Blue Star Limited (BLUESTARCO)

Voltas Limited (VOLTAS)

WEEKLY VIEW OF THE MARKET

Indian markets witnessed a roller coaster ride in the week gone by as volatility grip the market on back of mixed global cues and earning season. However with gains of nearly 1% on weekly basis both nifty and bank nifty ended the week in positive territory. From derivative front as well the tug of war was seen among bulls and bears as both call and put writers were seen actively shifting their positions. For coming week we believe that volatility will likely to grip the market once again as the trade talks between the US and China will also remain on the participants’ radar. The Implied Volatility (IV) of calls was up and closed at 16.40% while that for put options closed at 17.55%. The Nifty VIX for the week closed at 17.23% and is expected to remain volatile. PCR OI for the week closed at 0.93.For coming week we expect that nifty need to take a decisive move above 11450 for any further upside in coming sessions. However on downside 11150-11100 will act as major support and as far we are holding above that the bias is likely to remain bullish

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

Turmeric futures (Nov) is likely to plunge further to test 5500-5300 levels. The stockiest are not showing interest in buying as only poor quality turmeric is arriving in the spot markets. In the beginning of the calendar year, the yellow spice was sold at Rs.8,300 a quintal & currently it is being sold atRs.7,100 a quintal at the Erode Turmeric Merchants Association Sales yard. At the Regulated Marketing Committee, the finger turmeric was sold at Rs.5,669- 6,889 a quintal; the root variety was sold at Rs.5,189-6,329 a quintal. The reason being is that the demand has not been good from North India. Jeera futures (Nov) is expected to trade with a downside bias & move lower towards 16000-15700 levels. The reason attributed is weak buying and on the likelihood of an increase in supply as sowing is expected to be better this season. It is likely to start after Diwali. Sentiment has also dampened on expectation of a rise in acreage in 2019-20 (Oct-Sep) by 10-20% because of availability of water. Jeera needs less water but as the rains continue unabated, the sowing which should start by next week. Good rains this year are likely to push up production. Dhaniya futures (Nov) is expected to consolidate in the range of 5830-6130 levels. In the upcoming season, the output of coriander may be higher as the monsoon has been good in major growing areas of Gujarat, Rajasthan and Madhya Pradesh. Its sowing is expected in November and hence there is still time. However, if the acreage rises for sowing, then the fall in prices will be limited as the present stock has depleted.

BULLIONS

Bullion counter may witness profit booking at higher levels as hope of some progress in Sino-U.S. trade talks can increase risk appetite and reduce the safe haven demand of bullions. But downside will get limited on Brexit concern and Iran tensions. Gold can test 37500 while facing resistance near 38600 while silver can test 45000 while facing resistance near 47000. Traders expressed optimism the two sides might be able to ease a 15-month trade war and delay a U.S. tariff hike scheduled from Oct 15 as U.S scheduled to hike tariffs on $250 billion worth of Chinese goods, to 30% from 25%. Meanwhile Irish Prime Minister Leo Varadkar stated that a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union in an orderly fashion. U.S. Federal Reserve Chair Jerome Powell last week flagged openness to further rate cuts to fend off global economic risks. The FOMC meeting minutes released recently stated that the central bank is in favour of more rate cut in the near future to avoid economic slowdown. Global gold-backed Exchange Traded Funds (ETFs) reached their highest levels in September, adding 75.2 tonnes to a total of 2,808 tonnes during the month. In the month of September, India imported only 26 tonnes of gold, which is 68.18 percent lower than 81.71 tonnes imported a year ago. And People’s Bank of China picked up more gold last month, raising holdings to 62.64 million ounces in September from 62.45 million in August.

