2020: Issue 736, Week: 18th - 22nd May

A Weekly Update from SMC (For private circulation only)




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From The Desk Of Editor


n the week gone by, global markets witnessed mixed trend after the Federal I Reserve chief highlighted the risks facing the US economy after coronavirus shutdowns and as investors reacted to another dismal jobless-claims report. Growing investor worries about a second wave of coronavirus infections in the Chinese city where the pandemic had originated spooked investor sentiment. Meanwhile, Fed Chair Jerome Powell warned the economic outlook was "highly uncertain" and said Washington may need to spend beyond the nearly $3 trillion already approved by Congress.

Back at home, domestic markets witnessed sharp up and down moves as the first two tranches of domestic stimulus package failed to impress investors amid weakness in global stock markets. On Friday government unveiled the third tranches for agriculture and allied activities - fisheries, animal husbandry, dairy, etc. Finance minister has said that the stimulus announcements will be made in tranches. So, market participants are closely watching each announcement. Actually, market players were disappointed as the immediate spend out of the government's Rs 20 lakh crore fiscal stimulus packages was seen to be relatively small, raising doubts about the revival of growth any time soon. To note, Prime Minister Narendra Modi has announced a fiscal stimulus to spur growth and build a self-reliant India on the five important pillars of economy, infrastructure, technology-driven systems, demography and demand. The government has used both fiscal and monetary measures to address liquidity and asset quality concerns. The rupee slipped against the US dollar as investors await fresh cues from further announcements on the fiscal stimulus package. Going forward, Investors will continue to monitor developments on the global coronavirus virus pandemic, as concerns over the virus’ economic impact have sent markets into a whirlwind in recent weeks. Besides, movement of Currency, inflow and out flow of foreign fund and crude oil prices will continue to dictate the trend of the market going forward.

On the commodity market front, some most awaited recovery was witnessed in commodities and the commodities indices CRB closed near 124. Pause in rally in dollar index amid some ease in lockdown boosted the confidence of commodities meanwhile resurgence in cases in China, South Korea and Japan limited the upside. The US commodities regulator has issued a rare warning to brokers, exchanges and clearing houses, urging them to be ready for the risk that oil prices could again drop below zero. Nevertheless, crude prices are moving in upside direction. It can trade in a range of 1550-2200 in coming days. Silver may continue to outperform gold on technical breakout. It has potential to touch 45500. GDP of Japan and Russia, Employment Change and inflation of UK, ZEW Economic Sentiment Index of Euro and Germany, FOMC minutes and Markit Manufacturing PMI Flash of US and few inflation data of various countries are scheduled, which can influence commodities prices.

(Saurabh Jain)

SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.

SMC is a SEBI registered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.

SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.

The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.

SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.





• India's manufacturing output fell massively in March, when the country started its lockdown in a bid to slow the spread of the coronavirus, or Covid19, pandemic. Manufacturing output crashed 20.6 percent year-on-year in March. Mining production was unchanged, while electricity output dropped 6.8 percent.

• Finance Minister Nirmala Sitharaman has released the third tranche of the Rs.20 lakh crore economic packages on Friday with a focus on agriculture, fisheries and allied activities. In the previous two parts of the package, FM's focus was on MSMEs, NBFCs, MFIs, migrant workers, street vendors and small farmers. Prime Minister Narendra Modi has declared that the package is aimed at making India self-reliant. He has also hinted at bringing in several reforms to revive the Indian economy hit by the nationwide spread of the contagious coronavirus disease and the prolonged lockdown.


• Tata Motors announced the resumption of manufacturing operations for both Commercial and Passenger Vehicles from its plants located at Pantnagar (Uttarakhand) beginning last week and from Sanand (Gujarat). Tata Motors plants in Lucknow (Uttar Pradesh), Dharwad (Karnataka), Jamshedpur (Jharkhand) and Pune (only for Ambulance Vehicle manufacturing) are in final stage ofreadiness and expectto begin production overthe nextfew days. This commencement of operations follows receipt of all necessary approvals from relevantGovernment authorities.


• Glenmark Pharmaceuticals has initiated Phase 3 clinical trials in India on Antiviral tablet Favipiravir, for which it received approval from India's drug regulator DCGI in late April. Glenmark is the first company in India to initiate Phase 3 clinical trials on Favipiravir for COVID-19 patients in India. Favipiravir is a generic version of Avigan® of Fujifilm Toyama Chemical Co. Ltd., Japan, a subsidiary of Fujifilm Corporation.

