2019: Issue 732, Week: 20th – 24th April

A Weekly Update from SMC (For private circulation only)






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This Research Report is for the personal information of the authorized recipient and doesn't construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of this Research Report. The Research Report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this Research Report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that SMC its affiliates, Research Analyst, officers, directors, and employees, including persons involved in the preparation or issuance if this Research Report: (a) from time to time, may have long or short positions in, and buy or sell the securities thereof, of the subject company(ies) mentioned here in; or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company(ies) discussed herein or may perform or seek to perform investment banking services for such company(ies) or act as advisor or lender/borrower to such subject company(ies); or (c) may have any other potential conflict of interest with respect to any recommendation and related information and opinions.

All disputes shall be subject to the exclusive jurisdiction of Delhi High court




11 - 18


India lockdown! But this time - it’s right time

Mr. Dinesh Joshi - Sr. Research Analyst - Equity - Fundamental


COVID–19: Changing the behaviour and landscape for FMCG industry

Mrs. Seema Srivastva - Sr. Research Analyst - Equity - Fundamental


19 - 21


VIX Leading Indicator

Mr. Dhirender Bisht - Sr. Research Analyst, Derivative


22 - 35


Not only human being, crude oil is also suffering from Covid-19

Ms. Vandana Bharti - AVP, Commodities Research


Natural gas… “Ample Supply is Keeping Lid on Prices”

Mr. Sandeep Joon - Sr. Research Analyst, Commodities


All that Glitters is Gold

Mr. Ravinder Kumar - Sr. Research Analyst - Commodities


COVID-19: A boon or a bane for the agriculture worldwide

Mr. Subhranil Dey - Sr. Research Analyst - Commodities


Gold-Silver Ratio: The breakout is a game-changer

Mr. Shiva Nand Upadhyay - Sr. Research Associate - Commodities


36 - 37


Fiscal Deficit – The Byzantine Era of supply side economics

Mr. Arnob Biswas - Sr. Research Analyst - Currency- Fundamental










From the desk of editor

Dear Readers,

Heartiest congratulation that your Wise Money is now celebrating 14th anniversary and am sure this would not have been possible without your love and support. It is you all who have made our Newsletter the best possible. When something good starts its charismatic to know how quickly time runs away. On this important day, I take the opportunity to thank the management, all the team members, Brand team and most importantly our readers. In this issue, apart from the regular coverage, we have included several interesting articles and write-ups.

The Covid-19 has spread and spreading around the world exponentially. The testimony to the same are rising numbers of infections together with weak economic data like rising record unemployment numbers in U.S. and worst economic contraction at a rate of 6.8 percent in China and plunge in retail spending. While the short term implications are in front of us but the long term implications and its magnitude would hinge upon on how long it will take to solve the heath crisis. Governments, healthcare providers, and businesses are introducing drastic measures to slow down the spreading of the virus. The pandemic has given a blow to the global economy as it has come to a grinding halt and forcing investors to re-price equities for lower earnings growth. Stimulus measures announced so far by various countries are even higher than announced at the time of Great Financial Crisis – 2008. The central banks over the globe axed interest rates and opened up credit lines.

Governments world over gave stimulus to for the vulnerable sectors. In India large focus seen is to cushion the impact as government announced social support measures amounting to Rs 1.7 lac crore and 15,000 crore to strengthen healthcare systems. RBI after announcing big rate cut and infusing liquidity equivalent to 3.2 percent of GDP came out with more measures for easier asset quality norms and loan moratorium measures so that weak NBFC’s, MFI’s and MSME’s remain afloat as a result of lock-down.

Governments world over are trying to make balance between lives and livelihoods. U.S. president has already hinted on these lines and in India some more activities related to manufacturing, construction and movement of goods will start from 20th April. It is believed that some sectors have seen impact as a result of demand because of lock-down and partially opening up of the economy will alleviate concerns.

Although the government has announced various relief measures to save the economy, investors are still expecting a second stimulus package from the government which might be focused on MSMEs which is the worst hit. The reduction in international crude oil prices, if sustained, can improve India’s terms of trade. However,domesticgrowthwoulddependonthespeedwithwhichtheoutbreakis contained,andthepaceatwhicheconomicactivityreturnstonormalcy.

The lock down has crippled many industries like Hospitality, restaurants, travel & tourism, oil & gas, metals and car manufacturers which may take time to return to normal even if economy gets re-start partially as a result of fear of spread of disease. However, the key beneficiaries would be those with stable businesses and outlooks such as staples, agriculture, FMCGs, healthcare, pharma, chemicals and E-commerce.

Going forward, Volatility is expected to remain high till we get credible solution to the pandemic thereby meaning medicine or vaccine. So, investors should be investing in businesses that are not or moderately leveraged and has the ability to withstand the shock that is being experienced in the economy. Gradual opening up of activity in the economy along with the policy responses that are in the offing to support growth and the sectors that have affected the most would throw up new ideas for investments.

On the commodity market front, after facing resistance near 130-131, Commodity Indices CRB, took a downside and closed near 120. Further fall in heavyweight of CRB, crude again took a downside despite production cut decision by OPEC+. Market ignored the production cut news as it has many holes. Rather paid attention to Saudi Arabia decision to defer the payment of crude buyer for three months, record high inventories in US, revised GDP numbers by IMF and many more. Now some rebound is expected though the upside is capped near Rs 1750 levels and support appears near Rs1300 levels. Record low in INR, which is few points away from 77 levels added huge premium in MCX gold and it broke the level of Rs 47000 and the upside should continue upto Rs47700. If it takes some correction near Rs45000, it should be a good buying zone. Industrial metals recently showed some gradual but steady upside move, nevertheless this rally is supply driven as some mine closure news is stimulating buying rather demand. Agri commodities may continue to trade with some upside move as the Government allowed the agricultural activities during the lockdown 2. Procurement is already on and it is good for oil seeds, pulses and wheat etc. Euro-Zone ZEW Survey, CPI of UK, Canada etc are some important triggers for the week.

I wish you all stay healthy and safe. Happy Investing!!!

(Saurabh Jain)



application of new a n d e m e r g i n g technologies which address consumer n e e d s t h r o u g h Automation,Artificial I n t e l l i g e n c e , Machine Learning a n d P r e d i c t i v e Analysis. FinTechs i n c r e a s i n g l y r e c o g n i z e t h e significant costs of customer acquisition in financial services. As committed, we have excelled at s u p p o r t i n g o u r clients in meeting t h e i r m o s t d e m a n d i n g strategic needs,

How would you analyse the current pandemic of Covid 19& its impact on Indian economy & capital market ?

With the spread of novel coronavirus (COVID-19) from a regional crisis in China’s Hubei province to a global pandemic, the world is facing humanity’s biggest crisis since World War II. Almost every country has been affected by the devastating Coronavirus disease (COVID-19). In the last few months, Corona’s epicentre has been shifted from China to Europe to the United States. Over 2.2 million people had been affected by COVID-19 and many died worldwide. Indirectly, billions of people have been suffering from the impact of the global pandemic of COVID19 making it a global challenge.

Economic recovery and earnings growth in India are likely to be a bit derailed. There are several channels through which the COVID-19 outbreak may affect Indian economy. The worst hit sectors are aviation, tourism and hospitality where the problem started much before the lockdown. There will be pain for some export oriented industries as orders may be scarce and delayed by buyers abroad. Construction and real estate sector that was already in trouble will continue to remain depressed with no signs of revival in foreseeable future. Heavy industries sector, comprising of steel, cement and mining, is another area that will possibly be hit in the short-term.

On the flip side, admittedly, India is in a relatively good position to withstanding the hurricane as compared to other emerging markets. The drastic fall in international oil prices augers well for government and will help to keep inflation in check and it will also bridge the fiscal deficit. Nation’s internal consumption will remain buoyant and our huge young population is better placed to see through this Corona pandemic. Interest rates are at all time low which augers well for businesses. Inflation is under control. India is also expected to receive a normal monsoon this season and this may bring some respite to coronavirus-hit economy.

In the wake ofglobalshutdown,developed marketsbenchmark yieldsare at historic lower levels. Hunt of higher yield in emerging markets notably Indiahasadvantageofattractingglobalflowsintoitsfinancialmarket. IMF, initslatestreporttitled‘LatestWorldEconomicOutlookGrowthProjections’ has projected that Indian Economy will be the second fastest growing economy after China in 2021 at 7.4%. Moreover, RBI also expects a sharp V-shaped recovery for India as projected by the IMF in 2021-22. The sectors that will be well placed in the coming months are pharmaceuticals, medical, FMCG and agriculture. The valuations of Indian companies now lookattractive,presentinganattractiveentrypointforlongterminvestors.

How are FinTech initiatives driving financial services innovation? What are thenew Initiatives that SMChas takentoservetheclients inabetter way?

Fintech companies are altering the financial sector right now through the

developing an enduring, dynamic competitive advantage and making impactful improvements in their performance. SMC has introduced Live News for its trading clients using SMC ACE mobile trading interface from Livesquawk, a leading Global News Service provider and also advance Charting tool fromChartIQ. SMC has also introduced online Mutual Fund Investmentfacility throughSMC ACE&SMCeasyinvestforbothTradingand Non-Tradingclients. Keepingdigital initiativeof Govt.ofIndia, SMC hasalso launchedOnline IPO using UPI which caters to both Existing and prospectiveclientsinapaperlessmanner.

We are soon going to introducemore features in SMC ACE very soon - a) Simplified Login feature so that client can use their MPIN/Pattern lock/Finger print for more robust yetsimple to use security feature; b) Subscription based Researchproduct whereclientcansubscribetoResearch whichheactually wants; c) Theme Based Basket for our clients to invest in pre-defined sets of Baskets having selected Scrips based on different industry, sectors and themeslike Electric Vehicle , Weather, Budget etcd) Advance Charts which can be used to buy sell orsetting scrip alertsfrom the chartsitself e) Algo rule engineforretailclients.

Stock SIP is one of the most awaited feature to be introduced in SMC ACE very soon so that our clients can invest in Blue-chip Stocks/ETFs as an SIP (systematic investment plan).

Please walk with us through the new initiatives for business partners

Level of Capital Market penetration and its awareness has been continuously increasing in India. With increasing cake size, competition is also increasing. SMC wants its more than 3000 business partners to be well equipped to encash the opportunities and face the competition. SMC is continuously enhancing its processes as well as different platform which help our business partners in acquiring new business as well as improving their client services. We have emphasised on online account opening through E-KYC and most of the accounts are being sourced through it. We have also provided our business partner exclusive mobile application SMC Easy Go plus which they can use any time anywhere to track their revenue and service clients. We are also imparting Online Training modulesto keep ourbusinesspartnersabreastofnewhappenings.

Few words for Wise Money Team.

