lobal equity markets sentiments got spooked due to renewed worries over the GU.S.-China trade standoff after reports the United States has another Chinese tech firm in its sights. The fear of escalation of trade war forced investors to sought refuge in gold and bonds. On the flip side, bond yields and crude oil also plunged as the rising risk spread through other markets and this has prompted a warning from the IMF of the increasing risks to the global economy. Worries over German manufacturing and European parliamentary elections, UK political turmoil kept investor out of the market. Meanwhile, the release of minutes from the Fed's last meeting showed their patient approach to monetary policy could remain in place "for some time," a further sign policymakers see little need to change rates. In the meantime, the Japanese government downgraded its view of industrial production and other key parts of the economy, highlighting concerns about the U.S.-China trade.
Back at home, despite negative global cues, on Thursday, both Sensex & Nifty breached their historic mark for the first time as emerging trends suggested continuity PM Modi-led government for the second term. Nifty hit 12,000 mark for first time while Sensex surged over 40,000. However, profit booking at higher levels dragged the index to close lower. Now, the political uncertainty has eased after BJP’s victory, however, the current trade tensions between China and the US is giving headache to investors across the globe. The NDA 2 government is expected to push ahead with an agenda to put Indian economy on track. According to a report by the United Nations, India's economy is projected to grow at 7.1 per cent in fiscal year 2020 on the back of strong domestic consumption and investment. However, it has also said that the global growth outlook has weakened amid unresolved trade tensions and elevated international policy uncertainty. Going for the next week, market is expected to take cues from the global as well as domestic factors. It will also equally watch the progress of the Monsoon amid factors such as crude oil price, rupee movement, and foreign inflow/out flow of funds besides other factors.
On the commodity market front, Commodities saw some volatile trade; high fluctuations in currency also added wild swing in the prices. Crude attracted the most attention with its massive fall. Oil prices plunged nearly 6% Thursday in this year's worst drop and the worst fall since the start of OPEC production cuts in December. The escalating U.S.-China trade war and huge crude pileups from weak refiner demand combined to roil the market. In agri commodities, Jeera saw some healthy profit booking though overall trend is still bullish. The lower output in Syria and Turkey has led to a shift in demand to India & hence jeera is witnessing a buying spree from exporters as well as bulk buyers. GDP of Switzerland, Consumer Confidence Index, GDP, PCE Core and Advance Goods Trade Balance of US, BOJ Kuroda speaks in Tokyo, German Unemployment Claims Rate and CPI¸ Bank of Canada Rate Decision and GDP¸ Manufacturing PMI of China, etc are few important data to be released this week which may give significant direction to the commodities.
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• Prime Minister Narendra Modi roared back to power in a historic victory in which the Bharatiya Janata Party bagged more than 50% of the votes in 17 states and union territories. After Jawaharlal Nehru and Indira Gandhi, Narendra Modi is the third prime minister of the country who has been able to retain power for a second term with full majority in Lok Sabha.
• According to a report by the United Nations, India's economy is projected to grow at 7.1 per cent in fiscal year 2020 on the back of strong domestic consumption and investment but the GDP growth is a downward revision from the 7.4 per cent estimated in January this year.
• DLF is looking to double its rental portfolio to Rs 4,700 crore in the next three years. The company's rental arm, DLF Cyber City Developers (DCCDL), had a rental of Rs 2,510 crore in FY19. DLF has forecast a rental growth of 20 per cent on a compound annual growth rate (CAGR) basis.
• JMC Projects (India) secured new orders worth of Rs 616 crore for residential and commercial projects in South India. According to the management, most of these new orders are repetitive business from our existing clients, demonstrating JMC's impeccable reputation for domain expertise, timely delivery and adherence to quality standards.
• Tata Motors launched a new range of compact truck, Tata Intra — a small commercial vehicle developed under the modular platform. The company claimed it was India’s first compact truck and with the launch, it created a new segment in the small commercial vehicles space.
• Dr Reddy's Laboratories is planning to spend upto USD 300 million on research and development (R&D) during this financial year.
• Reliance Capital is all set to exit the mutual fund business by selling its entire stake in Reliance Nippon Life Asset Management Ltd.(RNAM) to its foreign partner Nippon Life Insurance.
• Adani Ports and Special Economic Zone will set up its first container terminal outside India in Myanmar at an estimated cost of USD 290 million (over Rs 2,000 crore). The company signed an agreement Thursday to develop and operate a container terminal at Yangon Port in Myanmar.
• Tata Power’s subsidiary, Tata Power Renewable Energy Ltd, emerged winner in an auction conducted by Gujarat for 1000 MW of projects to be built at Dholera solar park.
• US new home sales plunged by 6.9 percent to an annual rate of 673,000 in April after spiking by 8.1 percent to an upwardly revised rate of 723,000 in March.
• US initial jobless claims dipped to 211,000, a decrease of 1,000 from the previous week's unrevised level of 212,000. The modest decrease came as a surprise to economists, who had expected initial jobless claims to inch up to 215,000.