• Cipla has signed a non-exclusive licensing agreement with Gilead Sciences, Inc. for the manufacturing and distribution of the investigational medicine Remdesivir, which has been issued an Emergency Use Authorization (EUA) by the U.S. Food and Drug Administration (FDA) to treat COVID-19 patients. This agreement is part of Cipla's efforts to enhance global access to lifesaving treatments for patients affected by the pandemic.

• Lupin announced the receipt of the Establishment Inspection Report (EIR) from the United States Food and Drug Administration (U.S. FDA) after closure of the inspection for its Vizag (Vishakhapatnam), India facility. The inspection for the API facility was conducted by the U.S. FDA between 13 January 2020 and 17 January 2020.

Capital Goods

• V-Guard Industries has partially resumed operations at various offices and warehouses with limited workforce. With a view to maintain the socialdistancing norms, the Company continues to provide the facility of Work from Home to employees.


• Ircon International has signed a Memorandum of Understanding with RZD International LLC, a subsidiary of state-owned Russian Railways Company to explore opportunities for joint development of railways and other infrastructure projects in Asia, Africa and Latin America.


• US consumer credit fell by $12.1 billion in March after surging up by a downwardly revised $20.0 billion in February. The pullback came as a surprise to economists, who had expected creditto increase by $15.0 billion compared to the $22.3 billion jump originally reported forthe previous month.

• US import prices plunged by 2.6 percent in April after tumbling by a revised 2.4 percent in March. Economists had expected import prices to plummet by 3.1 percent compared to the 2.3 percent slump originally reported for the previous month.

• US initial jobless claims fell to 2.981 million, a decrease of 195,000 from the previous week's revised level of 3.176 million. Economists had expected jobless claims to tumble to 2.5 million from the 3.169 million originally reported for the previous week.

• US producer price index for final demand tumbled by 1.3 percent in April after edging down by 0.2 percent in March. Economists had expected prices to drop by 0.5 percent.

• China’s Industrial production grew 3.9 percent in April from the last year, reversing a 1.1 percent fall in March. Economists had forecast a moderate 1.5 percent growth.

• Producer prices in Japan were down 1.5 percent on month in April, the Bank of Japan said - missing forecasts for a decline of 0.9 percent, which would have been unchanged from the March reading.





Beat the street - Fundamental Analysis


CMP: 438.55

Target Price: 547

Upside: 25%


Face Value (Rs.) 10.00
52 Week High/Low 535.50/298.00
M.Cap (Rs. in Cr.) 4688.74
EPS (Rs.) 23.88
P/E Ratio (times) 18.36
P/B Ratio (times) 2.65
Dividend Yield (%) 0.57
Stock Exchange BSE


Investment Rationale

• Laurus Labs researches, develops, and manufactures active pharmaceutical ingredients for therapeutic areas of anti-retrovirals and hepatitis C. The drug maker serves customers worldwide.

• Recently, the company and its partner Rising Pharmaceuticals manufacture Hydroxychloroquine Sulphate (HCQ), USP Tablets under an FDA approved drug application. Rising Pharmaceuticals is the exclusive distributor of the product in the US. Moreover, according to the management, HCQ prices have jumped anywhere between around 3.5 times in the US as the market continues to be plagued by shortage.

• The company’s formulations business led by LMIC tender business continues to deliver robust growth resulting in 30% revenue contribution for the year. Along with the Tender business, the company is also seeing many new opportunities in developed markets of North America & Europe.

• According to the management, the company continues to file 8-10 ANDAs a year as it expects many long-term opportunities in US generics space. Its Custom Synthesis business has maintained its growth trajectory with higher volumes from the CDMO business.'

• Its Other API business segment has posted healthy growth with higher volumes and new product introduction and management expects this growth rate to continue and improve in the coming quarters. Moreover, Anti Viral API revenues grew on a sequential basis..