Congratulations on the fourteen years of Wise Money. You have set an example that hard work and persistence garner great results. We truly applaud and appreciate the whole team on achieving this milestone. Wise Money is a great value addition to our vision as it educates the investors and provides them with the most accurate knowledge of the market. Again Congratulations on your well-deserved success.



during the first two months of 2020 points to a slightly improved funding environment. To support growth in the sector, RBI has introduced a new l i q u i d i t y r i s k m a n a g e m e n t f r a m e w o r k t o holistically counter future risks in the sector. RBI has also t w e a k e d t h e SARFAESI Act. It seems the sector now stands on a firm footing with the right regulatory

Virus fears trigger shocks waves across global markets, volatility worsens Indian woes? How do you read into that?

Yes, volatility continued to rule the market be it domestic or the global. Actually, markets around the world succumbed as investors’ concern intensified over the rapidly spreading Covid-19 outbreak. Many economies have expanded travel curbs and closed more public facilities, raising the cost of efforts to contain the outbreak. It could be seen that despite central bank efforts to shore up economic growth of their respective economies and to flood with liquidity, markets became more sensitive. Uncertainty remains around the pace of recovery from the coronavirus-led economic slowdown. To compound the global economic uncertainty, an illtimed global crude oil war has begun. Markets will remain choppy as the coronavirus pandemic continues on. The current lock down will impact most economic activities like travelling, consumption, etc. Manufacturing will be impacted due to supply chain disruptions and this in turn will delay capacity additions and capex spending. The market is going through a period of flux and investors need to shift between sectors to make most of it. They need to rebalance from overvalued sectors to undervalued ones and from sectors with bleak prospects to those looking bright. Companies with solid business models are available at discounts. Investors should capitalise on this opportunity. Instead of trying to time the bottom, they should deploy funds and hold for the long-term. And it is believed that the Indian market is out of the overvaluation zone should provide comfort to long-term investors. Hence, investors can look at investing steadily, but carefully.

What are your views on NBFC space?

Non-Banking Finance Companies (NBFCs) have played an important role in the Indian financial system by complementing and competing with banks, and by bringing in efficiency and diversity into financial intermediation. However the sector saw some hiccups in the form of a liquidity crunch when the failure of IL&FS unraveled. The episode of IL&FS incident had led to banks tightened credit flows and liquidity squeeze reduced the pace of acceleration of credit as entities chose to focus on asset-liability management rather than just growing their books. However, now with the joint effort of both central bank and government, India’s shadow banks or NBFCs are slowly recovering. The recent fundraising by a number of NBFIs

provisions in place along with liquidity windows which have allowed NBFCs to raise funds. Moreover, the RBI's recent mega liquidity support will give a breathing space to many players due to coronavirus outbreak. The announcement of allowing the lending institutions such as banks and NBFC companies to provide a 3-month moratorium gives borrowers and lenders breathing space to stabilize from the unexpected financial and psychological jolt out of this pandemic. Going forward, it is expected that NBFCs will see growth, if credit flow doesn't stop and the risk mitigation mechanisms improve.

Entrepreneur plays a vital role in economic development. Optimism and a “can-do” spirit characterizes the youth, while age brings experience and realism. Please walk through it.

Entrepreneurship has the power to fundamentally change the way we live and work. The businesses and products they build can create wealth and foster innovation. The progress sparked by entrepreneurs’ ideas does not simply happen. A tremendous amount of work and a great deal of risk go into every new idea that eventually makes its way into the marketplace and contribute to a growing economy. The economic success of nations worldwide is the result of encouraging and rewarding the entrepreneurial instinct. Yes youth are strikingly more optimistic and today’s youth are creative and they have a lot of ideas to handle and solve difficult situations and problems. To quote the Prime Minster Shri Narendra Modi, a youth is one who works towards his future goals, unmindful of the past. With age comes experience and wisdom; Wisdom requires dealing with change so it works best for you, those around you, and the world in general.

Few words for Wise Money Team.

Cheers to the research team on the successful completion of 14th year of Wise Money. It is a great example of how the combination of an idea, hard work and relentless drive for constant progress paves path for a successful journey. Fourteen years back, the idea of educating our clients with the best industry knowledge perpetuated and today it is a huge success. Hearty congratulations to whole team for achieving this milestone. We wish you continued success and may Wise Money achieve greater heights in years to come.



environment, premiums offered by good corporate fixed deposits over bank deposits are nearly 200 basis points.

Besides, the current health crisis reinforce that having optimum insurance is must that one should have. Many people overlook the need to have life and health insurance while many have sub-optimal than they actually require. This is the time that one should correct the same.

Generally, many investors feel the need but due to time constraints they ignore to do proper planning in the domain of investments viz. equities, debt and insurance. In my opinion one should utilize the current time and pen down the gaps in their financial

Any word of advice to the retail investors about investments and financial instruments.

The world has suddenly become a different place in the last two months, with Coronavirus or Covid-19 taking a host of nations by storm. The recent correction in the market has washed away stability in spite of a slew of liquidity injection measures announced by central banks across the world. Indian market too witnessed the volatility and has fallen from its high. It is expected that Indian markets should respond favourably once the fear and the panic subsides and human and economic activities are restored. So, it is advised to investors to take the opportunity to invest in the market but in a staggered manner through mutual funds.

If an investor has surplus fund to invest then he can also consider corporate fixed deposits with strong ratings which are offering higher interest rates as compared to banks fixed deposits. In current

planning or can take assistance from SMC associates or relationship managers. The current lock-down is not stopping anyone at a time when products like mutual funds, corporate fixed deposits and insurance among others are available on the digital platform.

Few words for Wise Money

Congratulations to Wise Money on its monumental success. The amount of hard work put in this is commendable. We thank the research team for publishing information that is extremely vital for any investor. In an era where information is present everywhere; we thank the team for taking the time to verify and refine the most relevant information and for providing a well versed analysis of the market. It is only because of the hard work that Wise Money has gained the confidence of our readers and has become a routine for many of our clients. Cheers!

What is your advice for millennials and first time investors in present market condition?

The impact of Coronavirus should be seen as a blessing in disguise not only to regular investors but also to first time investors and millennials as it (Covid19) has acted as a catalyst in cooling down the valuations of stocks. It could be seen that in recent market correction, lessons in investing are being absorbed by the millennials, which now aged in their mid-20s to mid 30s. The massive increase in participation from millennials is reflecting their ‘swag’ as investors. Undoubtedly, it is the best time for the millennials or the first time investors to start

their investment activities. I believe one should (at least) invest 25% of their income in stock markets keeping in mind their financial goals. The recent data shows that many new demat account holders are aged between 25 to 35. I firmly believe that once the Covid episode subsides,themarketsentiment willgetboosted. Itisadvisedtoinvestin themarketinsmalltranchesregularly forthelongtermasstockmarkets reward long-term patient investors and owning stocks over the longterm is a sure shot way to success. One should always focus on finding good businesses which have a good runway. Before investing, one shoulddoproperhomeworkandinvestonly inthosecompanies which are escorted with strong balance sheet, growth fundamentals,

business moats and good corporate governance. At this juncture, sectors such as Pharma, FMCG, Healthcare and agriculture are the spacewheremillennialscaninvestforlongterm.

Few Words for Wise Money?

Congratulations on 14 years of Wise Money. It takes great commitment and hard work to reach a milestone like this. I'm so proud of you for setting your sights high and making every effort to present the most relevant information. We pride in the team’s continuing reputation for excellence. You worked hard and proved to yourself and everyone what you are capable of. Best wishes for continued success.


Please walk us through the new initiatives that SMC Realty has taken recently for clients.

We at SMC Realty along with providing our standard real estate advisory service are also introducing a format for after sales services to our home buyers/ investors which shall include regular reports on construction progress, due installments, various relevant updates from developers and loan EMI reminders where the clients have sought loan through SMC Investments and Advisors Ltd. The same is aimed at realizing one of SMC’s core values i.e. ‘One transaction, Life-time relationship’. Apart from this, we have added few more products to our kitty like Senior Living, Co-working and Co-living spaces in order to cater to the diverse needs of our clients.

Will India’s real estate be back on track after a challenging 2019?

With the advent of Covid-19 - the global pandemic, the economic situation has become pretty uncertain. However, India’s proactive response in containing the spread of the virus has landed India a very reputed image world over and it is believed that India would become a very attractive investment destination leading to greater demand for Indian commercial real estate. We are also looking at a spike in residential and co-living spaces in view of major intercity migration on account of new job opportunities that would result from the emergence of new businesses, both MNCs (through FDI) and domestic (as India’s imports from China and other affected countries are expected to decline and India will be expected to become the new manufacturing hub of the world).

How do you think the Covid-19 crisis will impact our loan and mortgage advisory business, IndiakaLoan.com? How are we dealing with it?

Amid the Corona scare and resulting lockdown, consumers are focusing more on theirsavings and spending lesser. Thisis expected to bring down the requirement for personal loans but only in the near term. There’ll be job cuts and pay cuts and in the mid to long term, more and more businesses will be set up with the support of the Government and jobs will be created leading to a significant increase in the demand for business loans and secured loans. While banks & NBFCs are refraining from fresh lending during the lockdown, the approachislikely toreverse withthesituationbecomingundercontrol. We shallsee financial institutions become aggressive and a good flow of funds into the economy but with stricter norms. Tapping the unique and glorious opportunity, we at IndiakaLoan.com are working towards building a strong pipeline of clean cases which we are hopeful willreapresultslikeneverbeforeoncethelockdownisover.

What keeps you motivated?

The trust of my employees and the Board in my decisions keeps me going. I get highly motivated to see my various business decisions giving results as anticipated.

Few words for "Wise Money".

I’m deeply impressed with the way ‘Wise Money’, an initiative more than 14 years old, has come of age and the credibility it has gained over the years. I highly appreciate the collective efforts of the teams behind making the Magazine a huge success.






I’m deeply impressed with the way ‘Wise Money’, an initiative more than 14 years old, has come of age and the credibility it has gained over the years. I highly appreciate the collective efforts of the teams behind making the Magazine a huge success.

• The International Monetary Fund (IMF) has cut its projection of India’s economic growth to 1.9 per cent for the current financial year, the lowest since the 1991 Balance Of Payments (BoP) crisis. It had earlier forecast a growth rate of 5.8 per cent.

• The International Monetary Fund (IMF) has cut its projection of India’s economic growth to 1.9 per cent for the current financial year, the lowest since the 1991 Balance Of Payments (BoP) crisis. It had earlier forecast a growth rate of 5.8 per cent.


• Gujarat Alkalies & Chemicals has started partial operation of Anhydrous Aluminum Chloride (AAC) Plant and Poly Aluminum Chloride (PAC) Plant at Dahej Complex in Bharuch District. For starting the plants at Dahej Complex, the company has obtained prior permission from the concerned District Authority. Based on the requirement, the Company may start operation of few more plants at Dahej Complex.


• Bajaj Consumer Care has launched a new product Bajaj Nomarks Hand Sanitizer. The product contains natural ingredients and helps to fight germs in this pandemic time.