• US existing home sales dipped by 0.4 percent to an annual rate of 5.19 million in April after plunging by 4.9 percent to a rate of 5.21 million in March.
• US leading economic index edged up by 0.2 percent in April after climbing by a revised 0.3 percent in March. Economists had expected the index to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.
• According to a survey data from IHS Markit, the euro area private sector expanded in May but the pace of growth remained subdued. The composite output index rose marginally to 51.6 in May from 51.5 in April. The score was forecast to rise to 51.7.
• Japan's all industry activity fell further in Marc. The all industry activity index declined 0.4 percent month-on-month in March, following a 0.2 percent drop in February. Economists had forecast a monthly fall of 0.2 percent.
|Stocks||*Closing Price||Trend||Date Trend Changed||Rate Trend Changed||SUPPORT||RESISTANCE||Closing S/l|
|S&P BSE SENSEX||39435||UP||08.02.19||36546||36300||35300|
Closing as on 24-05-2019
1) These levels should not be confused with the daily trend sheet, which is sent every morning by e-mail in the name of "Morning Mantra ".
2) Sometimes you will find the stop loss to be too far but if we change the stop loss once, we will find more strength coming into the stock. At the moment, the stop loss will be far as we are seeing the graphs on weekly basis and taking a long-term view and not a short-term view.
|27/05/2019||B H E L||Accounts|
|27/05/2019||Zee Entertainment||Quarterly Results, Final Dividend|
|27/05/2019||GAIL (India)||Quarterly Results, Final Dividend|
|29/05/2019||M & M||Quarterly Results, Dividend, AGM|
|29/05/2019||Power Grid Corpn||Accounts, Final Dividend|
|29/05/2019||NBCC||Accounts, Final Dividend|
|29/05/2019||Adani Power||Accounts, Raising funds|
|29/05/2019||Glenmark Pharma.||Quarterly Results, Dividend|
|30/05/2019||Berger Paints||Quarterly Results, Dividend|
|30/05/2019||S A I L||Accounts, Dividend|
|30/05/2019||O N G C||Dividend|
|27/05/2019||Manappuram Fin.||27.5% Interim Dividend|
|3/6/2019||Yes Bank||100% Dividend|
|4/6/2019||Tata Power Co.||130% Final Dividend|
|4/6/2019||TCS||1800% Final Dividend|
|6/6/2019||H P C L||94% Final Dividend|
|13/06/2019||Asian Paints||765% Final Dividend|
|13/06/2019||Infosys||210% Final Dividend|
|13/06/2019||Torrent Pharma.||80% Final Dividend|
|19/06/2019||Shriram Trans.||70% Final Dividend|
|28/06/2019||Tata Chemicals||125% Dividend|
FEDERAL BANK LIMITED
Target Price: 135
|Face Value (Rs.)||2.00|
|52 Week High/Low||106.85/67.05|
|M.Cap (Rs. in Cr.)||20329.78|
|P/E Ratio (times)||16.33|
|P/B Ratio (times)||1.53|
• The total business of the Bank grew by 20.28% Y-o-Y from Rs. 2,05,165.09 Cr as on 31st March 2018 to Rs. 2,46,783.61 Cr as on 31st March 2019. Gross Advances at Rs. 1,11,829.27 Cr as on 31st March 2019 from Rs. 93,172.60 Cr as on 31st March 2018 registered a growth of 20.02%. Retail advances grew by 24.79% to reach Rs. 31,741.96 Cr as on 31st March 2019 from Rs. 25,437.00 Cr as on 31st March 2018.
• Deposits recorded a growth of 20.50% to reach Rs. 1,34,954.34 Cr as on 31st March 2019 from Rs. 1,11,992.49 Cr as on 31st March 2018. The low cost CASA segment grew by 16.47% to reach Rs. 43,387.67Cr as on 31st March 2019. The NRE deposits of the Bank posted a growth of 17.66% during the year to reach Rs. 50,109.16 Cr as on 31st March 2019 from Rs. 42,586.31 Cr as on 31st March 2018.
• Annual Net Interest Income increased from Rs. 3,582.81 Cr to Rs. 4,176.35 Cr registering a growth of 16.57% as on 31st March 2019 while the quarterly Net Interest Income increased to Rs. 1,096.53 Cr from Rs. 933.22 Cr as on 31st March 2019. Net Interest Margin stood at 3.14% for FY19 while the quarterly Net Interest Margin stood at 3.17%.
• The Gross NPA of the Bank as on 31st March 2019 stood at Rs. 3,260.68 Cr. Gross NPA as a percentage to Gross Advances is2.92%. The Net NPA stood at Rs. 1,626.20 Cr and this as a percentage to Net Advances is 1.48%. The Provision Coverage Ratio (including technical writeoffs) stood at 67.16% as on 31st March 2019
• The Capital Adequacy Ratio (CRAR) of the Bank, computed as per Basel III guidelines, stood at 14.14% as on 31st March 2019. The Net Worth of the
Bank is at Rs. 13273.04 Cr as on 31st March 2019. The Bank has 1251 branches, 1669 ATMs and 269 Cash Machines as on 31st March 2019.