• During Q4 FY20, total Revenues from Operations came in at Rs.2831.70 crore for FY20. Its gross

Margins continue to show improvement on the back of better product mix from FDF & Custom Synthesis businesses. With the improvement, EBITDA margins has showed a meaningful improvement at 20 % for FY20. All its greenfield units have turned cash positive this year and reported a pre-tax ROCE of 14 %. ( language maam pls correct it)


• Global Economic Volatility and Regulatory Risk

• Currency fluctuation


The Company is financially stable and during FY20 has recorded highest ever Revenue, EBITDA and Profit numbers. The management of the company expects API and other than API business such as FDF would achieve stable revenues in FY21 and with the healthy order book also very confident to achieve improved return ratios.. Thus, it is expected that the stock will see a price target of Rs.547 in 8 to 10 months time frame on current P/Ex of 18x and FY21 earnings of Rs.30.40.


CMP: 360.95

Target Price: 446

Upside: 23%


Face Value (Rs.) 2.00
52 Week High/Low 505.95/286.25
M.Cap (Rs. in Cr.) 2498.76
EPS (Rs.) 18.93
P/E Ratio (times) 19.07
P/B Ratio (times) 4.13
Dividend Yield (%) 1.66
Stock Exchange BSE


Investment Rationale

• Sudarshan Chemical Industries manufactures and sells a wide range of Organic and Inorganic Pigments, Effect Pigments and Agro Chemicals. The Company also manufactures Vessels and Agitators for industrial applications.

• The company expects capex of Rs 230 crore for FY21, around 70% of the capex would be targeted at increasing the production capacity, especially for value-added pigments, and introduction of new products.

• The company is the largest pigment manufacturer in India and the fourth largest pigment manufacturer in the world with overall market share of about 35% in India and 3% (estimated) in the global market. According to the company, none of the domestic competitors have presence across all the segments.

• To cater to the developed markets of Europe, North America and Mexico, the management has set up marketing subsidiaries in these geographies. The subsidiaries are likely to support revenue growth over the coming years.

• Recently, it has received necessary permissions to restart production at its manufacturing facility located at Mahad (Maharashtra). The company’s manufacturing facilities at Roha & Mahad as well as company’s other offices were temporarily suspended due to pandemic of novel Coronavirus (COVID-19).

• Indian chemicals players will benefit from the expanding specialty chemicals market globally led b y g r owi n g n ew a p p li c a ti o n s a l o n g s i d e manufacturing shifts from China ― which has been battered by reliability and transparency woes; and EU, due to its ageing workforce; focus on innovation, and M&As.

• Consolidated Q3FY20 income from operations grew 8% to Rs 424 crore compared to Q3FY 19. PAT reported was up 72% to Rs 28.31 crore. The company is confident of good performance in the upcoming quarters.


• Largeworkingcapitalrequirement.

• Risks related to volatility in commodity prices


The company dominates the Indian pigment industry with a market share of around 35% and has presence across azo, phthalocyanine and sub-segments of high-performance pigments. The revenues growth is likely to be underpinned by the increased capacity of existing products and launch of new products. The margins are expected to remain resilient due to an improved product mix, backward integration, cost optimisation, and higher operating leverage. Thus, it is expected that the stock will see a price target of Rs.446 in 8 to 10 months time frame on target P/BV of 4x and FY21 (E) book value of Rs.111.44.

Source: Company Website Reuters Capitaline

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



Beat the Street-Technical Analysis

Cadila Healthcare Limited (CADILAHC)

The stock closed at Rs 332.20 on 15th May 2020. It made a 52-week low at Rs 202 on 13th March 2020 and a 52-week high of Rs. 374 on 09th April, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 280.51

As we can see on charts that stock is forming a “Bull Flag” pattern on weekly charts, which is bullish in nature. Last week, stock tried to give the breakout of the same but couldn’t hold the high levels and closed in green along with positive bias. So, follow up buying may continue for coming days. Therefore, one can buy in the range of 325-328 levels for the upside target of 355-365 levels with SL below 308.

Glenmark Pharmaceuticals Limited (GLENMARK)

The stock closed at Rs 339.65 on 15th May 2020. It made a 52-week low of Rs 161.65 on 13th March 2019 and a 52-week high of Rs. 614 on 15th May, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 347.41

Short term and medium term bias are looking positive for the stock as it is trading in higher highs and higher lows on weekly charts, which is bullish in nature. Apart from this, it’s forming an “Inverted Head and Shoulder” pattern and likely to give the breakout of same. So, buying momentum may continue for coming days. Therefore, one can buy in the range of 332-335 levels for the upside target of 375-380 levels with SL below 305.