• Prataap Snacks announced that production at the company's third party/job work manufacturing units located at Kashipur, Uttarakhand, Raigad (Karjat), Maharashtra and Hisar, Haryana have been started in line with the terms and conditions of the Order(s) of the respective local administration in the amidst of spread of CoronaVirus (COVID-19).


• Zydus Worldwide DMCC, a wholly owned subsidiary of Cadila Healthcare , has received tentative approval from the USFDA to market Macitentan Tablets (US RLD: Opsumit® Tablets), 10 mg. The medication is indicated for the treatment of pulmonary arterial hypertension. The drug will be manufactured at CMO Umedica Laboratories, Vapi, Gujarat.

• Indoco Remedies announced that the company has been part of the great initiative by the Indian government to export Paracetamol tablets to the UK in its fight against Covid 19. The first shipment of 11.70 lakh Paracetamol tablets to the UK was airlifted on 12 April, 2020 from Goa airport. The permission granted by the Indian Government is for a total air shipment of 4.48 crore tablets.

Realty/ Infra

• L&T Construction has secured two contracts to build Regional Rapid Transit System (RRTS) Infrastructure from National Capital Region Transport Corporation (NCRTC) in Uttar Pradesh. The scope of the project is to execute a new, dedicated, high speed, high capacity rail system in the Delhi- Gaziabad - Meerut Corridor.


• Jindal Steel & Power has bagged a contract to supply 12,000 tonnes of special grade Rail Blooms to France rail hayange, France.


• Vardhman Textiles has got permission from the concerned authorities in the States of Punjab for resumption of manufacturing operations of its Spinning Units situated at Malerkotla and Ludhiana subject to fulfillment of certain conditions


• Eveready Industries India has received permission from the concerned Government Authority, for operation of its battery manufacturing facility at Maddur, Karnataka subject to certain guidelines inclusive of maintaining a minimum number of working employees. Accordingly, the Company's battery manufacturing facility at Maddur is partially operational in a gradual and phased manner.



• US industrial production plunged by 5.4 percent in March after rising by a downwardly revised 0.5 percent in February. Economists had expected production to tumble by 4.0 percent compared to the 0.6 percent increase originally reported for the previous month.

• US business inventories fell by 0.4 percent in February following a revised 0.3 percent decrease in January. Economists had expected inventories to drop by 0.4 percent compared to the 0.1 percent dip originally reported for the previous month.

• US retail sales plummeted by 8.7 percent in March after falling by a revised 0.4 percent in February. Economists had expected retail sales to plunge by 8.0 percent compared to the 0.5 percent drop originally reported for the previous month.

• Eurozone industrial production fell by less-than-expected 0.1 percent month-on-month in February, reversing a 2.3 percent rise in January. Output was forecast to drop 0.2 percent.

• China's central bank reduced its medium-term borrowing cost, in an attempt to mitigate the downturn caused by the coronavirus pandemic. The People's Bank of China said it trimmed the one-year medium-term lending facility, or MLF, rate to 2.95 percent from 3.15 percent. The bank injected CNY 100 billion through the MLF operation.





Beat the street - Fundamental Analysis


CMP: 363.15

Target Price: 475

Upside: 31%


Face Value (Rs.) 2.00
52 Week High/Low 709.25/240.30
M.Cap (Rs. in Cr.) 27746.31
EPS (Rs.) 19.29
P/E Ratio (times) 18.83
P/B Ratio (times) 1.92
Dividend Yield (%) 1.47
Stock Exchange BSE


Investment Rationale

• Following the acquisition of Arysta (unlisted) in 2019, UPL has become the 5th largest agrochemical player globally and the largest generic player with sales presence in 138 countries, 48 manufacturing facilities and 12,400 registrations. The new UPL is attractively positioned to address the existing and emerging needs of farmers across a wider global footprint with a larger basket of products.

• Meanwhile, its factories around the world are operational and the company has said that it has adequate raw material inventory to meet production requirements. UPL’s diversified global presence with full portfolio offerings in many crops has helped the Company respond to upsides and downsides directly related to the impact of Covid-19. UPL is also taking various initiatives and actions to fight the disease.

• Company’s revenue base is well diversified, with 83% generated from Latin America, Europe, and the US in fiscal 2019. Wider geographical reach reduces susceptibility to cyclicality in demand from any one region. The group is also present across the crop lifecycle, from seeds, seed-treatment products, preand post-harvest products, to storage-treatment products.

• The company’s financial position is expected to remain comfortable on account of healthy generation of cash, notwithstanding increasing working capital requirements.

• The debt of around Rs.20747 crore availed for funding the acquisition of Arysta has a bullet repayment at the end of 5 years. However, the management intends to prepay the same and refinance the pending amount atthe end of 5 years.

• It has reported a 77.54 percent year-on-year (YoY) rise in its net profit at Rs 838 crore in Q3 versus a net profit of Rs 472 crore in the same period last year. Revenue from operations increased 80.69 percent YoY to Rs 8,892 crore during the quarter under review. Its margins surprised as the Latin America segment drove growth for the company.


• Large working capital requirement

• Sus ceptibilit y to ri sks inherent in the agrochemicals sector


With the strong market position, geographical diversification in revenue, healthy profitability backed by sound operating efficiencies and leading to sizeable annual cash generation, the company was gaining market share in a tough environment. Thus, it is expected that the stock will see a price target of Rs.475 in 8 to 10 months time frame on a current P/BV of 1.92x and FY21 (E) book value of Rs.247.53.


CMP: 256.50

Target Price: 305

Upside: 19%


Face Value (Rs.) 2.00
52 Week High/Low 313.45/153.70
M.Cap (Rs. in Cr.) 17657.21
EPS (Rs.) 15.47
P/E Ratio (times) 16.58
P/B Ratio (times) 6.16
Dividend Yield (%) 0.39
Stock Exchange BSE


Investment Rationale

• The company has more than 24,000 kms. of gas pipeline network.Ithasmorethan375CNGstationsanddistributes approximately 9.30 mmscmd of natural gas to over 14,00,000 households, approximately 2 lakh CNG vehicles (fueled per day) and to more than 3700 industrial customers.

• Recently, the government has reduced the domestic natural gas price to a record low of $2.39 per million British thermal units (mmBtu).This price cut is applicable for the period of April 1, 2020 to September 30, 2020 and major city gas distribution companies are likelytogetthebenefitfromthispricedrop.

• On the development front, recently it has received an authorization to develop city gas distribution (CGD) network in Dahej-Vagra taluka in Bharuch district and also granted permission to develop city gas distribution network(CGD)inAhmedabaddistrict.

• Government of Gujarat has also initiated a CNG Sahbhagi Scheme and also pushing forthis marketin other way and have eased land requirement from 1000 square meter to about 500-550 square meter and permission process has been fastened in Gujarat now. So ecosystem around the company has been improved due to that effort and in last budget, Gujarat government allocated 1,000 crore for CNG buses. Therefore, allthese will help itto improve its CNGvolumes and that needs to push more CNGstations in timetocome.

• During the December quarter FY20, it has reported Rs 2506.19croreasconsolidatedsales,agrowthof18%forthe quarterendedDecember2019comparedtocorresponding previous year period and net profit of Rs 197.3 crore up 42%. Transmission volume during the quarter was 857 mmscm-Industrial 654 mmscm,CNG139 mscm,Domestic



• Fluctuation in commodity prices

• Regulatory changes


The company has strong and steady revenue growth momentum and sustainable margins. As per the management, the company will continue to focus on growing the penetration in the current operating areas by increasing the PNG connections and additional CNG stations while tapping the untapped potential by expeditious rollout of distribution network in the newly acquired geographic areas as well. With this focused endeavor GGL is expected to continue its efforts in providing clean fuel solutions across all operational area to augment an energetic top-line and bottom-line in coming years. Thus it is expected that the stock will see a price target of Rs. 305 in 8-10 months time frame on the expected PBV multiple of 5.43 times and FY21E BVPS of Rs. 56.19.

Source: Company Website Reuters Capitaline

Above calls are recommended with a time horizon of 8 to 10 months.



India lockdown! But this time - it’s right time

These days everyone in the market like “Be prepared for the Worst”. Investors are witnessing a fullblown bear market. Will the stock market continue to drop during the COVID-19 outbreak? When it comes to deploying money, investors get cold feet in a full-blown bear market. As per the historical data, the markets earlier or later do recover. But until that happens, most of investors would be confused what they should do. While the root of the current crash is not economic, the upheavals it will bring will play out similar to previous crises. In this article, I would try to clear some confusion that has arisen in the mind of investors.

Should I exit at this time and re-enter later?

History shows that - Indian markets have always done well in the long term. Hence, this is a good time to participate in the equity markets; you can invest in small amounts but in staggered manner. The problem with this approach is that no one knows when is the right time to re-enter the market. There is a saying that more money is lost in waiting for corrections than corrections themselves, so it’s better to be in the market than exiting now, enter later approach.

Another question be like. I want to add more. Should I wait for more correction?

If your allocation gives you the space to invest more, waiting is not a good decision. That’s because sharp correction may be followed by equally sharper rise too. So waiting for further correction may deprive you of lower prices. Missing out on a chance of getting your investment allocation right at lower prices won’t leave a good feeling if you witness a sharp recovery without getting a chance to invest.


Phases of Business Cycle

Market performance greatly depends on the timing and sector you investin. Stock picking has only small weight on the end portfolio;itis far more important to be in the right sector atthe right moment,thus analyzing stocks situation,its pros and cons is important, specially for medium to long-term investors.

By understanding the business cycle and stocks sector rotation investor can anticipate a weaker or stronger economy and select the sectors to invest in.

Conclusion: Take a step back and take a long-term view. Instead of ruing over the recent losses your portfolio may have seen, consider these corrections as long-term investment opportunities. Indian market also may become more attractive for foreign investment if the decline in oil and other commodities persists and kick-starts the capital expenditure cycle. Ups and down fall will happen in the future too so use this time to be ready for whatever happens in your investment journey.



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COVID–19: Changing the behaviour and landscape for FMCG industry

FMCGhas always been very stable industry with growth rates which is slightly above the GDP growth, however, the sector has been in slowdown for over a year. FMCG may see the least demand impact and for some of their sub-segments may indeed benefit from demand uptick during the pandemic-driven disruption. FMCG market segmentations are actually flaring in that way where weightage on Food & Beverages are high as depictin picture. So

demand in that segment during lockdown may add benefit to these companies and also support the earnings.

Due to the coronavirus lockdown,the sector may lose some growth in revenues as well as margins while sales growth was already low in January-February, the loss of sales for about 10 days in March will

further hit revenues. The lockdown extension for 19 more days may also add to the pain for consumer goods companies but these companies are expecting that partial opening may zero down the negative impact on their earnings as well as growth.

It is clearly evident that the over the years the FMCG sector has rapidly changed and progressed towards expansion which would easily direct to reach at

rural segment. It is a progressive truth that that industry growth is basically depend on the growth in rural segment. Near-term consumer demand, commodity price and currency will remain volatile and absolutely India’s FMCG growth story purely depend on these factors in the medium to long term.