• Strict Regulatory guidelines
• Liquidity risk
The bank of the business grew strongly and management of the bank has focused on retail banking which would continue to give strong, balanced credit growth and improvement in asset quality. New partnerships in General Insurance with Tata AIG and HDFC Ergo to augment fee income and also has opened new Call Centre for Cross Selling products like Credit Card, Insurance and to extend exclusive support to Ultra HNI and Non Resident Customers would help to increase other income. Thus, it is expected that the stock will see a price target of Rs.135 in 8 to 10 months time frame on a P/Bvx 1.85 and FY20E (BVPS) of Rs.73.10.
KEC INTERNATIONAL LIMITED
Target Price: 359
|Face Value (Rs.)||2.00|
|52 Week High/Low||383.95/229.95|
|M.Cap (Rs. in Cr.)||7882.33|
|P/E Ratio (times)||15.90|
|P/B Ratio (times)||3.24|
|P/BDividend Yield (%)||0.78|
• The company has robust and well diversified order book and its management is confident of 15-20% growth in revenue for FY2020. The company expects its Railway business revenue to register a growth of 20-25% for FY20 and that of T&D as a whole is expected to register a growth of 15% for FY20. Moreover, it expects revenue of civil business to double from FY19 revenue of Rs 500 crore.
• It has registered 5% growth in consolidated sales for the quarter ended March 2019 to Rs 3841.17 crore. Facilitated by, higher sales and 30 bps expansion in operating profit margin to 10.4%, the growth at operating profit was up 8% to Rs 399.04 crore and management of the company expect to maintain it at that level for FY20 as well.
• Its debt has come down by Rs 1200 crore in Q4FY19 and the management expects more reduction of debt in coming years. The company expects interest cost (as proportion to sales) to come down to 2.5% as a percentage of revenue for FY20 down from 2.8% in FY19.
• The Railway business continues to be on a high growth trajectory on the back of consistent order inflows. The company expects its order intake/booking to be about Rs 17000-18000 crore in FY20.
• T&D growth will be largely driven by international in FY20 with execution of orders from SAARC/Bangladesh, Brazil and Arica start picking up during the fiscal. Management expects Brazil would give 35-40% order growth in FY20 and
tenders already start coming from Saudi Arabia, West Africa and East Aisa.
• Increase in escalation cost due to delay in projects
• Political uncertainties and changes in regulations
The company is continuously performing well and delivering in all the three parameters of revenue, profitability and order intake. The management of the company expects international business to pick up with large order inflow from Jordan, Saudi, Far East (Indonesia, Thailand), etc and international T&D, sub-stations and civil infra will be key drivers for FY20. Moreover, the company has maintained its annual guidance of 20% growth for FY20 revenue. We expect the stock to see a price target of Rs.359 in 8- 10 month time frame on a one year average P/E of 15.78x and FY20 (E) Earnings Per Share of Rs.22.77.
Source: Company Website Reuters Capitaline
Above calls are recommended with a time horizon of 8 to 10 months.
The stock closed at Rs 111.80 on 24th May, 2019. It made a 52-week low of Rs 72.50 on 14th Feb 2019 and a 52-week high of Rs. 125.40 on 28th May 2018. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 96.46
The stock has melted down sharply from 190 levels and tested 74 levels in short span of time. Then after, it consolidated from 74 to 100 levels and formed a “Triple Bottom” pattern, and again it started moving higher. Last week, stock has given the consolidation breakout and also has breached its 200 WEMA on weekly charts and also has managed to close above the same along with huge volume so follow up buying may continue for coming days. Therefore, one can buy in the range of 107-109 levels for the upside target of 125-130 levels with SL below 99.
The stock closed at Rs 105.70 on 24th May, 2019. It made a 52-week low at Rs 67.05 on 04th Oct 2018 and a 52-week high of Rs. 106.95 on 23rd May 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 90.17
As we can see on chart that stock is trading in higher highs and higher lows sort of “Rising Wedge” on weekly charts, which is bullish in nature. Last week, stock ended over 7% gains and has given the pattern breakout with decent volumes which indicates buying is aggressive for the stock. So one can initiate long in the range of 102-103 levels for the upside target of 120-124 levels with SL below 96.
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.
SOURCE: CAPITAL LINE
Charts by Spider Software India Ltd
Above calls are recommended with a time horizon of 1-2 months
Nifty again closed near weekly highs, data reflects that at current levels there is lot of outstanding short position in Nifty and Index calls and we can expect another round of short covering. As per current derivative data, Nifty can move towards 11900-11950 mark this week as the market undertone remains bullish with support of consistent short covering. Derivative data indicates bullish scenario to continue with Nifty having multiple strong supports at lower levels around 11750 & 11800 spot. Currently Nifty is moving up, with decent addition in open interest and options put writing, which indicates strength in the current trend. Option writers were seen active in recent rally as we have seen put writing in 11700 & 11600 strikes along with the unwinding in calls. Among Nifty Call options, the 12000 strike call has the highest open interest of more than 40 lakh shares, while in put options 11700 strike hold the maximum open interest of more than 25 lakh shares. The Implied Volatility (IV) of calls closed at 21.73% while that for put options closed at 21.00%. The Nifty VIX for the week closed at 19.41% and is expected to remain volatile. The PCR OI for the week closed at 0.63 which indicates call writing. On the technical front, 11750-11800 spot levels is strong support zone and current trend is likely to continue towards 11900-11950 levels.