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




Indian markets witnessed see saw moves in the week gone by and settled with marginal losses with mixed sentiments. Selling pressure was seen in banking, auto and reality sector while pharma counter supported the markets up to some extent. From derivative front , the tug of war between bulls and bears kept the markets in range of 9000-9500 levels during the week. However, call writers were seen shifting to lower band which indicates limited upside into the index as of now. On higher side, 9300-9400 levels would act crucial resistance for nifty while slide below 9000 levels would add further selling pressure into the markets. The Implied Volatility (IV) of calls closed at 33.42% while that for put options closed at 34.86%. The Nifty VIX for the week closed at 38.18% and is expected to remain volatile. PCR OI for the week closed at 1.14 down as compared to last week at 1.28 which indicates more call writing than put. At the current juncture, traders should remain focussed on stock-specific moves and are advised to trade cautiously tracking global markets as volatility is likely to grip the domestic markets in the coming few sessions as well.












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




Turmeric futures (June) is likely to find support near 5000-4900 levels. The counter is in oversold region and it is attracting the stockists to fill up their inventories at such bottom available prices. With over 60% of the units involved in processing turmeric and making value-added products started functioning, turmeric trading is nearing normalcy in Erode. More traders have started arriving and the market will be back to normal soon, and added that once all the units started functioning, demand for turmeric would go up. Jeera futures (June) is seen to trade on a bearish bath towards 13000, facing resistance near 13700 levels. It is reported that the Agriculture Produce Market Committee (AMPC) of Unjha, will resume auction of the spice seeds from this weekend in a staggered manner. Every season, March to May is considered peak season of jeera marketing in Gujarat, the largest producer of spice seed in India. This year, the crop was delayed by around two weeks due to late retreat of monsoon. However, just when arrivals started peaking, the yard was closed since March 22 due to the outbreak of novel coronavirus. So when the auctions will resume, probably the counter will witness a selling pressure, against lack of export demand. Dhaniya futures (June) will possibly descend towards 5400-5200 levels. In the present scenario, the Farmers appear to be on a selling mode to meet their financial needs to clear the outstanding dues of agriculture loans. Moreover, demand has taken a hit as departure of labour has affected the functioning of many spices industries especially in Maharashtra, Madhya Pradesh, Rajasthan, Delhi. The buyers are unable to get neither discounts, nor sellers a premium rates for their produce.


Bullion counter may continue to extend its upside momentum as rising U.S.- China tensions over the coronavirus and weak economic data from U S and talks of further U.S. stimulus is assisting the prices higher. U.S. President Donald Trump is open to negotiations on another possible stimulus bill amid the pandemic, but not the one put forward by House of Representatives Democrats. Trump also signalled a further deterioration of his relationship with China over the virus, saying he has no interest in speaking to President Xi Jinping right now and going so far as to suggest he could even cut ties with Beijing. U.S. President Donald Trump stated that he opposed renegotiating the U.S.-China "Phase 1" trade deal after a Chinese state-run newspaper reported some government advisers in Beijing were urging fresh talks and possibly invalidating the agreement. SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund stood at 1,104.72 tonnes. Gold can move towards 47500 levels while taking support near 46000 levels while silver may move higher towards 45500 levels while taking support near 42500. Federal Reserve Chair Jerome Powell's signalled bets that the U.S. central bank will pursue a negative interest-rate policy are off-base, but vowed to use its power as needed and called for additional fiscal spending to prop up the virus-hit economy. According to World Gold Council (WGC) “Higher risk and uncertainty combined with lower opportunity cost will likely be supportive of gold investment demand in 2020”. Gold, as an asset class, benefits from widespread stimulus measures because it is considered a hedge against inflation and currency debasement.


