for its first weekly gain in five weeks on tensions in the Middle East after Iran shot down a U.S. military drone and on hopes for a drop in U.S. interest rates that may stimulate global growth. While U.S. President Donald Trump played down the destruction of the drone, tensions remain high after the latest incident in the Gulf, which followed tanker attacks last week that raised concerns about crucial oil supplies being disrupted. Crude in MCX traded near 4000 levels. Natural-gas prices declined after a larger-than-expected weekly climb in U.S. supplies. The U.S. Energy Information Administration reported Thursday that domestic supplies of natural gas rose by 115 billion cubic feet for the week ended June 14. Gold futures topped $1,400 an ounce for the first time since 2013, riding bullish momentum after major central banks projected more dovish stances this week and geopolitical tensions rose, while silver prices hit a five-week high. Gold has been trading on a positive note for the last four weeks in MCX on growing geopolitical concerns and weak economic releases from U.S. and China that lifted its safe haven appeal. Gold is also seeing safe-haven demand on reports Iran’s military shot down a U.S. military drone in Iranian territory. In MCX, it surpassed the level of 34400 and silver crossed 38400. Almost all base metals rose in the week gone by supported by weaker dollar. Copper prices also rose owing to supply disruptions as a labour strike halved output at one of the world's largest mines in Chile and Glencore's Zambian smelter shut for refurbishment. Nickel prices witnessed some buying on concerns over supply disruptions in Indonesia -- the world’s largest nickel exporter and producer.

In spices, cardamom is still on fire on lower production amid small carry forward. Dhaniya and turmeric saw further decline, especially turmeric. In the initial stage it is being estimated that acreage of turmeric is expected to rise by 25% on year in 2019-20 (Jul-Jun). Cotton saw some strength despite fall in international market. Import of cotton in the 2018-2019 cotton season is expected to be 22 lakh bales, almost seven lakh bales higher compared with the previous season.

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 $)

TURMERIC FUTURES ON BSE PLATFORM

Now after getting approval from SEBI, BSE is scheduled to launch futures trading in turmeric on June 28. The exchange has received the SEBI approval to launch futures contract in castor seed and chana as well. We all know that BSE is the latest entrant into the commodity derivatives trading. Earlier BSE had launched futures trade in cotton and guar seed/gum. Riding on the exchange’s superior technology and transparent processing mechanism, BSE would strive to develop a benchmark price in the agriculture commodity space over a period of time and help farmers reap the right price for their produce. It is significant that in the past 3-4 months, BSE’s derivative trade volumes in agri commodities are higher than its non-agri segment.

Global & Domestic scenario of Rice

The contract for the trade has been designed in consultation with traders and farmer associations to ensure that it is relevant to the market and does not remain just another product. The exchange has waived transaction fee till September and expects farmers to use the opportunity to hedge theirrisk on the exchange platform.

Contract Specifications of Turmeric Futures

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week