**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 expected to trade with an upside bias in the range of 6950-7450 levels, taking positive cues from the spot markets. Spot turmeric arrivals registered a decline at the markets in Erode. The Erode turmeric market attracts farmers even from other districts and States because of the potential to get higher price. This year, Erode farmers prefer to stock their produce and sell it when price improves. Based on the rainfall forecast for June and July, the demand and price will be fixed in the coming weeks. Jeera futures (June) will probably maintain its positivity & trade in the range of 17350-18350 levels. The commodity is witnessing rise in demand due to likely lower output in Syria and Turkey, both major producers, so, there is a shift in demand to India. According to trade sources, jeera production in Syria is estimated lower this year as a major part of its crop was damaged by heavy rains. Jeera is witnessing a buying spree from exporters and bulk buyers as they are expecting demand in the overseas market to increase in coming months. The gains in cardamom futures (June) is seen to getting limited by facing resistance near 2360 levels. The arrivals of poor quality of small cardamom has led to weak demand and weighing on prices at the auction centre. The overall bias of dhaniya futures (June) is affirmative; hence it is expected to test 7800, as soon as it breaches the resistance near 7690 levels. The sentiments are firm on the spot markets because of lower than expected arrivals & anticipation of higher demand in coming days.
Bullion counter can witness some short covering in near term as uncertainty regarding trade war between US and China along with Middle East tensions can lend support to the prices. The U.S. dollar retreated after hitting its highest level in two years as weaker US domestic data and the potential economic fallout from the trade war with China increased expectations for an interestrate cut this year. Sales of new U.S. single-family homes fell from near an 11- 1/2-year high in April as prices rebounded and manufacturing activity hit its lowest level in almost a decade in May, suggesting a sharp slowdown in economic growth was underway. Gold can take support near 31500 and recover towards 32300 while silver can take support near 38000 while taking support near 36000. Meanwhile in growing geopolitical tensions The U.S. military sent two Navy ships through the Taiwan Strait last week, its latest transit through the sensitive waterway, angering China at a time of tense relations between the world’s two biggest economies. Federal Reserve officials signaled that they were in no rush to change interest rates even if the economy continued to strengthen, according to minutes from their April 30 to May 1 policy meeting, and some were worried about persistently low inflation. Price increases eased to 1.6 percent annually in March, well below the Fed’s goal of 2 percent. Inflation has not sustainably reached the Fed’s target since the central bank formally adopted it in 2012, and has been languishing below the dividing line for much of the past quarter-century.
Soybean futures (June) is expected to test 3760-3790 on the higher side, taking support near 3680 levels. The demand is catching pace on the spot markets supported by lower level buying & expectation of higher buying from millers owing to positive gross crush margin of Rs.586 per ton. The upswing momentum in domestic soybean prices & a weaker rupee against dollar may act as a catalyst to drive up the soy oil futures (June) towards 748-752 levels. Despite the bearishness prevailing over the soy oil price on CBOT, due to prolonged trade war & crashing oil prices, the domestic market wouldn’t be impacted due to surging demand. On the contrary, CPO futures (June) is expected to descend further towards 500 levels. In the international market, the fundamentals are showing a projection of decline in demand of palm oil as the European Union’s publication of limits on the use of the tropical oil in biofuels that will restrict the types of biofuels from palm oil that may be counted toward the EU renewable-energy goals, will come into force on June 10. Moreover, the US-China trade war is adding to the headaches to the palm oil industry & the stand-off is weighing on prices. The analysis highlights that Malaysian Palm oil prices have fallen nearly 36% since U.S. President Donald Trump took office in early 2017. The outlook of mustard futures (June) is bullish as it has the potential to test 3990-4020, hence lower level buying is recommended in this oilseed. On the spot, at present the demand is firm from crushing plants as the arrivals are shrinking because the peak supply season is coming to an end.