Soybean futures (June) may continue to face resistance near 3850 levels and trade with a downside bias. The reason being is that this kharif season has brightened the prospects for soybean cultivation starting next month. The Soybean Processors Association of India estimates carryover stock to rise to 13.26 lakh tonnes at the end of September. The markets haven’t opened in many regions. But as the trade expects markets to resume operations after the lifting of the lockdown, farmers are likely to flush the market with the stocks available with them, which is about 4 million tonnes as on May 1. This is considerable quantity for the next five months. And without exports, we may be left with a good amount of carry-forward stock for the next season. Mustard futures (June) may witness a consolidation in the range of 4120-4250 levels. The upside may remain limited due to lack of cues from the spot markets. The procurement of mustard continues interrupted in Rajasthan despite closure of all 247 agricultural produce marketing committee (APMC) mandis due to the ongoing strike in the state. These mandis were observing a strike to protest against the imposition of 2 percent farmer’s welfare cess. Soy oil futures (June) may remain stable & trade with a positive bias in the range of 745-775, while CPO futures (May) is likely to trade on a positive note in the range of 585- 620 levels. The sentiments of the market participants have turned positive after U.S. exporters inked their first soybean oil export deal with China in nearly two years last week, as Beijing seeks to fulfill its purchase commitments in the Phase 1 trade agreement it signed in January.


Crude oil may witness upside movement as International Energy Agency (IEA) predicted crude stockpiles would start to shrink in second-half 2020 after surging while the coronavirus pandemic slashed fuel demand. Prices have been lifted by more signs that oil output is falling among OPEC and other major producers, a grouping known as OPEC+. But the market mood remains cautious, with the coronavirus pandemic far from over and new clusters emerging in countries where lockdowns have been eased. Crude oil can recover towards 2500 by taking support near 1600. Still, as demand increases with the easing of lockdowns to get economies going again, the IEA expects crude inventories to fall by about 5.5 million bpd in the second half of this year. OPEC+ had already agreed to cut production by nearly 10 million bpd, a record amount, and Saudi Arabia extended its planned reductions for June, pledging earlier this week to slashing production by nearly 5 million barrels per day. The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia agreed in April to curtail their production by 9.7 million barrels per day (bpd) in May and June. Saudi Arabia, de facto leader of OPEC, also said it would cut its oil output by an additional 1 million bpd to 7.5 million bpd starting in June. Natural gas can witness some recovery as it may test 140 levels while taking support near 120 levels. The weather is expected to be warmer than normal over the next 6-10 and 8-14 days which should keep inventory withdrawals at the average rate.


Cotton futures (May) is expected to trade higher towards 16200, taking support near 15000 levels. The U.S Department of Agriculture estimates that India’s mill consumption in MY 2020/21 to be two percent higher than last year. The marginal increase is expected as textile industry operations restart and begin the process of recovery after the impact of the lockdown in MY 2019/20. On the export front, Indian exporters will witness increased competition from exporters such as the United States and Brazil, whose export orders have also been deferred/canceled and will have larger volume of unsold stocks to offload. Moreover, the imports may decline further as a weakening rupee coupled with lower demand will limit cotton imports to only high/premium grades. Chana futures (June) is likely to witness towards correction towards 4000, facing resistance near 4200 levels. The Department of Agriculture, Cooperation and Farmers Welfare stated in a latest update that sowing of pulses continues at a good pace despite the nation-wide lockdown. About 10.35 lakh ha area coverage under pulses as compared to 5.92 lakh ha. during the corresponding period of last year. The bearish momentum will possibly continue to persist over mentha oil futures (May) and in days to come, it can slide down to test 1100-1080 levels. This season, the acreage of menthe in the major grown state of Uttar Pradesh has totaled to 200,000 hectares. It is reported that the sate government is ensuring that the farmers do not face any shortage in the ongoing zaid sowing season, which is a short season between kharif (summer) and rabi (winter) season in the months of March to July. The Zaid crops are grown on irrigated land and do not depend upon monsoon for irrigation.


Base metals may witness mixed movement. New bank lending in China fell less than expected in April from the previous month while growth of broad money supply quickened, as the central bank ramped up policy support for the coronavirus-ravaged economy. Recently Trump suggested he could cut ties with the China, signalling a further deterioration in the relationship that could potentially hurt sentiment and raise fears of more tariffs along with impacting metals demand. But there are hopes that more stimulus to help global economies could boost demand for metals. Copper may test 416 while taking support near 390. Fundamentals for copper are expected to be relatively strong as lockdowns in producer countries limits supply and helps to offset the drop in demand. Chile, the world’s biggest copper producer, announced a general quarantine for greater Santiago to force down a sharp resurgence of coronavirus cases. Zinc may recover towards 160 levels by taking support near 145 levels. Lead may face resistance near 140 levels while taking support near 130 levels. French metals producer Recylex its Weser-Metall lead production plant in Germany had filed for insolvency amid falling metal demand. Nickel may witness recovery towards 960 levels while taking support near 900 levels. Aluminum also may remain in narrow range of 130-138 levels. The huge costs involved in suspending and restarting aluminum smelters have mostly prevented any significant supply cuts. Aluminum stocks are likely to climb and, as was the case after the global financial crisis (GFC), stocks should remain high for several years, a key factor holding back any recovery in prices.





