CESC Limited (CESC)

Muthoot Finance Limited (MUTHOOTFIN)

WEEKLY VIEW OF THE MARKET

Long rollover to July series was seen in the week gone by. Average rollover price is in the range of 11800 to 11850 levels. Smart recovery was seen led by short covering from lower levels. Calls writers covered their short positions and put writers were actively selling puts. Maximum put open interest buildup of more than 20 lakh shares is at 11700 puts, which should act as strong support zone. Next week Nifty is most likely to trade in the range of 11700 to 11900 with positive bias. Nifty has multiple strong supports at lower levels. Various supports are 11700 & 11650 spot levels. Option put writers were active in recent rally. We have seen put writing in 11600, 11700 puts. The Implied Volatility (IV) of calls closed at 13.87% while that for put options closed at 13.00%. The Nifty VIX for the week closed at 14.65% and is expected to remain sideways. Among Nifty Call options, the 11900-strike call has the highest open interest of more than 30 lakh shares, and in put side 11700-strike put has the highest open interest of over 20 lakh shares in open interest respectively. The PCR OI for the week closed up at 1.44 which indicates OTM put writing. On the technical front 11700-11750 spot levels is strong support zone and current trend is likely to continue towards 11850-11900 levels.

DERIVATIVE STRATEGIES

NIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN NIFTY OPTION OI (IN QTY) (MONTHLY)

BANKNIFTY OPTION OI CONCENTRATION (IN QTY) (MONTHLY)

CHANGE IN BANKNIFTY OPTION OI (IN QTY) (MONTHLY)

SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

Top 10 Rollover

Bottom 10 Rollover

SPICES

The downtrend in turmeric futures (July) is likely to continue & it may test 6200-6100 levels. The sentiments are bearish owing to lack of demand as farmers are not bringing quality produce to the mandis, rather busy in sowing practices of the new crop. After the increase pace of monsoon, improved sowing is witnessed in the key growing areas of Maharashtra, Telangana and Karnataka. At present, the farmers are seen reluctant to their turmeric as present price are not feasible for them, but are selling only to meet their domestic expenses. At the Erode Turmeric Merchants Association Sales Yard, finger turmeric sold at Rs.5,678-Rs.7,333 a quintal, root variety sold at Rs.5,300-Rs.6,529. The correction phase in jeera futures (July) is likely to continue as it may see 16450 levels on the downside. Jeera prices in Unjha are falling too, Gujarat, on account of adequate supplies. Arrivals have been steady at over 5,000-6,000 bags (1 bag = 55 kg) for the past few weeks. In Unjha, the benchmark market, exchange-quality jeera was sold at 17,200 rupees per 100 kg. Cardamom futures (July) is looking bullish for 3000 levels tracking unabated surge in prices at Spices Board of India's auctions in the wake of lower crop estimates. The average price of small cardamom was 3,150 rupees per kg auction held at Bodinayakanur in Tamil Nadu. Dhaniya futures (July) is expected to trade with a downside bias & move lower towards 6700-6600 levels. Poor demand from the domestic stockists & rise in inventories at exchange-accredited warehouses, is weighing on prices.

BULLIONS

Bullion counter may continue its sharp upside momentum as weaker greenback, fear of interest rate cut by Fed in upcoming meeting and uncertainty regarding US and China trade war to keep the sentiment upbeat. Moreover geopolitical tensions in the Middle East will also continue to assist the prices higher. Chinese president Xi stated that they would want to resume talks and negotiate on the terms again and also has asked to lift the sanctions on companies that US has put including Huawei. Although, President Trump also stated that, if there is no progress seen on trade talks with China, he will impose the additional tariffs on remaining goods from China. Gold (Aug) can further move higher towards 35100 while taking support near 33800 while silver (Sep) can test 39500 while taking support near 37500. Meanwhile, US economy grew at 3.1% in line with expectation. The US dollar index has recovered marginally from 3-month lows as comments from Fed officials dented market expectations of immediate and aggressive rate cuts by Fed. San Francisco President Mary Daly stated that any rate cut would be to boost growth but it is difficult to say whether interest rate will be lower a year from now. Gold silver ratio hovered around historical high of above 93 as gold continue to outperform silver. Gold, however, remains supported by dovish stance of Fed and other central banks, disappointing economic data from major economies and increased tensions between US and Iran. India's gold demand could fall in 2019 as a rally in local prices to a record high dents retail purchases during a key festive season.