Crude oil prices may continue to remain on weaker path as global economic slowdown and swelling fuel inventories kept the prices downbeat. But multiple supply risks remain, as tension continues between Iran and the U.S., which can cap the downside. Crude oil can slip further lower toward 3800 while facing resistance near 4200. U.S. sanctions on Iran’s and Venezuela’s oil industries would likely further reduce crude exports from OPEC, of which both countries are members. The key OPEC meeting, which was scheduled to be held in Vienna on 25 June, followed by the OPEC+ meeting on 26 June, has been delayed until the first week of July. Meanwhile increasing crude oil inventories and slumping U.S. manufacturing activity exacerbated trade related concerns about global demand thereby keeping the prices under pressure. After weeks of fruitless negotiations and more tariffs and retaliatory tariffs that the world’s two biggest economies slapped on each other, China said last week that the talks about resolving the trade dispute can’t resume until the U.S. addresses its ‘wrong actions. Natural gas may remain on sideways bias as it can move in range of 170-190. The weather forecast for the next 8-14 days is expected to be milder than normal on both the west and east coast which would reduce total natural gas demand. Over the next 6-10 days, the weather is expected to be colder than normal on the west coast and warmer than normal on the east
Cotton futures (June) is likely to remain trapped in the range of 21200-21600 levels. The domestic cotton prices are taking negative cues from the international market, where the sentiments are getting hammered by the ongoing trade war. Going ahead, the market participants would definitely judge the planting numbers as the West Texas is sowing cotton in the ground and it may be the best crop they've had in the last 10 years as far as the moisture profile looks good. Moreover, if the trade war doesn’t settle down in weeks to come, then it would hamper the U.S cotton exports & overall these factors could limit price in the near term. Back at home, although cotton prices have softened, there is no buying interest in the domestic market. Guar seed futures (June) might see a recovery towards 4470-4500 levels. The market participants are estimating that in the upcoming season acreage of guar may drop by 15-20% as farmers may shift to cotton and pulses as they are getting much better prices for these two crops. On the contrary, guar gum futures (June) may consolidate in the range of 8810-8970 levels with upside getting capped. Falling crude oil prices in the international market due to surge in inventories & North America’s oil rig companies using cheaper fracturing material such as slick water instead of guar gum may dent its export demand from India. Mentha oil futures (June) is expected to trade higher & test 1330, taking support near 1270 levels. This commodity may witness fresh demand from stockists against the arrivals that are likely to gather pace later this month.
In base metal counter, prices may remain on weaker side as trade tensions stoked by US President Donald Trump are clouding the economic outlook in Europe coupled with the fact that fears that a trade war with China will hurt the U.S. economy more than expected. Copper may dip further lower towards 405 while its upside is capped near 430. The global world refined copper market showed a 74,000 tonnes surplus in February, compared with a 33,000 tonnes deficit in January, the International Copper Study Group (ICSG) stated in its latest monthly bulletin. Chinese miner MMG Ltd's operations at its Las Bambas mine, one of Peru's largest copper producers, have not been disrupted and talks with an indigenous Peruvian community may further continue. Meanwhile Lead may dip lower towards 122 levels while taking resistance near 130 levels. According to ILZSG “Global lead demand declined 0.2% in 2018, but is forecast to jump 1.2% this year to reach 11.87 million tonnes”. Nickel can take support near 810 while resistance near 855. Aluminium may test 141 levels while taking resistance near 152. Zinc may remain sideways to weak bias as it can test 205 levels while facing resistance near 218 levels. The global nickel market deficit widened to 12,500 tonnes in March from a revised shortfall of 1,000 tonnes the previous month, the International Nickel Study Group stated recently. The United States struck deals to lift tariffs on aluminum imports from Canada and Mexico, removing a major obstacle to legislative approval of a new North American trade pact.
ZINC MCX (MAY) contract closed at Rs. 210.75 on 23rd May’19. The contract made its high of Rs. 232.40 on 11th Apr’19 and a low of Rs. 208.80 on 23rd May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 215.79.On the daily chart, the commodity has Relative Strength Index (14-day) value of 44.22.
One can buy at Rs. 211 for a target of Rs. 218 with the stop loss of Rs. 207.
COPPER MCX (JUN) contract closed at Rs. 415.45 on 23rd May’19. The contract made its high of Rs. 473.95 on 27th Feb’19 and a low of Rs. 410.60 on 23rd May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 428.17.On the daily chart, the commodity has Relative Strength Index (14-day) value of 31.25.
One can buy at Rs. 414 for a target of Rs. 425 with the stop loss of Rs. 410.
CASTORSEED NCDEX (JUN) contract was closed at Rs. 5812 on 23rd May’19. The contract made its high of Rs. 6318 on 12th Apr’19 and a low of Rs. 5342 on 6th Mar’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 5769 on the daily chart, the commodity has Relative Strength Index (14-day) value of 56.56.
One can buy at Rs. 5700 for a target of Rs. 6100 with the stop loss of Rs 5500.
• The Sebi allowed mutual funds to participate in exchange-traded commodity derivatives (ETCD).
• The Sebi allowed portfolio management schemes to invest in Commodity Derivatives Market in India on behalf of their clients. They will have to enter into agreements with clients for this, and managers in charge of PMS have to appoint a custodian for this activity as well.
• The India Meteorological Department has set June 6 as the day of the onset over Kerala.
• Iran's oil storage on land and at sea is on the rise as U.S. sanctions on exports bite and Tehran battles to keep its ageing fields operational and crude flowing.
• Codelco's giant Chuquicamata Copper mine is set for a 40% drop in production over the next two years.
• Saudi Arabia is in no rush to increase oil production and exports, fearing that additional supply would risk a renewed build up of stockpiles and push prices lower
• Asia's oil refiners are considering reducing output after margins slumped to their lowest for the season since 2003.