CRUDE OIL MCX (JUNE) contract closed at Rs. 2115 on 14th May’2020. The contract made its high of Rs. 3620 on 28th Feb’2020 and a low of Rs.1361 on 22nd Apr’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs.1749.58 On the daily chart, the commodity has Relative Strength Index (14-day) value of 58.61.

One can buy around Rs. 2000 for a target of Rs.2500 with the stop loss of Rs.1820.

SILVER MCX (JULY) contract closed at Rs. 44135 on 14th May’2020. The contract made its high of Rs. 48999 on 18th Feb’2020 and a low of Rs. 34076 on 18th Mar’2020. The 18- day Exponential Moving Average of the commodity is currently at Rs. 42780.93 on the daily chart, the commodity has Relative Strength Index (14-day) value of 67.60.

One can buy around Rs.43300 for a target of Rs. 46000 with the stop loss of Rs. 42000.

GUARGUM NCDEX (JUNE) contract was closed at Rs. 5150 on 14th May’2020. The contract made its high of Rs. 5835 on 16th Apr’2020 and a low of Rs. 4717 on 28th Apr’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 5191.88onthedailychart,thecommodityhasRelativeStrengthIndex(14-day)valueof53.4.

One can buy at Rs. 5230 for a target of Rs.5550 with the stop loss of Rs 5120.




Ÿ Interest subvention and prompt repayment incentive on crop loans due from 1st March has been extended to 31st May. - Ministry of Finance.

Ÿ Additional Margin applicable on both long and short side in allthe running contracts and in contracts to be launched of Soy Bean, Refined Soy Oil and Rapeseed-Mustard Seed is withdrawnfrombeginningoftradingdayMay14,2020

Ÿ The export of oilmeals during March 2020 is provisionally reported at 177,003 tons compared to 382,852 tons in March, 2019 i.e. down by 54%. - Solvent Extractors’Association of India.

Ÿ Saudi Aramco, the world’s largest oil exporter, reduced the volume of crude it will supply to at least three buyers in Asia by as much as 30% for June.

Ÿ The Shanghai Futures Exchange (ShFE) will allow delivery of nickel briquettes against its nickel futures contracts later this year in response to rising demand for other forms ofthe metal, notably for electric vehicles (Evs).

Ÿ China’s monthly auto sales rose for the first time in almost two years as the country eased virus-related curbs and reopened for business.

Ÿ HSBC Holdings Plc suffered mark-to-market losses of about $200 million in a single day in March after gold prices in London and New York diverged dramatically.

Ÿ Iraq is cutting its oil output by around 700,000 barrels per day (bpd), a third less than required under an OPEC+ supply pact.


Some most awaited recovery was witnessed in commodities and the commodities indices, CRB, closed near 124. Pause in rally in dollar index amid some ease in lockdown boosted the confidence of commodities meanwhile resurgence in cases in China, South Korea and Japan limited the upside. The US dollar erased earlier losses as Fed rejected the idea of using negative interest rates as a stimulative tool, even as he sounded a gloomy note about economic growth. Gold prices rose as mounting fears about a likely deep recession prompted traders to seek the safe haven asset. Retaliation by US against China also propped up bullion counter. Silver outperformed gold last week. Silver crossed the mark of 44700 whereas gold after breaking the resistance of 46100, crossed 46700. Crude oil prices moved up as data showing a drop in U.S. stockpiles as well as a decline in output last week. EIA showed U.S. crude stockpiles declined by 745,000 barrels last week, as against expectations of over 4 million-barrel rise. Natural gas continued the fall from 162 to 122 in last two trading weeks. In the later part of the week, some buying had emerged. Base metals took correction on fears of a second wave of coronavirus infections in top metals consumer China and in South Korea amid some worse than expected data’s. IMF said it was “very likely" the Fund would cut global growth forecasts further as the pandemic was hitting many economies harder than previously projected. China’s services activity contracted for the third month in a row in April due to decreasing demand both at home and overseas amid the pandemic