OIL AND OILSEEDS

Soybean futures (July) is expected to witness a consolidation & trade with an upside bias in the range of 3600-3725 levels. Absence of monsoon rains has halted sowing operations in key growing areas of Madhya Pradesh and Rajasthan. The government has recommended that farmers wait for adequate monsoon rains and start sowing if rain water reaches 4 inches in the soil. Asmall delay in sowing may not hit the overall crop this year because soybean planting usually lasts till the third week of July. Some farmers continue sowing even till early August, but the yield from the crop sown later would be lower. On CBOT, U.S soybean futures (July) is seen facing resistance near $9.20 a bushel. The upside is getting capped as the traders are cautious owing to volatility in the weather over the major growing areas. It is being anticipated that this week the improved weather could prompt some farmers to plant more soy and could boost crop conditions. Mustard futures (July) is likely to stay on a strong foot & test 3980-4000 by taking support near 3895 levels. The spot prices are firm due to paucity of stocks in physical markets coupled with improved buying from oil millers & continuous procurement effort by NAFED. CPO futures (July) may witness an upside momentum towards 520-525 taking support near 503 levels, while soy oil futures (July) will probably continue to trade with a bullish bias towards 750-755, if sustains above 745 levels. It is reported that the farm ministry is working with government think tank NITI Aayog to devise ways to stem huge imports of edible oil in the country, and support the industry and domestic oilseed growers.

ENERGY COMPLEX

Crude oil prices may continue to witness further recovery as rising tensions in the Middle East will continue to support he prices. But investors will be edgy as outcome of OPEC meeting starting and US China trade war will be keenly watched. The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts. Markets are expecting the same rollover in the OPEC meet i.e. the extension of 1.2mbpd output cut deal in the meet. But Russia remains hesitant to go for an output cut extension. Crude oil may take support near 3850 levels and can move higher towards 4250 levels in near term. President Xi Jinping has stirred hopes that trade tensions could ease followed by the OPEC meet on 1st July 2019. Crude oil is also supported by increased tensions between US and Iran amid recent attacks in Middle-east and retaliatory sanctions by US on Tehran. However, supporting crude oil price is US EIAweekly report which noted a sharp 12.788 million barrels decline in US crude oil stocks as against expectations of a 2.8 mn bbl decline. US crude production fell for the third consecutive week to 12.1 million barrels per day. Natural gas may witness lower level buying can it can test 175 while taking support near 150. Natural gas prices rallied following a smaller than expected build in natural gas inventories. On demand front, weather forecasts show warmer weather in parts of US which will increase cooling demand.

OTHER COMMODITIES

Cotton futures (July) is expected to show some more weakness towards 21000 levels. The cotton sowing during the ongoing Kharif season in three states of north India Haryana, Rajasthan and Punjab has already topped the year-ago level, while the acreage in west and south India has been lagging, data provided by respective states showed. The acreage in south and western India has been down due to scanty rains. The total area in Punjab, Haryana and Rajasthan has reached 1.62 mln ha, up from 1.60 mln ha a year ago and also up from five-year average normal area of 1.47 mln ha, the data showed. Meanwhile, we may see a consolidation in U.S cotton futures in the range of 63-69 cents per pound. The market participants are cautious due to inexplicable change in weather during the ongoing sowing season. In the Midwest, relentless rain flooded fields. Meanwhile, parts of the Southeast have been gripped by extreme heat and drought. Both scenarios are terrible for farmers, who may plant less crop than projected. Castor seed futures (July) is expected to take support near 5360 levels & trade with an upside bias till 5550-5600 levels. This commodity is witnessing gains in key spot markets of Gujarat owing to decline in acreage.Area under kharif castor was at 2,039 ha as of June 20, down 72% on year, according to the latest data from the farm ministry. Cocud futures (July) may continue to face resistance near 2900 levels & witness profit booking. Sluggish demand from the cattle-feed industry as concerns over low availability of fodder eased, after monsoon progressed in the key drought-prone areas of Gujarat and Maharashtra, is seen weighing on prices.