• After linking 585 markets in 2018-19 (Apr-Mar), the farm ministry is set to integrate 220 more mandis under the electronic-National Agricultural Market portal this financial year
• The government is expected to scale up its estimate for wheat production in 2018-19 (Jul-Jun) to a record of over 100 mln tn from 99.12 mln tn earlier, as late rains in February and March have boosted yield.
• ICEX Steel Long contracts witness highest ever open interest of 7,790 MT on May 21, 2019, since its launch on Aug 28, 2018.
It was a historic week for India as well as the Indian economy in which financial market saw new highs as confidence returned after full majority for NDA-2. Commodities saw some volatile trade; high fluctuations in currency also added wild swing in the prices. Crude attracted the most attention with its massive fall. Oil prices plunged nearly 6% Thursday in this year's worst drop and the worst fall since the start of OPEC production cuts in December. The escalating U.S.- China trade war and huge crude pileups from weak refiner demand combined to roil the market. Since the beginning of the week it was on bearish path. Saudi Arabia reiterated it would aim to keep the market balanced and try to reduce tensions in the Middle East, while industry data showed a surprise increase in U.S. crude inventories. In the international market, WTI breached the level of $60 whereas on MCX, it made a low of 4008. Natural gas prices also dipped last week after a marginal gain in previous two week; however, the downside was capped on a smallerthan-expected storage build and forecasts for warmer weather and higher cooling demand. Copper prices headed for their sixth straight week of losses on a prolonged U.S.-China trade war. Rests of the metals were also down on the trade war issue. Bullion counter saw marginal rebound owing to fresh buying from lower levels. Upside was more on Thursday as risk-averse investors fleeing everything from equities to oil embraced the safe-haven sanctuary of the yellow metal. It was the largest percentage gain in a day for gold since May 15 and came despite a near-1% gain in the rival U.S. dollar earlier in the day. Silver saw some buying as it tracked the trend of gold and downside in dollar index.
In agri commodities, soyabean saw gradual recovery with limited upside as it is being estimated that India is set to grow soybeans on more land in the 2019 crop year. Mustard prices augmented as well as the sentiments are upbeat due to buying by oil millers and on hope of a pick-up in procurement at minimum support price. Sluggish business activities are being observed in the spot markets of cotton as both buyers and sellers are cautious trading; which kept cotton counter in range with little upside. Turmeric was in high demand on improved export demand. Jeera saw some healthy profitbooking though overall trend is still bullish. The lower output in Syria and Turkey has led to a shift in demand to India & hence jeera is witnessing a buying spree from exporters as well as bulk buyers.
In order to promote institutional participation in the commodities market, the Securities and Exchange Board of India (Sebi) has permitted Category III Alternative Investment Funds to participate in Exchange Traded Commodity Derivatives. Sebi has allowed portfolio managers & mutual funds to participate in commodities derivatives on behalf of their clients. The participation of both is subject to certain conditions. Funds that make short-term investments and then sell, like hedge funds, come under Category III Alternative Investment Funds.
Regulation for mutual funds
• In a circular, the regulator said that no mutual fund schemes can invest in physical goods except in 'gold' through Gold Exchange Traded Funds (ETFs).
• Exchange traded commodity derivatives (ETCDs) having gold as the underlying, shall also be considered as 'gold related instrument' for Gold ETFs.
• Mutual funds can make the investments in ETCDs through hybrid schemes and Gold ETFs.
• According to Sebi the investment limit will not exceeding 10 per cent of NAV of the scheme. However, the limit of 10 per cent is not applicable for investments through Gold ETFs in ETCDs having gold as underlying asset.
• In case of multi-assets allocation schemes, the exposure to ETCDs should not be more than 30 per cent of the NAV of the scheme.
• The cumulative gross exposure through equity, debt and derivative positions, including commodity derivatives, should not exceed 100 per cent NAV of the scheme.
• According to Sebi, prior to participation in ETCDs, asset management companies should a dedicated fund manager with requisite skill and experience in commodities market, including commodity derivatives market.
• Sebi said NAV value of the scheme has to be updated on a daily basis on the websites of the asset management company concerned and the Association of Mutual Fund of India (AMFI).
• Further, total exposure to ETCDs is required to be disclosed in the monthly cumulative report submitted by mutual funds.
Regulation for Portfolio managers
• Portfolio managers will have to mandatorily appoint a Sebi-registered custodian before dealing in exchange traded commodity derivatives (ETCDs).
• For existing clients, portfolio managers may execute addendums to the agreement, permitting them to participate in ETCDs on their behalf.
• In case dealing in commodity derivatives leads to delivery of physical goods and if the portfolio manager remains in possession of the physical commodity, the goods need to be disposed of within the timelines as agreed upon between the client and the portfolio manager.
• The regulator further added that the responsibility of liquidating the physical goods shall be with the portfolio manager.
• Regarding disclosures, the portfolio managers shall provide periodic reports to the clients regarding their exposure in ETCDs.
• Moreover, they are required to provide adequate information about risk factors, margin requirements, position limit, among others to the client while participating in ETCDs besides furnishing an exposure report to Sebi on monthly basis.