Now to sustain growth and to cope up with the current situation of the lockdown now these companies has increased focus on the consumer health space which enhances the capabilities for sustainable future growth. Companies such as Nestle India, Britannia Industries Ltd, Marico Ltd, J&J Consumer, Dabur India Ltd, Tata Consumer Products, Procter and Gamble Hygiene and Health Care Ltd, Mondelez India, Hindustan Unilever Ltd, Godrej Consumer Products Ltd, ITC Ltd, Colgate-Palmolive Co. (India) Ltd has moved towards e-commerce to market their products. In line with that Marico has register sales largely in the edible oils and foods portfolio driven by continued healthy growth in the “Saffola” portfolio which was topped up by households stocking up on food and essential items in the early stages of the outbreak. At present, the industry is experiencing a sudden steep demand for essential products such as hand hygiene products, household cleaning products. Moreover, apart from essentials, the demand for snacks and summer drinks are on the rise. Consumption are moving high and we may see through this chart that rural demand is also accelerating.

Rural consumption has increased, led to combination of increasing incomes and higher aspiration levels. The rural market in India is expected to grow to US$ 220 billion by 2025 from US$ 23.6 billion in FY18.

In order to support industry, Government is allowing brewers and distillers to produce cleaning products. According to the CII report, the government may consider reduction of GST from the current level of 18% to nil on ‘Essential Commodities’ including soaps, handwash, sanitizers and packaging industry so that their production and supplies continue. Also, fumigation / pesticide service providers should be included in the list of essential goods so as to help the private sector to share the responsibility of sanitization with the government. Additionally, many other companies whose major revenue generation is not from FMCG products are entering into the market as a result of strong demand for hygiene products. Moreover, due to lockdown People shall stay home, avoid

outside food, more concentrated about health & immunity which would lead to more consumption. Many of FMCG companies are fundamentally sound and have surplus cash and bank balance in their books, which itself provides significant comfort in the current situation. Companies with higher exposure to essentials, dominant positions and higher direct reach would perform better and would have very least impact on their top line as well as bottom line such Hindustan Unilever Limited , Britannia Industries, Nestle, Dabur, Marico, Jyothy laboratories and ITC.



Beat the Street-Technical Analysis

Adani Power Limited (ADANIPOWER)

The stock closed at Rs 30.90 on 17th April 2020. It made a 52-week low at Rs 23 on 13th March 2020 and a 52-week high of Rs. 73.80 on 04th November, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 51.31

After massive correction from 60 levels, the stock consolidated in narrow range and formed a “Pennant” pattern on weekly charts and likely to give the breakout of pattern. Last week, the stock ended with marginal gains but decent surge witnessed in the volumes that indicates buying is aggressive for the stock. Apart from this, technical indicators such as RSI and MACD are suggesting buying for the stock. Therefore, one can buy in the range of 29.50-30 levels for the upside target of 37-39 levels with SL below 27.

LIC Housing Finance Limited (LICHSGFIN)

The stock closed at Rs 277.75 on 17th April 2020. It made a 52-week low of Rs 185.25 on 25th March 2020 and a 52-week high of Rs. 587 on 05th July, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 392.87

As we can see on charts that stock corrected sharply from 480 levels and made yearly low of 185 levels in short span of time. Then after, stock recovered sharply as buying witnessed at lower levels. Last week, stock has given the breakout of downward sloping resistance line along with high volumes, gained over 8% and also has managed to close above the same so buying momentum may continue for coming days. Therefore, one can buy in the range of 270-272 levels for the upside target of 300-306 levels with SL 254.

Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.

The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.


Charts by Spider Software India Ltd

Above calls are recommended with a time horizon of 1-2 months




Tailing to its last week gains, Indian markets once again settled the week in a green zone with bank nifty taking the lead and posted gains of more than 3.5%. The sentiments got positive tracking strong global markets on the prospect of the countries getting back to work and encouraging news on potential coronavirus treatments. From derivative front, put writers were seen adding open interest at 9000 strike while on higher side 9500 call strike holds with maximum open interest. The Implied Volatility (IV) of calls closed at 38.51% while that for put options closed at 36.84%. The Nifty VIX for the week closed at 42.59% and is expected to remain volatile. PCR OI for the week closed at 1.33. In coming week we expect markets to consolidate at higher levels in broader range of 9000 to 9500 after witnessing a stunner run of nearly 14% in last two weeks. Traders should remain more focus on stock specific moves as ongoing result season could keep markets volatile.












Top 10 Rollover

Bottom 10 Rollover

**The highest call open interest acts as resistance and highest put open interest acts as support.

# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup

# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering



The same scenario can be seen in 2020 where there is a sudden spurt in the VIX due to fear of COVID-19, resulting in the ATR to shoot up. VIX after consolidating in a range for a long period broke out which can be observed in chart 2.

How to use VIX as a trading Indicator

The biggest question always comes into the mind how to trade the market using VIX. Earlier in India, VIX was a trading instrument in NSE whereas now only VIX value can be tracked down on live market. Over a period of time like stock or any index, the VIX also form pattern and range. As a layman it is quite tough to find the pattern on the VIX chart but one can see the support and resistance levels. If the VIX breaches the resistance then there are chances that the VIX will rise further and with the help of other indicators one can play bearish on the market. Other high volatility strategies can also be executed like long straddle and long strangle etc. On the other hand if we look back in history then we can see that the VIX does not stay in a range for a long period of time. When there is a signal for cooling off volatility like the volatility starts trading below its earlier resistance where it recorded the breakout then with the help of other signals one can start accumulating the stocks or in option he can sell volatility like short strangle and short straddle etc.

One should keep in mind that VIX is reflection of sentiments and it can help in finding the overall trend of the Markets.

VIX Leading Indicator

VIX stands for volatility index for respective market. Volatility can be stated as a measurement for fear and uncertainty in the market. The VIX also termed as fear index. The VIX measure the future volatility in coming next 30 days. In this way we can say that VIX is a leading indicator. The higher the VIX higher the volatility and vice versa. In the year 2008 when the global market crashed down there was a spurt in VIX resulting high volatility in the market. The increase in VIX leads to the rise in the daily ATR (Average true range) to spurt. Most of the time there is an inverse correlation between Index and VIX means that if VIX rises there is a large chance that the market will fall. This can be easily seen in the below chart 1.




Not only human being, crude oil is also suffering from Covid-19

It is not the first time that the “most influential and political commodity” behaved in such an explosive way; nevertheless the reason for all major movements were more or less based on human actions. We all can recall the epic moves of crude oil during Iran and Iraq war, subprime crisis, expansion of shale production and the epic fall of 2014-2015, slow down and US & China trade war. Admittedly, in last three months crude got slashed more than 65%. Basically, market balances the prices based on its demand and supply equilibrium.

OPEC and Non OPEC tussle for market share have had moved crude prices in highly volatile fashion. If demand is static and supply is flat then in that case mostly Non OPEC takes steps of production cut to balance the oil market. Recently OPEC has cut the supply by 1.5 million barrel per day. This move cushioned up the prices to some extent and touched the (recent) high of $66.6 in 2019, nevertheless the rally was short lived and slow down issue along with record production (more than 12 million

barrel per day) ballooned the market supply. Here comes some green shoots from economies and PMI, export and trade data of different modern economies along with first phase trade deal between US and China after a tussle of 18 months happened. Market took a sigh of relief, but then market participants had no clue that a natural disaster was in underneath and ready to blow out the world.

When it all started in Wuhan, China, no one knew that approx. 200 countries and lakhs of people will come under its grip. Nearly lakh are already dead and counting is still on. World is in complete lockdown and 3 billion people are in lockdown. All trade activities are on halt. People have isolated themselves in home; it means demand is only for essential commodities which is necessary to survive. It brought business to a sudden stop, sent stock markets into a meltdown and forced central banks to take emergency action on a scale even greater than during the 2008 global financial crisis. Most of the markets witnessed a heart breaking fall by around 30-35% in just three months; eating up the movements of around 6-8 years. Movement from one place to another is not allowed. Aviation, automobile, banking, tourism and many more sectors saw the severe setback and if the situation is not controlled, there will be a major damage to the world.

Besides, all major oil giants are giving tough time to the crude market. Saudi and Russia are in big tussle to increase the production and subsequently their market share, which failed the OPEC+ deal. US opted for record production now regretting after a 70% fall in the prices as market is not viable at current prices. I.M.F. projected that the global economy would contract by 3% in 2020, an extraordinary reversal from early this year, when the fund forecast that the world economy would outpace 2019 and grow by 3.3%. Demand is expected to fall by more than 20 million barrels per day (bpd), or about 20% of daily global crude consumption if the lockdown continue longer. Now recently some consensus emerged. OPEC+ members have agreed to cut production by a record large 9.7 mb/d from May 1, which is roughly around 10% of the total supply. The U.S., Brazil and Canada will contribute another 3.7 million barrels on paper as their production declines and other G20 states will contribute 1.3 million. OPEC will also reduce the size of the cuts over time. After June, the 10 million barrel cut will be tapered to 7.6 million a day until the end of the year, and then to 5.6 million through 2021 until April 2022. Frequent lower side GDP revisions by many banks and research agencies about world and major

economies have also given the jolt to the market. Earlier we were expecting slowerfirsttwo quarters but now it will go long and willtake longertime to get recover.It should be in a range of $15-45 in long term.Ifit breaches $15 then it won’t sustain below this forlong and can see value buying from lowerlevels.

Global recession, once not convincing in the beginning of 2020, is now a foregone conclusion, and many warn that if the pandemic continue then it could drag the world's economy into a depression. The impact of the coronavirus won’t show up in economic statistics right away. Nevertheless once it gets contain then we may see some swift recovery in the market though we should not expect a magical move as it is most likely to give some permanent damage to the world economy which will take longer time to get cured. A round of action by the world’s central banks received mixed reviews. The biggest boost up to the world economy is that to arrest this virus as soon as possible; rest the economic forces will take care.




Turmeric futures (May) is expected to witness correction towards 5600-5500 levels. The sentiments are bearish due to expectations of a bigger crop in the coming season after the India Meteorological Department said the country would receive "normal" rains during the monsoon season this year. This year, Jun-Sep rains are likely to be 100% of the long period average, India Meteorological Department said, while releasing the first long-range forecast for the southwest monsoon. Cardamom futures (May) is likely to go down to test 1600-1550 levels. This season the production is likely to rise nearly 30% in 2020-21 (Jul-Jun), provided conditions remain conducive through May-Jun, when the crop would enter its growth stage. After the floods in 2018, farmers in Kerala had replanted cardamom, which will reap fruits this year. Though there is a restriction on the number of labourers allowed on the fields, growers are maintaining their plantations. Dhaniya futures (May) will probably trade with a negative bias & test 6060, facing resistance near 6430. The spot prices are going down due to increased supply and a bigger crop. A sharp rise in arrivals is being witnessed after the Ramganj mandi decided to resume operations despite extension of lockdown. The badami variety of coriander is being sold for 6,100 rupees per 100 kg, and the eagle variety for 6,400 rupees. Jeera futures (May) is likely to consolidate in the range of 13600-14400 levels & trade with a downside bias. The Agricultural Produce Marketing Committee in Unjha has allowed traders holding licences to restart their processing units and sell produce lying in market yards or warehouses from today to help maintain the supply to retail markets during the lockdown.