Cotton and cotton oil seeds cake rose from lower levels. Global cotton consumption is likely to fall 11.8%. CCI has revised its bulk discount slabs for the bales of quality cotton stock procured in 2018-19 (Oct-Sep) and 2019-20 marketing years. ICE cotton futures rose to a near one-week high on Thursday helped by a positive US government export sales report that included sales to China and on hopes of more demand from the top consumer. CPO moved up from lower levels on surge in crude prices, nevertheless buying was limited. Palm oil prices have room to fall further and are getting close to the cost of production. China’s vegetable oil imports are going to shrink this year because of higher crushing of oilseeds locally. Soybean sentiments remained weak on forecasts of good weather in the Midwest likely to support big crops pressured futures, but hopes of a pick-up in Chinese export purchases helped limit losses. SEAof India has compiled the export data for export of oilmeals for the month of March 2020. The export of oilmeals during March 2020 is provisionally reported at 177,003 tons compared to 382,852 tons in March, 2019 i.e. down by 54%.







SPOT PRICES (% change)



Global stimulus packages to spur the economy

The happiness & excitement of New Year 2020 had disappeared immediately as the most deadly coronavirus originated from city Wuhan of China started to expand and had taken nearly 90% of world in its grip. The worst crisis has forced the world economy under global lockdown and is disrupting supply chains, depressing consumer demand and putting millions out of work. The current global downturn is expected to be the worst since the 1930s with U.S. unemployment soaring to 33 million since the middle of March and the EU announcing it is expecting its collective GDP to shrink by 7.4 percent this year. The IMF’s April projection for a 3% contraction the global economy would mark the steepest downturn since the Great Depression of the 1930s. IMF also warned that outcomes could be far worse, depending on the course of the pandemic.

The growing steps of stimulus

Global responses to combat with coronavirus and to pull back the corona hit economy on track of growth are quite different compared to economic size. Central banks and governments have unveiled an estimated $15 trillion of stimulus already to shield their economies from the coronavirus pandemic. The sum equates to about 17% of an $87 trillion global economy last year. Central banks will also buy more bonds; with some saying there is no cap on purchases.

U.S. has committed to the largest rescue package of any country in pure dollar terms over three congressional stimulus phases ($8.3 billion, $192 billion and $2.5 trillion). But in term of percentage, the U.S. measures are estimated 13 percent of GDP and it is actually trails Japan's measures which equate to just over 21 percent of GDP. It has outlined USD 1.1 trillion recovery package and plans for further spending. In Europe where Spain and Italy have endured devastating coronavius outbreaks, the size of stimulus packages are estimated to be 7.3 percent and 5.7 percent of GDP respectively. Germany has announced a spending of around USD 815 billion, equal to 10.7 per cent of its GDP. Italy has announced an Euro 750 billion (around USD 815 billion) package.

Mega-stimulus for Atma-Nirbhar Bharat Abhiyan

In India, relatively lesser spread of corona than other developed countries, the government also come with a mega-stimulus package. The initial stimulus package of Rs 1.7 lakh crore in March, followed by liquidity measures by the RBI and now, the stimulus package of Rs 20 lakh crore may help the Indian economy towards a vertical (V-shape) recovery. India’s Atma-nirbhar Bharat Abhiyan or Self-reliant India Mission is about 10 per cent of India’s GDP in 2019-20 and would rank behind Japan, the US, Sweden, Australia and Germany. The UN has welcomed India's Covid-19 megastimulus package, even as it slashed India’s growth rate for this fiscal year to 1.2 per cent. By this mega-stimulus package, the Indian government has tried to balance between supply side of the economy and demand constraints.

The pace and strength of the recovery from the current crisis not only hinges on the efficacy of public health measures in slowing the spread of the virus, but also on the ability of countries to protect jobs and incomes, particularly of the most vulnerable members of our societies.