BASE METALS

In base metal counter, Nickel and copper may witness lower level buying but further movement in base metals depend upon the news regarding the trade tensions between US and China. China's central bank stated that it will maintain support for the slowing economy as global risks rise, while vowing not to adopt "flood-like" stimulus that could exacerbate debt and structural risks. Copper may further recover towards 425 levels while taking support near 400 levels. Copper prices got some support following news that dozens of artisanal miners were killed when part of a copper and cobalt mine owned by Glencore collapsed in Congo. Refining charges in China have fallen, signaling a tightening in market, and Chinese copper premiums have started to make a comeback. Meanwhile, Lead may trade sideways as it can face resistance near 160 while taking support near 149 levels. Zinc may trade with weak bias as it can test 194 levels while taking resistance near 206 levels. Nickel can further recover towards 930 while taking support near 870 levels. The downside in Nickel may be capped amid supply worries. Meanwhile, production is also halted temporarily from Glencore’s Koniambo nickel plant in New Caledonia amid leak. Aluminium can test 135 levels while taking resistance near 148 levels. Aluminum downside may be capped amid reports of possible idling of Quebec Plant by Alcoa Corp. as it has threatened to idle the entire facility of Quebec Plant if workers don’t sign what it’s calling a “final offer’’.

TREND SHEET

TECHNICAL RECOMMENDATIONS

NICKEL MCX (SEP) contract closed at Rs. 1166.00 on 29th Aug’19. The contract made its high of Rs. 1184.50 on 30th Aug’19 and a low of Rs. 974.10 on 29th Jul’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 1040.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 81.062.

One can buy near Rs. 6800 for a target of Rs. 7250 with the stop loss of Rs. 6650

NICKEL MCX (JUL) contract closed at Rs. 911.90 on 27th Jun’19. The contract made its high of Rs. 912.90 on 27th Jun’19 and a low of Rs. 845.00 on 06th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 882.14. On the daily chart, the commodity has Relative Strength Index (14-day) value of 61.331.

One can buy around Rs. 895 for a target of Rs. 925 with the stop loss of Rs. 880.

GUARSEED NCDEX (JUL) contract was closed at Rs. 4170.00 on 27th Jun’19. The contract made its high of Rs. 4608.00 on 13th May’19 and a low of Rs. 4140.00 on 11th Jun’19.The 18- day Exponential Moving Average of the commodity is currently at Rs. 4347.40. On the daily chart,the commodity has Relative Strength Index (14-day) value of 34.782.

One can buy near Rs. 4150 for a target of Rs. 4300 with the stop loss of Rs 4075.

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NEWS DIGEST

• Euro zone economic sentiment main indicator of economic confidence dropped to 103.3 points in June from 105.2 a month earlier.

• India exported 319,000 tonnes of finished steel in May, down 28% from the same month last year and the lowest level since April 2016.

• Russia became the largest crude oil supplier to China in May, supported by robust demand from private refiners.

• US Conference Board stated that its consumer confidence index dropped 9.8 points to a reading of 121.5 last month, the lowest since September 2017.

• The Government has procured over 768,900 tons of chana, harvested in 2018-19 (Jul-Jun), in nine states as of 24th June, 2019 under the price support scheme.

• Aluminium stocks at MCX-accredited warehouses were at 2,518.4 tons as on 26th June, 2019. The stock is the highest since base metal contracts were brought under the compulsory delivery regime from April, as per SEBI's directions.

• MCX Copper Option 22 July 2019, 21 August 2019 and 19 September 2019 contracts will be available for trading with effect from June 27, 2019.