Bullion counter may continue its upside momentum but profit booking at higher levels cannot be denied. Recently concerns over global economic growth and a wave of stimulus measures from central banks and governments lifted bullion's appeal. Gold can move towards 47800 while taking support near 45000 while silver may move higher towards 45500 while taking support near 42000. US retail sales suffered a record drop in March and output at factories declined by the most since 1946, strengthening the views that the economy contracted in the first quarter at its sharpest pace in decades as measures to control the virus shut down the country. The U.S. Federal Reserve announced a $2.3 trillion stimulus package, while European Union finance ministers have agreed on half-a-trillion euros worth of economic support. European Union finance ministers agreed on on half-a-trillion euros worth of support for their coronavirus-battered economies .The International Monetary Fund expected Asia’s growth this year in Asia to grind to a halt for the first time in 60 years, in addition to its forecast of a 3.0% cut in global economy during 2020 – the steepest downturn since the Great Depression. Near limitless monetary stimulus by the Federal Reserve to alleviate liquidity and credit pressures in the financial markets and trillions of dollars of federal government support to help businesses and workers also are viewed as supportive of gold buying. Demand for gold in India is expected to drop 30 per cent to 483 tonnes this year on the back of volatile prices and complete lockdown in the country.


Soybean futures (May) is likely to witness a consolidation in the range of 3700- 4000 levels, with upside getting capped. This counter is taking negative cues from the its counterpart on CBOT, where US soybean futures is hovering near three-week low and is under pressure amid expectations that demand will remain depressed due to the coronavirus outbreak. There is a fear among market participants that demand for soymeal, which is widely used in feeding livestock will decrease. The uptrend in mustard futures (May) will resume only when it surpasses the previous high near 4180, but till then we may witness a consolidation and the upside may remain capped. The demand side is not encouraging as the crushing has slowed down because of the nationwide lockdown, which has now been extended till May 3. The supply side is already heavier due to large inventories with farmers, processors, stockists, and state-run agencies at 7.35 mln tn as on Mar 31. In addition to it, with government allowing all agricultural activities to remain fully functional, harvesting of this Rabi oilseed will catch pace, arrivals will increase, adding to the selling pressure. The edible oils are expected to trade higher & remain on a stronger foot cushioned by healthier demand and weaker Indian rupee against dollar, making the imports costlier. On the supply side, the country’s 600 refineries, 500 solvent plants and 10,000 crushing mills have reduced output by half compared to pre-Covid levels. Saying this, the price outlook for soy oil futures (May) as well is looking bullish and may witness 825-835 on the higher side. CPO futures (May) is also expected to gain for the third consecutive week & move higher towards 680-690 levels.


Crude oil may remain on weaker path but marginal short covering at lower levels can be seen. The Organization of the Petroleum Exporting Countries, along with Russia and other producing countries - a grouping known as OPEC+ - partnered with other oil-pumping powerhouses including the United States for an agreement set to remove a total of around 19.5 million barrels per day (bpd) from the market. Officials and sources from OPEC+ states indicated the International Energy Agency (IEA), the energy watchdog for the world’s most industrialized nations, may announce purchases of up to several million barrels to buoy the deal. Crude oil (May) can face resistance near 2400 and support near 1800. Leaders of the world’s top three oil producers, Russian President Vladimir Putin, U.S. President Donald Trump and Saudi Arabia’s King Salman, all supported the OPEC+ deal to cut global crude output. The United States - the world’s biggest oil producer but an even bigger consumer - along with Japan and South Korea have said they could buy oil to replenish reserves. International Energy Agency (IEA) that forecast oil demand would fall by 29 million barrels per day (bpd) in April, to the lowest in 25 years, and just below 30% of global demand before the coronavirus outbreak. Natural gas can remain on subdued path but lower level buying can be seen as it may test 140 while taking support near 120. There huge oversupply of natural gas and there are warmer temperatures coming in the northern hemisphere in US is driving down demand.


A bearish phase can be seen in cotton futures (Apr) in days to come it may trade with a downside bias facing resistance near 16800 levels. With the Covid-19 intensifying the projections for both domestic consumption and exports appear to be bleak. The domestic demand for cotton fibre from yarn manufacturers is affected. In the international market, ICE cotton futures (Apr) is expected to remain in negative zone in the range of 52-55 cents per pound. The International Cotton Advisory Committee (ICAC) has warned in a statement that macroeconomic challenges, including lockdowns in major producing and consuming countries, is likely to alter the demand-supply equation going forward. There is more room for mentha oil (April) to go forward towards 1400-1450 levels. Mentha exporters are getting large orders from many countries including America, Brazil, Italy. This will create medicine and sanitizer to prevent corona. Guar gum futures (May) is likely to witness correction towards 5300, facing resistance near 6000. The demand for the gum which is used for expansion of the shale gas and oil industries is not encouraging. The reason being is that the EIAexpects U.S. shale oil production to drop next month to 8.526 million barrels per day in the seven most prolific shale basins in the United States. The forecast for May for an 182,673-average barrel per day drop in oil production is expected to be the second largest drop dating back to 2007. The largest drop in oil production, according to the EIA, should be this month, down 193,625 barrels per day from March. The Drilling Productivity Report shows six weeks of sizeable declines, shedding more than a half a million barrels per day 546,622 barrels since December 2019.


Base metals may continue to witness lower positive gains on supply cuts. China’s central bank cut a key interest rate to a record low and reduced the amount banks must hold as reserves by about $28 billion. Copper may recover towards 418 while taking support near 385 on supply concerns. A total of 2.4 million tonnes of annual copper capacity or 12% of global mine supply has been temporarily shut due to virus related curbs. MMG Ltd has declared force majeure on copper concentrate supplies from its Las Bambas mine in Peru. Copper inventories in the Shanghai Futures Exchange (ShFE) warehouse system touched a four-year high last month above 380,000 tonnes, but have since fallen to 317,928 tonnes. Zinc may recover towards 158 by taking support near 145. China’s zinc and zinc alloy production in March fell 5.7% to 396,000 tonnes from February, while refined nickel output rose 5.7% to 13,930 tonnes. Lead may recover towards 140 while taking support near 132. Lead inventories monitored by the Shanghai Futures Exchange (ShFE) fell for a sixth straight week to a 16-month low as buyers sought stocks in exchange warehouses due to a lack of recycled metal in China. Nickel may witness recovery towards 935 while taking support near 890. Aluminum also may remain in narrow range of 132-139. Expectations of large surpluses also pushed the discount for the cash over the three-month aluminium contract to $40 a tonne recently, the highest since June 2015. China’s inventories of primary aluminium ingots in eight consumption areas in China fell to 1.55 million tonnes, their lowest since March 5.


Natural gas… “Ample Supply is Keeping Lid on Prices”

Natural gas prices nosedived to their lowest level in a quarter century in NYMEX due to cocktail of bearish factors like growing supplies, warmer than usual weather and falling demand. After hitting high above$ 4.15 in Nov 2018 prices have fallen drastically in 2019 and that decline continued in first quarter of 2020 as well. Natural gas hit below $1.53 recently, its lowest level since 1995 or lowest in 25 years. So far prices have fallen more than 60 percent from its high hit in Nov 2018 due to ample supply and unfavorable weather.

Natural gas prices have been depressed in the past couple of years because of a massive supply glut in US. Oil drillers in places like Texas produce gas while they drill for oil, and that “associated gas” has flooded the market in recent times thereby keeping the prices under pressure. Meanwhile due to steep fall in oil prices some oil producers are now preparing to sharply decrease production, which means a lot of that “associated gas”, will also disappear thereby capping the downside in natural gas prices to some extent.

In the first quarter of 2020 natural gas prices have tanked by more than 15 percent in MCX and nearly 25 percent in NYMEX. Nevertheless, the fall in natural gas was little immune of COVID 19 impact as compared to crude oil, which fell more than by 60%. Natural gas prices had fallen to multiyear lows even before the coronavirus hit the U.S economy due to unfavorable weather and massive supply amid shale gas exploration.

Prices have sunk even further since as demand has dried up due to coronavirus pandemic. Prices have declined on the back of mandatory shutdowns for nonessential businesses and lockdown orders for many Americans to prevent the spread of COVID-19. As lower industrial activity means lower demand for natural gas but unlike oil, it isn’t really used as a transportation fuel, so less travel shouldn’t hurt demand in the same way. But exports of liquefied natural gas, a major growth driver for the industry, have been falling, and other industrial uses will be hurt by the weak economy.

Furthermore the sharp drop in natural gas prices in past months has resulted in less drilling of natural gas as indicated by the rig count data from US. Recently Baker Hughes Co. reported a 44-rig decline in its latest U.S. rig count, ranking among the largest weekly drops in domestic drilling activity over the past two decades. The declining rig numbers have coincided with a spate of announcements in recent weeks from upstream operators planning sharp reductions in spending in the face of headwinds from both Covid-19 and supply gluts scenario.

Meanwhile U.S. electricity demand is beginning to rapidly decline due to coronavirus-related containment measures. The widespread closure in the U.S. of schools, offices and social spaces including restaurants and bars will impact commercial gas use, but we assume this loss in the very near term will be offset by a similar gain in residential use as workers operate remotely or stay at home.

COVID-19 coronavirus (or the government's response to coronavirus) is disrupting way of life in US. The net impact of lockdown is bearish because it destroys demand. But demand can only be destroyed up to a point. Natural gas is a "commodity of necessity". Without it, there will be no electricity, no heating, no cooking, no fertilizers, etc.

Furthermore, the market has to deal with the idea of far too much supply out there and the weather patterns which remain to the bearish side. Meanwhile Appalachia has been living off of drilled but uncompleted wells for several years, allowing production to continue to rise. That backlog is now depleted, which can lead to a decline in output. On the one side increasing usage of natural gas as clean fuel considering stringent environmental norms across the globe can support the prices. Low natural gas prices and recent increases in the cost of generating electricity from coal have resulted in a significant shift from coal to natural gas over the past few years. While on the other side oversupply concerns amid shale gas production can limit the upside in 2020.

Overall natural gas prices can take support near $1.45-1.40 range in NYMEX and 100-105 in MCX while on the upside $2.80 will acts as major resistance in NYMEX and 200-210 in MCX. Meanwhile it is possible that cooler weather and a sharp bounce back in crude oil can provide some support, but until the new case coronavirus curve begins to flatten in US, demand destruction will continue to keep a lid on prices.