• Since Foreign Portfolio Investors are not allowed to participate in the Exchange Traded Commodity Derivatives market, Portfolio Managers shall not onboard Foreign Portfolio Investors until such time as they are permitted to participate in Exchange Traded Commodity Derivatives market.
According to circular, the Exchanges are advised to
I. make necessary amendments to the relevant bye-laws, rules and regulations.
ii. bring the provisions of this circular to the notice of the members of the Exchange and also to disseminate the same on their website.
|20th MAY||Exit poll results 2019: Over 300 seats for NDA; PM Modi set for 2nd term.|
|21st MAY||UK lawmakers postpone hearing with Bank of England's Carney.|
|22nd MAY||India's import cover falls marginally to 9.1 months at end of Dec 2018: RBI.|
|23rd MAY||RBI not in favour of providing special credit window to NBFC sector.|
|23rd MAY||NDA sweeps Lok Sabha with massive majority.|
PM Mr Modi led-NDA got another substantial majority to run the world's largest democracy. After this political mandate, next few weeks will be crucial whether FIIs turn to pour-in capital flows to bring Rupee back to above 68.00 to a Dollar. On the contrary, growing China-US failures in trade truce & weak US equities which is the probable case after Trump's tax on equities (indirect means of tariff hike) will dry the capital flows in emerging economy. In continuation of ebb and flow of trade-war US Treasury 10- years yield sink to seventeen-month low to 2.30%. Admittedly in June-August this year majority of the offshore Chinese companies have to pay dividend of over 18bn USD (outflows) which in-turns push USDCNY to above 7.00. The euro-zone Composite PMI was broadly unchanged in May, and the Ifo Business Climate Index declined to a 54-month low in May, suggesting that Germany’s economy slowed to little more than a crawl in Q2. In the UK, the pound fell to a five-month low of $1.26 in response to growing speculation over Theresa May’s departure as PM and renewed concerns over a no-deal Brexit. Next week European election results & growth number from US will be important global political event & key economic release respectively.
USDINR is likely to stay above 69.50 move higher towards 70.40 levels.
USD/INR (JUN) contract closed at 70.2650 on 23rd May’ 19. The contract made its high of 70.3050 on 23rd May’19 and a low of 69.6175 on 23rd May’19 (Weekly Basis). The 14-day Exponential Moving Average of the USD/INR is currently at 70.26
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 50.05. One can buy at 69.95 for the target of 70.55 with the stop loss of 69.65.
EUR/INR (JUN) contract closed at 78.4675 on 23rd May’ 19. The contract made its high of 78.76 on 20th May’19 and a low of 77.75 on 23rd May’19 (Weekly Basis). The 14-day Exponential Moving Average of the EUR/INR is currently at 78.83
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 40.52. One can buy at 78.25 for a target of 78.85 with the stop loss of 77.95.
GBP/INR (JUN) contract closed at 89.0375 on 23rd May’ 19. The contract made its high of 89.60 on 20th May’19 and a low of 88 on 23rd May’19 (Weekly Basis). The 14-day Exponential Moving Average of the GBP/INR is currently at 90.35
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 30.18. One can sell at 89.20 for a target of 88.60 with the stop loss of 89.50.
JPY/INR (JUN) contract closed at 63.9550 on 23rd May’ 19. The contract made its high of 64.85 on 20th May’19 and a low of 63.2450 on 23rd May’19 (Weekly Basis). The 14-day Exponential Moving Average of the JPY/INR is currently at 63.94
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 51.50. One can buy at 63.70 for a target of 64.30 with the stop loss of 63.40.
SEBI approves Emami Cement IPO, may hit market in 6 months
Emami Cement Ltd's IPO could hit the market in the next six months with SEBI approving the issue. The company is looking to raise Rs 1,000 crore through the IPO, which comprises fresh issuance of shares worth Rs 500 crore, and the rest as offer for sale from existing promoters. Emami Cement currently operates three manufacturing plants at Risda in Madhya Pradesh, Panagarh in West Bengal and Bhabua in Bihar, having a capacity of 5.6 million tonne. It is also in the process of setting up a cement grinding plant at Kalinganagar, Odisha. The company's combined installed capacity will be 9 million tonne with a clinker capacity of 3.2 million tonne.
NSE-, LIC-backed NCDEX eyeing IPO by end 2019
The Life Insurance Corporation of India-(LIC) and National Stock Exchange (NSE)-backed multi-commodity exchange National Commodity & Derivatives Exchange Limited (NCDEX), which is the market leader in agri-commodity trading, has initiated preliminary discussions with merchant bankers to raise funds via an initial public offer. NCDEX is in talks with SBI Capital and ICICI Securities to raise around Rs 400 crore to Rs 500 crore via an IPO for growth capital and provide an exit window for their investors. Multi Commodity Exchange (MCX), which deals mainly in metals and energy, is currently the only listed commodity bourse in India. According to the NCDEX website, NSE is the largest shareholder in the exchange with a 15 percent stake, followed by LIC (11.10 percent), National Bank For Agriculture & Rural Development (NABARD, 11.10 percent), Indian Farmers Fertiliser Cooperative Limited (IFFCO, 10 percent), Oman India Joint Investment Fund (10 percent), Punjab National Bank (7.29 percent), Canara Bank (6 percent), IDFC Private Equity Fund (5 percent) and others.