• The Australian Bureau has further downgraded its El Nino 'watch' status to ‘inactive.’ Separately, it reiterated that the positive Indian Ocean Dipole (IOD) phase will run from July to November

WEEKLY COMMENTARY

Buying spree was continued in commodities and it is evident by the fact that CRB is continuously trading up since last three week. The entire world was looking for the G 20 meet. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between U.S. President Donald Trump and Chinese President Xi Jinping on Saturday. Ahead of G20, gold took some correction from the higher levels as investors were cautious ahead of meeting. Decline in physical demand of gold in India at higher prices is also capping the upside. India's gold consumption dipped 1.5% in 2018 to 760.4 tonnes, below a 10-year average of 838 tonnes, according to data compiled by the World Gold Council. Gold prices extended losses after a revision to first-quarter gross domestic product data showed more inflationary pressure than previously thought. Silver also saw fall in the prices whereas in COME gold was up and silver was down. In energy counter, crude saw fresh buying. Crude prices rose, buoyed by an outage at a major refinery on the US East Coast and industry data that showed US crude stockpiles fell more than expected. Philadelphia Energy Solutions is expected to seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, as per the source. US crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, compared with analyst expectations for a decline of 2.5 million barrels. Natural gas prices bounced back from the lower level but stability on upper levels is doubtful. Copper prices were on track for their weakest quarterly performance since the end of 2015, weighed down by demand fears from the U.S.-China trade war. Nickel saw some buying whereas, lead, zinc and aluminum were down on trade dispute issue.

Soyabean traded up on lower acreage issue. Key growing areas for soybean have seen rainfall significantly below average for monsoon season. Mustard saw some buying after a four week fall. Castor seeds sentiments were positive owing to fall in the acreage of the oilseed and tracking gains in key spot markets of Gujarat. Prices of castor seed rose in Gujarat's key markets today due to rising demand from domestic stockists amid a fall in arrivals. Jeera prices dropped; the reason being its exports have fallen due to sluggish demand from China and Bangladesh. Cardamom prices rose further. The various reasons such as absence of carry-over stocks, last year’s production loss and anticipation of a delayed production this year is being attributed to this rally.

NCDEX TOP GAINERS & LOSERS (% Change)

WEEKLY STOCK POSITIONS IN WAREHOUSE (NCDEX)

MCX TOP GAINERS & LOSERS (% Change)

WEEKLY STOCK POSITIONS IN WAREHOUSE (MCX)

SPOT PRICES (% change)

WEEKLY STOCK POSITIONS IN LME (IN TONNES)

PRICES OF COMMODITIES IN LME/ COMEX/ NYMEX (in US $)

NATIONAL MISSION FOR VEGETABLE OILS

The government is soon going to launch new National Mission for Vegetable Oils to reduce reliance on hefty imports by promoting output of home-grown oilseeds, including palm oil. The imported cost of vegetable oil in India is around 73,000 crore rupees. So it is an urgent need to cut dependency on it. India, the world's top buyer, imports 14-15 mln tn of edible oil annually to meet domestic consumption of around 25 mln tn. Currently,the country does not produce enough edible oilto meet even half the requirement. So the farm ministry is working with government think tank NITI Aayog to devise ways to stem huge imports of edible oil in the country, and supportthe industry and domestic oilseed growers.

Palm oil accounts for 60% of the total edible oils imported annually, most of it from Indonesia and Malaysia. Most of the crude degummed soyoil is imported from Argentina, the world's third largest soybean producer, crude canola oil is purchased from Canada and crude sunflower oil is bought from Ukraine.

Measures under National Mission for Vegetable Oils to promote output of oilseeds

• There are many ways to curb imports such as levying cess on imports, increase base tariff, or increasing custom duties. But the mission will initially focus on providing subsidies on farm inputs and higher minimum support price.

• Procurement by state-run agencies will be pushed to encourage farmers to shift to oilseed crops.

• For the long term, the ministry is trying to add more area under oil palm plantation by announcing fair and remunerative price on fresh fruit bunches of oil palm at 8,000-8,500 rupees per ton. India has 325,000 ha under oil palm trees at present and it may grow to 350,000 ha in 2019-20 (Apr-Mar).

• However, of the total area under oil palm, fruit-bearing trees cover only 225,000 ha. The government aims to increase area under the plantation primarily in coastal areas and northeast.

• With new plantation, production may increase in next four to five years, which is the gestation period of the oil palm tree

• The government is also aiming to set up seed hubs in the country to provide good quality certified oilseed seeds to the farmers.

• The government is also aiming to set up seed hubs in the country to provide good quality certified oilseed seeds to the farmers.

INTERNATIONAL COMMODITY PRICES