All that Glitters is Gold

The world economies are facing serious crisis as the pandemic Coronavirus is certain to cause a global recession in 2020. IMF reports suggest that it could be worse than the global financial crisis of 2008-2009. And investors have already removed US$83 billion from emerging markets, the largest capital outflow ever recorded.

Now the question arises where to invest money to earn hefty returns. Investing in equities or other asset classes such as bond, real estate seems risky as of now. At the present situation, the question comes to mind is that investing in bullions is a wise decision or just an imagination. In this article, I will walk through the bullion counter especially gold.

Well before making any investment in gold and silver, we should note the rally that bullions have seen in 2k19. During the year, Gold and Silver had posted decent returns and closed on positive node in 2k19. However, in early 2k20 we have witnessed roller coaster type of movement because global growth concern. Despite this roller coaster movement, both looks attractive and investors can go for bullions. As Gold act as safe heaven and silver also has antimicrobial properties that could boost demand during the global pandemic that’s shaping up. If history is to be believed, gold moves first and silver follows its (gold) footsteps.

In this article, I am looking at that segments which are presenting enormous long-term opportunities. In 2k19, Gold prices rose most between early June and early September as uncertainty increased and interest rates fell. But investors’ appetite for gold was apparent throughout the year, as seen by strong flows into gold-backed ETFs, growing gold reserves from central banks, and an increase in COMEX net longs positioning. This indicates that once situation gets normalise, bullions are the first to move in upward direction.

Now, with the actions of the Federal Reserve and the U.S. government stimulus bill, which will be unprecedented in regard to size, this would be a huge catalyst for gold over the long term.The zero-interest rate policy (ZIRP) and negative interest rate policy (NIRP) of the world's central banks depress

yields, weaken U.S. dollar, and stoke inflation, thus driving more investors to gold, a traditional safe haven, mostly through buying gold ETFs (GLD). Another classic example is China. When Chinese stock market crashed investors showed their interest in physical gold, resulting in American Eagle Coins being sold out. My belief is if coronavirus acts in a similar way as it has in China and South Korea, we'll start to see a decline in new cases and deaths in nations that have had exposure the longest.

Technical Outlook:

The yellow metal for short term has turned bearish for the first time since December 2k18, after bears breached the important 200-day moving average.

Based on current chart patterns the metal may fall towards the $1370- 1380. A fall near these levels may considered as buying opportunity for longer horizon which may take the bullish rally towards 1800/2000 in future. Huge volatility is expected in counter as suggested by technical indicators. Silver also follows the gold, and may test $25-$30 with taking support near $8.

On MCX price has moved with higher high and higher low formation where higher low 36020 is considered as strong support for counter. Break and sustained below the level may guide the bearish rally towards 31232 in worst case scenario. In my view, any dip towards 36000 may considered as buying opportunity which may target 46980. Break above 46980 may take metal towards 50000/53000. Again in MCX also huge volatility is expected as defined by technical indicators.





NICKEL MCX (APR) contract closed at Rs. 921.80 on 16th Apr’2020. The contract made its high of Rs. 970 on 10th Mar’2020 and a low of Rs.800.10 on 19th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 890.31 On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.52.

One can buy around Rs. 910 for a target of Rs.960 with the stop loss of Rs. 890.

ZINCMINI MCX (APR) contract closed at Rs. 152.25 on 16th Apr’2020. The contract made its high of Rs. 196.10 on 11th Nov’2019 and a low of Rs. 175.10 on 24th Dec’2019. The 18- day Exponential Moving Average of the commodity is currently at Rs. 181.50 on the daily chart, the commodity has Relative Strength Index (14-day) value of 50.64.

One can buy around Rs.148 for a target of Rs. 170 with the stop loss of Rs. 140.

RMSEED NCDEX (MAY) contract was closed at Rs. 4109 on 16th Apr’2020. The contract made its high of Rs. 4635 on 31st Dec’2019 and a low of Rs. 3770 on 13th Mar’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4049.25 on the daily chart, the commodity has Relative Strength Index (14-day) value of 54.25.

One can sell at Rs. 4150 for a target of Rs.3900 with the stop loss of Rs 4250.



Rays of hope turned into dark: Timing was just perfect in the beginning of this year for a bullish environment of agro commodities. After a long overhauled tug-of-war with multiple rounds of meeting between delegates and keeping the world markets on toes, finally the phase one of the U.S.- China trade deal was signed. The market participants saw a ray of hope, commodity indices applauded and traders just had started to take long positions especially of commodities such as oilseeds and their derivatives and cotton – large quantities imported by China.

COVID-19: A boon or a bane for the agriculture worldwide

Let’s start with a question, whether COVID-19 will prove to be a boon or a bane for the agriculture worldwide? The answer is as simple and complex too. The response of agro commodities towards this pandemic has not been so much as compared to other assets class. The facts show that dollar index surged to year high of 101, crude oil in the international market plunged by more than 65%, stock markets crashed to 5 years low and last but not the least gold lost its shine. However, agriculture being a demand driven sector, major commodities didn’t witness correction more than 20-30%. Even some of them, gave positive returns. The below chart says it all:

But then, viral disease that labeled as Covid-19 was detected in Hubei province in China and WHO issued its first guidance on the novel coronavirus 10 January 2020. From then onwards, the commitment by China to purchase an additional cumulative USD 200 billion of goods and services from the United States over 2020-21 (relative to a 2017 baseline of around USD 180 billion) seems to be challenging to achieve.

Dark clouds:The virus COVID-19 declared by the WHO as pandemic has brought world almost to a halt and slowed down the global economy. The rising corona virus infection count and death tolls gave the financial markets as well as the business environment a “bearish emotional impact”. The latest figures cite that till date there has been approximately 13,17,130 cases worldwide in more than 212 countries. The human community is under severe threat and so is the agriculture.

India fallen as a prey: The numbers of cases are rising at a rapid speed in India. Several states and theirrespective districts are underlock down.According to theUnitedNations Conference onTrade andDevelopment(UNCTAD),it will likely costthe global economy between $1 trillion and $2 trillion in 2020.

Impact on Agriculture: In India, the spot markets have shut & arrivals of the Rabi harvest are severely affected. The increasing gap between demand & supply is acting a catalyst to some of the commodities such as pulses, edible oils such as palm oil, soy oil & oilseeds namely soybean & mustard. Since the beginning of the year, these internationally linked commodities were battered due to the negative impact of COVID-19. But in the present scenario, the lock down in the country has been a game changer for agri commodities, giving the prices a U-turn from their multi-months low levels. This will be definitely beneficial to the farmers.

Opportunity knocking doors: For India, it is a great opportunity to push its exports in the global markets to fill up the space vacated by China. Our country is major producers in many agriculture commodities such as rice, pulses, cotton & menthe.

In China, the combination of African Swine Fever (ASF) and coronavirus resulted in major food price increases due to disruption of supply chains both into and within China. It made fruits and vegetables at least 17% more expensive locally.

For U.S, there is one open question as to how much will China increase its U.S. agricultural purchases in the coming two years. It is being projected that U.S. agricultural exports to China would reach only $14 billion in the fiscal year ending September 30th. During the trade war, China shifted its base to Brazil from U.S for commodities like soybean & cotton.

Negligible impact on India’s agriculture: For the time being, the exports-imports figures might feel a jolt as the countries have sealed their borders. But in the long term the consumption pattern will again catch its pace because people still need to eat, which means agriculture demand will not abate.” In the wake of the COVID-19 outbreak, the Centre has identified 21 agricultural products, including honey, potatoes, grapes, soya beans and groundnuts, in which Indian exports could benefit from trade restrictions against Chinese goods.

Conclusion: Going ahead, it will be important to look the actions being taken by various countries in order to contain the virus & also the stimulus package being offered by the respective federal agencies to support the economies. Also, one should keep an eye on the forward curves of the agricultural commodities. For India, it is high time to establish a link of Indian agriculture with global chains and take advantage of the supply gap in the global market in the current scenario, in order to double farmer’s income by 2022.




Ÿ All agricultural & horticultural activities to remain fully functional, such as - farming operations by farmers & farm workers in field, agencies engaged in procurement of agriculture products, including MSP operations. - Ministry of Home Affairs

Ÿ Gold, the second-largest item in the import bill, continued to fall. Incoming gold shipments fell by a massive 64 per cent.-CommerceandIndustryMinistryofIndia

Ÿ In pursuant to discussions with SEBI all the commodity exchanges have decided to continue with the revised trading timings (i.e. 9:00 a.m. to 5:00 p.m.) until further notice.

Ÿ Southwest monsoon seasonal (June to September) rainfall over the country as a whole is likely to be normal (96-104%). - India Meteorological Department

Ÿ Malaysia aims to delay nationwide adoption of plans to step up the use of palm oil in biodiesel - Malaysian Biodiesel Association

Ÿ IMF stated that the global economy could shrink by 3% this year - the steepest downturn since the Great Depression of the 1930s.

Ÿ Zambia plans to revoke mining licences of Glencore’s subsidiary Mopani Copper Mines because the company did not give enough notice before suspending its mining operations in the coronavirus crisis.

China Crude processing volumes were 50.04 million tonnes, equivalent to about 11.78 million barrels per day (bpd), data from the National Bureau of Statistics showed.

Spot treatment charges (TCs) for zinc concentrate in China have fallen to a one-year low on tightening supply as mines around the world shut amid governmentenacted measures to contain the coronavirus pandemic.


After facing resistance near 130-131, Commodity Indices CRB, took a downside and closed near 120. Further fall in heavyweight of CRB, crude again took a downside amid production cut decision. Market ignored the production cut news as it has many holes. Rather paid attention on Saudi decision to defer the payment of crude buyer for three months, record high inventories in US, revised GDP numbers by IMF and many more. Crude saw a fall of more than 10% last week. It traded near 1500 on MCX and $20 on NYMEX. The other counterpart of energy counter, natural gas also saw some decline, nevertheless it erases some weekly loss in the later part of the week. International Energy Agency (IEA) that forecast oil demand would fall by 29 million barrels per day (bpd) in April, to the lowest in 25 years, and just below 30% of global demand before the coronavirus outbreak. Industrial metals saw steady move and with some recovery in equity market amid mine closure news most of them saw marginal recovery. The U.S. Federal Reserve announced a $2.3 trillion stimulus package, while European Union finance ministers have agreed on half-a-trillion euros worth of economic support. China’s central bank cut a key interest rate to a record low and reduced the amount banks must hold as reserves by about $28 billion. A total of 2.4 million tonnes of annual copper capacity or 12% of global mine supply has been temporarily shut due to virus related curbs. Upside was capped on weak data. US retail sales suffered a record drop in March and output at factories declined by the most since 1946. The International Monetary Fund expected Asia’s growth this year in Asia to grind to a halt for the first time in 60 years. In bullion counter gold closed up whereas silver gave up its strength. Demand for gold in India is expected to drop 30 per cent to 483 tonnes this year.