Currency Table

News Flows of last week

12th MAY China announces new tariff waivers for some U.S. imports
12th MAY House Democrats float $3 trillion coronavirus bill, Republicans reject it
12th MAY India to provide $266 billion to boost pandemic-hit economy
13th MAY U.S. reports record $738 billion budget deficit in April
13th MAY UK GDP shrinks by record 5.8% in March, harder COVID hit ahead
13th MAY India unveils major credit line for small businesses, lenders
14th MAY Second layoffs, backlogs wave keeps U.S. jobless claims elevated
14th MAY Trump says he doesn't want to talk to Xi right now, could even cut China ties

Market Stance

Indian Rupee reversed the gain made this week after euphoria got faded from the fiscal stimulus package announcement to revive the economy. Further rupee was driven by risk-aversion dollar bid in last few trading session prompted many Importers to cover their imports obligations. We are constantly suggesting that any rise in rupee will be eaten out and on top of that RBI's intervention to buy dollar whenever rupee tends to rise beyond 75.20 support our view of weaker rupee. However expectations of dollar flows this month will keep the pair in a narrow range of one and half of rupee for instance REC Ltd has raised roughly $500 million and at the same time this week ended Thursday capital outflow over $1 billion are such flows to keep the pair in-check. We are expecting such narrow move to continue on coming days unless any major trigger comes from global side. Meanwhile markets are turning cautious after Trump has warned that he could “cut off the whole relationship” with China, in the latest escalation of US tensions with Beijing as he increasingly blames China for the global spread of the corona virus . From the majors, Pound hit seven week low after fear of further rate cut by Bank of England. Earlier BoE Governor has advocated for negative rate oil required, however we think it’s too early for BoE to push the rate into negative territory. Going forward next economic weekly calendar will guide the major pairs especially flash PMIs from Euro zone at a time when most of the European economies are resuming their economic activities.

Economic gauge for the next week

Technical Recommendation

USD/INR (MAY) contract closed at 75.6400 on 14-May-2020. The contract made its high of 76.0900 on 12-May-2020 and a low of 75.1100 on 13-May-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.93

On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 46.24. One can buy @ 75.50 for the target of 76.50 with the stop loss of 74.99.

EUR/INR (MAY) contract closed at 81.5550 on 14-May-2020. The contract made its high of 82.2125 on 12-May-2020 and a low of 81.5025 on 14-May-2020 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 82.34

On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 42.65. One can buy at 81.4 for a target of 82.5 with the stop loss of 80.90.

GBP/INR (MAY) contract closed at 92.2525 on 14-May-2020. The contract made its high of 94.2500 on 11-May-2020 and a low of 92.0450 on 14-May-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 93.72.

On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 36.95. One can sell at 92.50 for a target of 91.5 with the stop loss of 93.1.

JPY/INR (MAY) contract closed at 70.6175 on 14-May-2020. The contract made its high of 71.0000 on 11-May-2020 and a low of 70.0775 on 13-May-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 70.75

On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 48.6. One can buy at 70.5 for a target of 71.5 with the stop loss of 69.99.







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BSE StAR MF contributes 61% of industry's net equity inflow in April

Mutual funds distributor platform BSE StAR MF contributed Rs 3,806 crore as net equity inflow in April, which is 61 percent of the MF industry's total Rs 6,212 crore. In 2019-20, the platform contributed Rs 56,038 crore as net equity inflow, which is 66 percent of the mutual fund (MF) industry's net inflow of Rs 83,781 crore, the BSE said in a statement. It processed over 63.17 lakh transactions amounting to Rs 37,200 crore in April despite the nationwide lockdown due to coronavirus pandemic as it helped AMCs, members and their clients in smooth paperless transactions. Overall, the platform achieved 5.75 crore transactions in financial year 2019-20. The platform registered 2.54 lakh new systematic investment plans (SIPs) amounting to Rs 60 crore last month. At present, total SIP book size stands at 39.54 lakh amounting to Rs 1,180 crore. BSE StAR MF App (StAR MF Mobility) has processed over 4.47 lakh transactions since its launch in May 2019, amounting to over Rs 3,561 crore.

SIP inflows register decline in March, folios rise in April

The inflows into systematic investment plans or better known as SIPs fell to Rs 8,376.11 crore compared to Rs 8,641.20 crore in March 2020. SIP contribution for April 2019 stood at Rs 8,238 crore. However, the month of April saw an addition in number of SIP folios. The industry added 1,93,761 accounts taking the total number of folio count to 3.13 lakh crore. In April, SIPAUMs stood at Rs 2.75 lakh crore, up by Rs 36,096.75 crores from March 2020. SIP is an investment method offered by mutual funds through which one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals - say once a month -- instead of making a lump-sum investment.



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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