Goldman Sachs-led SAMHI Hotels looks to raise about Rs 2,000cr via IPO in H2 2019
SAMHI Hotels, which specialises in the development, acquisition and ownership of branded hotels like Marriott International, Sheraton Hotels & Resorts and Hyatt Hotels Corporation, has initiated preliminary discussions with merchant bankers to raise funds via an initial public offer. SAMHI Hotels is evaluating raising between Rs 1,800 crore to Rs 2,000 crore via an IPO in the second half of 2019. SAMHI Hotels, founded by Ashish Jakhanwala and Manav Thadani in 2010, has 4,315 rooms across 29 hotels in 14 cities. It operates under brands such as Courtyard by Marriott, Sheraton, Hyatt Regency, Hyatt Place, Fairfield by Marriott, Four Points by Sheraton and Holiday Inn Express.
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Reliance Capital to sell entire stake in AMC JV to Nippon Life
Reliance Capital has signed binding definitive agreements with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management, according to a statement from Reliance Capital to the exchanges. Both partners currently hold 42.88 percent each in the company, while the rest is with public shareholders. Pursuant to the agreements, Nippon Life will also make an open offer to the public shareholders of RNAM at Rs 230 per share, as required under SEBI regulations, and reach the maximum permissible promoter shareholding of 75 percent for listed companies, which mean Nippon will hold 75 percent stake in the AMC. The transaction price represents a premium of 15.5 percent to the minimum 60-day price as specified under the SEBI Takeover Regulations. Reliance Capital will receive proceeds of approximately Rs 6,000 crore through sale of its shareholding to Nippon Life Insurance at Rs 230 a share, and the simultaneous Offer For Sale (OFS) to other financial investors. This transaction will reduce Reliance Capital’s debt by 33 percent. The transaction is subject to necessary regulatory approvals. JM Financial Limited acted as the advisor to Reliance Capital for the above transaction.
India Ratings (Ind-Ra) downgrades UTI Ultra Short Term Fund to ‘IND Aamfs’
India Ratings and Research (Ind-Ra) has downgraded UTI Ultra Short Term Fund’s National Fund Credit Rating to ‘IND AAmfs’ from ‘IND AAAmfs’. The fund has also been placed on Rating Watch Negative (RWN. The rating agency noted that the downgrade and RWN follows downward credit migration in one of the underlying investments of UTI Ultra Short Term Fund. The statement also said that Ind-Ra is closely monitoring the fund’s exposure to the investment that has seen a series of credit rating downgrades. "The agency considers weighted average rating factor (WARF) as a primary driver of the fund’s credit rating. It is an indicator of portfolio’s average credit risk. The fund’s average annual WARF from June 2018 to April 2019 stood at 0.10.
Sebi paves way for mutual fund participation in commodity derivatives market
In a step that could significantly deepen the commodity derivatives segment (CDS), market regulator Sebi has issued norms for participation of mutual fund in commodity derivatives like gold, silver, crude, copper, guar, Mentha etc. However, MFs won’t be allowed to take positions in sensitive commodities like agri products which are those subject to frequent government intervention and the Essential Commodities Act. Effective May 21, MFs can participate in gold derivatives only through Gold exchange traded funds launched by asset management companies (AMCs) and in other commodity derivatives through hybrid schemes, which currently invest in equity, debt and gold, Sebi said. As most commodities are physically settled, Sebi has stipulated that MFs shouldn’t hold any physical goods for more than 30 days since they first take delivery. “No Mutual fund schemes shall invest in physical goods except in ‘gold’ through Gold ETFs. Further, as mutual fund schemes participating in ETCDs (exchange traded commodity derivatives) may hold the underlying goods in case of physical settlement of contracts, in that case mutual funds shall dispose of such goods from books of the scheme, at the earliest, not exceeding 30 days from the date of holding of the physical goods,” the circular said.
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
Mr. S C Aggarwal (CMD, SMC Group) addressing the audience during National Conference on Fiscal Policy organised by ASSOCHAM held on Friday, 17th May, 2019 at Hotel Taj Mahal, Man Singh Road, New Delhi.
Mr. D K Aggarwal (CMD, SMC Investments & Senior VP – PHD Chamber of Commerce) during the Meeting with H.E. Dr. Ashraf Shikhaliyev (Ambassador, Embassy of the Republic of Azerbaijan) to discuss the possible collaboration between PHDCCI and Embassy of Azerbaijan for furthering India – Azerbaijan bilateral relations held on Tuesday, 29th January, 2019 at PHD Chamber, New Delhi.
SMC organised Associate Awareness Program in association with Mahindra Finance on Fixed Deposit held on Friday, 3rd May, 2019 at Lucknow, Uttar Pradesh.
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