Agri commodities were mostly bearish on good monsoon expectation. Permission of agri activities during lockdown 2 gave some relief to the farmers and traders. Overall rabi crop production is good and Khariff sowing is expected to be good. Menthe was up clearly as mentha exporters are getting large orders from many countries including America, Brazil and Italy. Guar counter came down along with crude prices as demand for the gum which is used for expansion of the shale gas and oil industry is not encouraging. Although it was trying to make some base.







SPOT PRICES (% change)



Initiatives to promote farming and allied sectors during lockdown

The Department of Agriculture, Cooperation and Farmers Welfare, Government of India is taking several measures to facilitate the farmers and farming activities at field level during the lockdown period. Following exemptions were given by Government of India for agricultural operations keeping in view the harvesting and sowing season:

• Agencies engaged in procurement of agriculture products, including MSP operations;

Ÿ Farming operations by farmers and farm workers in the field;

Ÿ ‘Mandis’ operated by the Agriculture Produce Market Committee or as notified by the State Government;

Ÿ ‘Mandis’ include direct marketing, facilitated by the State Government/UT Administration, directly from the farmers/groups of farmers. FPOs, Cooperatives, etc;

Ÿ Shops for Seeds, Fertilisers and Pesticides;

Ÿ Manufacturing and packaging units of Seeds, Fertilisers and Pesticides;

Ÿ Custom Hiring Centres (CHC) related to farm machinery;

Ÿ Intra and inter-state movement of harvesting and sowing related machines like combined harvester and other agriculture/ horticulture implements;

Ÿ Cold storage and warehousing services;

Ÿ Manufacturing units of packaging material for food items;

Ÿ Transportation for essential goods;

Ÿ Shops of agriculture machinery, its spare parts (including its supply chain) and repairs.

Ÿ Tea industry, including plantation with maximum of 50% workers.

Ÿ The Agriculture Minister along with Ministers of State (Agriculture) formally launched the All India Agri Transport Call Centre on 15th April 2020. This Call Centre has been set up for coordination between States forinter-state movement of perishables like vegetables & fruits, agri inputs like seeds, pesticides and fertilizer etc.The Call Centre numbers are 18001804200 and 14488.

Ÿ Truck drivers, traders, retailers, transporters or any other stakeholders who are facing problems in inter-state movement of above commodities, may seek help by calling at the Call Centre.

Ÿ Railways introduced 67 routes for running 236 Parcel Specials (out of which 171 are time table parceltrains)to supply essential commodities including perishable horticultural produce, agricultural inputs viz. seed, fertilizer and pesticides, milk and dairy products at fast speed which will facilitate farmers/FPOs/traders and companies for continuity of supply chain across the country.

Ÿ Under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) Scheme during the lockdown period from 24.3.2020, about 8.46 crore farmer have been benefitted and an amount of Rs. 16,927 crore has been released so far.

Ÿ Decision has been taken (on 30.03.2020) for providing 2% Interest Subvention (IS) to Banks and 3% Prompt Repayment Incentive (PRI) to farmers for the extended period of repayment of loans upto 31.05.2020 or date of actual repayment date whichever is earlier, for short terms crop loan upto Rs.3 lakh per farmers given by Banks @ 7% p.a., which have become due or shall become due between 1st March, 2020 and 31st May, 2020.

Ÿ Module of Uberisation of logistics aggregator has been recently launched on eNAM Platform. More than 7.76 lakh trucks and 1.92 lakh transporters are already linked to this module.

Ÿ Exports of all major products i.e rice, groundnut, processed food, meat, poultry, dairy and organic products has started.NAFED has exported 50,000 MT wheattoAfghanistan and 40,000 MTwheatto Lebanon underG2Garrangement.

Ÿ The validation of pack houses, rice mills, processing units, treatment facilities, fumigation agencies, PEQ facilities etc. which have expired in the lockdown period due to COVID-19 situation have been extended.

Ÿ During this lockdown period, 2.70 Lakh quintals seed of cereals, millets, pulses etc was moved and 42.50 Lakh cotton seed packets was also moved in Northern India especially for Haryana and Punjab.




Gold-Silver Ratio: The breakout is a game-changer

Recently the gold-silver ratio stood over 126 before closing on April 14, 2020 around 110. Admittedly, the ratio has seen a jump of about 55 per cent in the past seven months and the ratio show clear picture of rising gold demand. Globally, the demand for gold has been increasing due to multiple factors to name a few are buying by central banks, US-China trade war, US-Middle East geopolitical tensions and the rapid spread of coronavirus. Even it could be seen that traders are still buying gold as a safe haven in these uncertain market conditions. In MCX, gold prices also jumped in this period to above Rs 46000 (per 10 gm) and restrained thereafter. Silver remained stable compared to gold as industrial demand is poor. Last time the gold-silver ratio had reached the levels of 100 in 1991.

If we check the history, whenever the ratio has increased to a very high level, it has never sustained but has always fallen. There is an assumption that the ratio will not sustain at high levels and silver may start outperforming gold. This is possible only in the case, if gold falls faster than silver or if silver rises faster than gold. However, it is too early to comment on this as this time silver doesnt look strong following weaknesses in base metals as the outbreak of coronavirus has dented the

economic growth globally. And to note that over 55 per cent of the silver demand comes from industry. Morever, the physical buying of silver is also tepid. During January and February 2020, the combined silver Eagle sales (coins) totalled just 4.50 million ounces, compared with 6.18 million ounces over the same period in 2019.

On the flip side, there are reasons for gold to rise further or it may outperform silver. First of all, it is sceptical that fiscal/monetary stimuli introduced by central banks will be sufficient to rescue the global economy. Prior to the virus outbreak, not only had nominal interest rates been kept at historically low levels across key reserve currencies, central banks stimulus have also ballooned since 2008. As the coronavirus is damaging the global economy, the central banks are coming with additional rate cuts and/or monetary easing and hefty bond buying. If global growth concerns deepen, silvers price prospects and concerns are quite unattractive.

. However, it seems that the short-term impact of these stimuli on underlying economy should be limited. On the other side, silver prices are showing signs of improvement, indicating that the gold-silver ratio in the near term will lower further and silver will outperform gold. Silver may benefit as gold prices rise strongly in a very short span of time. From investor point,if you don t own any,this looks like a good time to buy some

. Sooner or later, we expect silver prices to recover when US silver coin and bar demand improves. This, in turn, should lead to an upside breakout in silver prices, which in turn will encourage retail buying on two counts. First, some of the gold buying of institutional investors will move to silver. Second, as positive price expectations emerge, some retail investors may buy into a rising market, with a view to gaining exposure to silver before prices strengthen further. This could be possible only in second half of CY2020 from when the ratio is expected to start falling.

The supply of silver is indeed relatively inelastic as it is mostly mined as a by-product. This is one of the reasons that makes silver so volatile. If it declines, the supply cannot be quickly limited to balance the price. If it soars, the supply cannot be quickly increased to balance the price. Its a double-edged sword that currently makes the declines so significant, but also one that is likely to make silver soar particularly sharply in the final part of the next long-term run.

Except this, gold has not been immune from general market sell-off in recent days as investor sold metal to raise much needed cash. If the sell off continues the ratio will down as chart show:-



Fiscal Deficit – The Byzantine Era of supply side economics

Historically Gilded Age shaped the supply side of economics which drove growth for many decades. In this growth journey political leaders took the fiscal space by Ways and Means to embrace the momentum like in the past when President Trump took office and implemented tax cuts despite economy was running at full employment capacity is a classic example of such Byzantine leaders and their policies to run governmentin deficit. Now when the world is passing through deep sanitary crisis, political leaders are jogging around fiscal stimulus when the global economy took a toll. The misrepresentation of fiscal deficit in terms of civic sense is a biggest challenge apparently. Usually deficit turns-up our mind about excess spending overincome but we failed to differentiate between household and sovereign deficit notably financial markets sometime react severely on fiscal deficit number.Itried to lay-outfiscal deficitrepresentation into three phases to counterthe myths involved in it. Firstly the mathematical representation to place fiscal deficit into zero sums equation. Secondly the graphical route to explain the algebric forms and thirdly few fallacies for the same. Later part showed the economic performances ofIndian Rupee vis-à-vis fiscal deficit achieved on a yearto year basis.

The Mathematical Passage: To interpret the insight of fiscal deficit, we need to begin with calculating GNP (Gross National Product) equals to GDP plus the net income from foreign investments we get: GNP = C + I +G + (X-M) + FNI

Now, GNP will give us the real picture for the retained earnings made by corporations which on ideal term received by households. Further to obtain the sectoral balances we need to deduct total taxes of transfer (T) from GNP.

GNP-T = C + I + G + (X-M) + FNI -T

Rearranging the above equation: (GNP-C-T) – I = (G-T) + (X-M + FNI)

Thus (GNP-C-T) = Saving of Private Domestic Sector which is represented by S.

Thus (S-I) = Saving minus Investment = Private domestic financial balance

Finally the equation stands: (S-I) + (T-G) + (-CAB) = 0

Where –CAB = - (X-M-FNI) which is external financial balance i.e. Current Account Balance

CAB = negative i.e. Current Account Surplus; positive i.e. Current Account Deficit; T-G = Government financial balance

Now the equation states that private domestic balance (S-I) plus the government financial balance (T-G) plus the current account deficit (CAB) equals zero which further implied that it is not possible for all sectors to run surplus at the same time. Notably if the private domestic financial balance is in surplus means government must run in deficit to drive the aggregate demand which we are experiencing now in India in the midst of lock-down.

The Graphical Passage: India persistently runs current account deficit with surplus in private financial balance. Hence the resultant accounting to be zero, the government must run fiscal deficit i.e. (T-G) < 0 (higher spending over income).

Usually India maintains roughly over 3.0% fiscal deficit based on modest restrictions in fiscal space. Graphically vertical axis above zero shows the fiscal surplus and deficit is below zero. Similarly horizontal axis represents the external balance with right side surplus and left one is deficit. As Indian private domestic balance is in surplus and modest current account deficit which means fiscal space should run on deficit and on top of that if it is

Few Fallacies of Fiscal Deficit:

Does Fiscal Deficits or Surpluses good or bad: Fiscal deficit or surplus intuitively drives by situation in private sector as well net exports.

Does the budget constraint for government is same as household: Household always earn first to spend later or must finance their present spending but government fist issue currency via central bank and spend first and later it can tax or borrow to lift the aggregate demand.

Does government run out of money in case of over-spending:Government never run out of money rather it’s less availability of resources that push back government to implement the fiscal program. Technically fiscal space signifies the real availability of resources in terms of goods and services.

Journey of Indian Rupee and Fiscal Deficit:Value of foreign exchange (in case of Rupee) doesn’t depend much on the scale of fiscal deficit amid India is less vulnerable to external currency debt. Below table shows the USD/INR move over a period of time and subsequent fiscal deficit which shows rupee was not influenced much with fiscal path.



Currency Table

News Flows of last week

14thAPR IMF to provide debtreliefto help 25 countries deal with pandemic
14th APR Fed to launch commercial paper liquidity backstop Tuesday..
14th APR U.S. import prices post biggest decline in over five years; more to come
15th APR U.S. manufacturing output posts largest drop since 1946
15th APR Japan's $1 trillion corona virus stimulus to lift GDP by 3.8% - Abe
15th APR Corona virus to hit Mideast growth more than 2008 crisis, 2015 oil shock - IMF
16th APR IMF gets $11.7 billion in pledges to aid poor countries to fight the corona virus pandemic.
17thAPR RBI surprises with reverse repo rate cutin bid to spur bank lending

Market Stance

In this week, dollar bid against emerging currencies including Indian rupee which is losing ground on frequent intervals faced another week of volatility amid the pandemic curve steepens in India. With lock-down now extended till 3rd May 2020, expectations of an abrupt fall in the economic activity pushed rupee to fall record low of 76.86. The growth outlook for Indian economy for next few quarters is highly challenging and on top of that mass cancellation of export orders prompted fear of dollar shortage in the system which is the prime reason for dollar to trade at a large premium. Meanwhile India's Merchandise Exports plunged by 34.6% and Imports dipped to 28.7% left trade deficit narrows to $9.8 billion which highlights the severity of great shutdown across the globe. However losses in rupee was pared based on flows especially less trading hours in banks prompted many corporation and foreign banks to jump in exchange to sell dollar for arbitrage opportunity. Meanwhile US Federal government attempted to create the Paycheck Protection Program (PPP) of forgivable small business loans and others incentives helped global markets to retain the positive sentiment. Although it has come too late to prevent the huge initial wave of layoffs - ( US unemployment claims ) but will be more useful in helping less directly affected firms stay afloat while limiting the rise in unemployment. Going forward, next week will be important for rupee in anticipation of large domestic fiscal stimulus path may direct dollar-rupee market.

Economic gauge for the next week

Technical Recommendation

USD/INR (APR) contract closed at 77.0300 on 16-Apr-2020. The contract made its high of 77.0675 on 16-Apr-2020 and a low of 76.3550 on 13-Apr-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.85

On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 62.30. One can buy@76.40-76.50 forthe target of 78.00 with the stop loss of 75.97.

EUR/INR (APR) contract closed 83.7550 on 16-Apr-2020. The contract made its high of 83.7375 on 13-Apr-2020 and a low of 83.2250 on 13-Apr-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe EUR/INR is currently at 82.78

On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 54.18. One can buy at 82.90-82.80 for a target of 84 with the stop loss of 81.30.

GBP/INR (APR) contract closed at 96.0875 on 16-Apr-2020. The contract made its high of 96.1675 on 16-Apr-2020 and a low of 94.7075 on 13-Apr-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 93.75

On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 58.80. One can buy at 95.00 for a target of 96.50 with the stop loss of 94.49.

JPY/INR (APR) contract closed at 71.4575 on 16-Apr-2020. The contract made its high of 71.4950 on 16-Apr-2020 and a low of 70.2650 on 13-Apr-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 69.92

On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 59.42. One can buy at 70.80-70.90 for a target of 72.5 with the stop loss of 70.39.




NCDEX gets SEBI go-ahead for Rs 500-cr IPO

Agricultural commodity bourse, National Commodity and Derivatives Exchange Ltd (NCDEX), has received capital market regulator Sebi's approval to launch the Rs 500-crore initial public offer (IPO). The offering comprises a fresh issue aggregating up to Rs 100 crore and an offer for sale of up to 1.44 crore shares, according to the draft red herring prospectus (DRHP). After BSE and MCX, this would be the third listing by an exchange. Build India Capital Advisors LLP, Canara Bank, Indian Farmers Fertiliser Cooperative, Investcorp Private Equity Fund I are among the selling shareholders. Besides, Jaypee Capital Services, National Bank for Agriculture and Rural Development, Oman India Joint Investment Fund and Punjab National Bank will also sell their stakes. The National Stock Exchange (NSE) holds 15 percent stake in the agricultural commodity exchange, while Life Insurance Corporation of India (LIC) and NABARD have 11.10 percent each. IFFCO has 10 per cent, Oman India Joint Investment Fund 10 per cent and Punjab National Bank 7.29 per cent, among others, according the DRHP. The book running lead managers to the offer are ICICI Securities and SBI Capital Markets. ICICI Securities is the coordinating lead manager for the issue. The shares are proposed to be listed on the BSE and NSE.





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Mutual funds add over 72 lakh folios in 2019-20, tally nears 9 crore mark

Mutual fund industry has added more than 72 lakh folios in 2019-20 taking the total tally to near 9 crore mark. However, the pace of growth in folio numbers dropped in the just concluded financial year 2019-20 as compared to preceding two fiscal, which suggests investors' understanding about market risks associated with such schemes. In comparison, the industry had added 1.13 crore investors account in 2018-19 and 1.6 crore accounts in 2017-18, according to data from Association of Mutual Funds in India. The mutual fund space saw an addition of over 67 lakh folios in 2016-17 and 59 lakh in 2015-16. According to the data, the number of folios with 44 fund houses rose to 8.97 crore at the end of March 2020 from 8.24 crore in March 2019, registering a gain of 72.89 lakh folios. Industry experts said the addition of folios indicates investors' understanding about market risks associated with the mutual fund schemes. Investor account in equity oriented schemes surged by over 15 lakh to 6.44 crore at the end of past fiscal from 6.29 crore in March 2019. However, debt-oriented scheme folios count dropped by 45 lakh to 71.78 lakh. Within the debt category, liquid funds continued to top the chart in terms of number of folios at 18.15 lakh, followed by low duration fund at 9.64 lakh fund houses. The 44-player mutual fund industry has assets under management(AUM) of Rs 22.26 lakh crore atthe end of March this year, as compared to Rs 23.8 lakh crore in March 2019.

Mutual funds investing in debt funds see Rs 1.95 lakh crore outflow in March

Mutual funds focussed on investing in fixed-income securities saw a massive outflow of Rs 1.95 lakh crore in March, after pulling out Rs 28,000 crore in the preceding month, mainly on account of withdrawal from liquid funds. According to Association of Mutual Funds in India (Amfi), mutual funds that invest in fixed-income securities saw an outflow to the tune of Rs 1.95 lakh crore last month as compared to a withdrawal of nearly Rs 28,000 crore in February. In January, the segment had witnessed a fund infusion of Rs 1.09 lakh crore. A total of Rs 1.10 lakh crore was taken out from liquid funds, which invest in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon. Apart from liquid funds, a net withdrawal of over Rs 29,000 crore was seen from ultra-short duration funds and nearly Rs 20,000 crore from low duration funds. In addition, banking and PSU funds saw an outflow to the tune of over Rs 6,300 crore, while the same for credit risk fund was over Rs 5,500 crore and corporate bond category close to Rs 3,800 crore. However, inflow in overnight schemes, which invest in securities with a maturity of one day, stood at Rs 26,654 crore.

Mutual Funds garner over Rs 1 lakh crore in FY20 with big bets on SIPs

According to the Association of Mutual Funds in India (Amfi), SIP contribution in the just concluded fiscal 2019-20 rose to Rs 1,00,084 crore from Rs 92,693 crore in 2018-19. Inflows into SIPs have averaged about Rs 8,200 crore in the past 12 months. Over the past few years, inflows through SIPs have been showing an upward trend. Investments of over Rs 67,000 crore through the mode were seen in 2017-18 and more than Rs 43,900 crore in 2016-17. Currently, mutual funds have 3.12 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. The industry, on an average, added 9.95 lakh SIP accounts each month during the last financial year, with an average ticket size of Rs 2,750. The 44-player mutual fund industry, which mainly depends on SIPs for inflows, had assets under management (AUM) of Rs 22.26 lakh crore at the end of March this year, as compared to Rs 23.8 lakh crore in March-end 2019.


  • Scheme Name
  • Fund Type
  • Fund Class
  • Opens on
  • Closes on
  • Investment Objective
  • Min. Investment
  • Fund Manager
  • Motilal Oswal S&P 500 Index Fund (MOFSP500)
  • Open Ended
  • Other Scheme - Index Funds
  • 15-Apr-2020
  • 23-Apr-2020
  • To the performance of S&P 500 Index subject to tracking error. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.
  • Rs. 500
  • Herin Visaria (foreign securities), Abhiroop Mukherjee (debt component).
  • Scheme Name
  • Fund Type
  • Fund Class
  • Opens on
  • Closes on
  • Investment Objective
  • Min. Investment
  • Fund Manager
  • Nippon India Fixed Horizon Fund - XLII - Series 5
  • Close-Ended
  • Income
  • 17-Apr-2020
  • 22-Apr-2020
  • To seek to generate returns and growth of capital by investing in a diversified portfolio of the following securities maturing on or before the date of maturity of the scheme with the objective of limiting interest rate volatility - Central and State Government securities and Other fixed income/ debt securities. However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved

  • Rs. 5000
  • Mr. Amit Tripathi



Performance Charts

EQUITY (Diversified)
TAX Fund
Due to their inherent short term nature, Short term funds have been sorted on the basis of 6month returns

Note:Indicative corpus are including Growth & Dividend option . The above mentioned data is on the basis of 08/08/2019 Beta, Sharpe and Standard Deviation are calculated on the basis of period: 1 year, frequency: Weekly Friday, RF: 7%

*Mutual Fund investments are subject to market risks, read all scheme related documents carefully















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Registered Address: 11/6-B, Shanti Chamber, Pusa Road, Delhi-110005, Tel +91-11-30111000 | website: www.smctradeonline.com

SEBI Reg. No. INZ000199438, Member: BSE (470), NSE (07714) & MSEI (1002), DP SEBI Regn. No. CDSL/NSDL-IN-DP-130-2015, Mutual Funds Distributor ARN No. 29345. SMC Comtrade Ltd. SEBI Regn. No. INZ000035839, Member: NCDEX (00021), MCX (8200) & ICEX (1010). SMC Investments and Advisors Limited, SEBI PMS Regn. No. INP000003435. SMC Insurance Brokers Pvt. Ltd. IRDAI Regn. No: DB 272/04 License No. 289 Valid upto 27/01/2020. Comtrade Ltd. • Real Estate Advisory services are offered through SMC Real Estate Advisors Pvt. Ltd.

Disclaimer: Investments in securities market are subject to market risks, read all the related documents carefully before investing • PMS is not offered in commodity derivative segment • Insurance is the subject matter of solicitation • All insurance products sold through SMC Insurance Brokers Pvt. Ltd. • Investment Banking Services provided by SMC Capitals Ltd. • Equity PMS and Wealth management services provided by SMC Investments & Advisors Ltd. • IPOs and Mutual Funds distribution services are provided by SMC Global Securities Ltd. • Financing Services provided by Moneywise Financial Services Pvt Ltd. • Commodity broking services provided by SMC Comtrade Ltd. Real State Advisiory services are offered through SMC Real State Advisiors Pvt. Ltd.



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