OIL AND OILSEEDS

Soybean futures (Nov)is likely to hold on to the support near 3610, while the upside may remain restricted till 3730 levels. India’s soybean output is likely to fall by 17.74 percent this year on a sharp decrease in average yield across the country. The Soybean Processors’ Association (SOPA) said in its survey that India’s total soybean output may remain at 89.94 lakh tonnes in 2019, down 17.74 percent from 109.33 lakh tonnes in 2018. Average yield is estimated at 836 kg per hectare for the current harvesting season from 1009 kg per hectare in the previous season. On the CBOT, U.S soybean futures (Nov) is expected to trade on a bullish note to test $9.50 a bushel. This rally is being triggered by the increasing the buying appetite by China for U.S Soybean. In the past few weeks, China has purchased around 2 million mt of US-origin soybeans, to show its seriousness in resolving the trade dispute with the Americans. Mustard futures (Nov) is expected to trade range bound with a positive bias in the range of 4070-4140 levels. The agriculture ministry has proposed an increase in minimum support price (MSP) of 5.3% increase in the mustard MSP, which will take the existing floor price of Rs.4,200 a quintal to Rs.4,425.The government has been promoting cultivation of pulses and oilseeds over foodgrains for the past few years. CPO futures (Oct) is likely to trade with a downside bias in the range of 542-551 levels. The reason being is the negative sentiments prevailing in the Malaysian palm oil market due to swelling inventories which rose for the first time in seven months in September.

ENERGY COMPLEX

Crude oil prices witness bounce back at lower levels as OPEC hinted at making deeper cuts in supply while optimism was revived over talks between the United States and China to end their trade war. Mohammad Barkindo, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), stated that all options were on the table, including a deeper supply cut to balance oil markets. Crude oil may recover towards 4050 while taking support near 3600 levels. OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day (bpd), while leaving its 2020 demand growth estimate unchanged at 1.08 million bpd, according to OPEC’s monthly report. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) has granted Nigeria a higher oil output target under an OPEC-led supply cut deal, lifting the quota to 1.774 million barrels per day (bpd) from 1.685 million bpd. Nigeria secured higher production target from the OPEC and a force majeure over exports from key Bonny Light stream was lifted. EIA cut its 2020 world oil demand growth forecast by 100,000 barrels per day (bpd) to 1.30 million. EIA expected the US production to reach record high of 12.26 M bpd in 2019 providing an upside revision to previous expected rise of 1.25 Mbpd. Natural gas may dip further lower as it can test 150 while taking resistance near 167 . The weather is expected to be near normal in the US for the next 6-10 whereas 8-14 days are forecasted to show 30%-50% above the normal temperature levels .

OTHER COMMODITIES

Cotton futures (Oct) make attempt to break the support near 19320 & descend further towards 19200-19000 levels. The ground report is showing strong crop vigor in both Gujarat and Maharashtra. Currently the crop is in the boll stage in central India. USDA estimates India cotton production for 2019/20 at 30.5 million 480-pound bales, up 3 percent from last month and up 15 percent from the previous year. Yield is estimated at 515 kilograms per hectare, up 12 percent from last year. In the international market, ICE cotton futures may trade sideways in the range of 61-64 cents per pound. In the latest estimates given by the US Department of Agriculture, U.S cotton production was lowered less than 1percent, to 21.7 million bales, largely the result of a reduction in Texas. At 7.0 million bales, U.S. ending stocks in 2019/20 are projected at 36 percent of use, compared with 27 percent in 2018/19. Chana futures (Nov) may witness a consolidation in the range of 4300-4400 levels. On the spot markets, the buyers are buying only to meet their immediate requirement for crushing amid lack of demand in the domestic market and also are cautious at prevailing rates as government is holding major stock of Chana. Actual demand in chana dal and besan from consumption centres is seen limited in the market. Mentha oil futures (Oct) may witness a rally till 1255, taking support near 1210levelsdue a fall in warehouse stocks. Mentha oil stocks at MCX-accredited warehouses were at 4,21,426.62 Kgs at end of last week, lesser by 32,401.15Kgs during the beginning of this month, according to data from the bourse.

BASE METALS

Cotton futures (Oct) make attempt to break the support near 19320 & descend further towards 19200-19000 levels. The ground report is showing strong crop vigor in both Gujarat and Maharashtra. Currently the crop is in the boll stage in central India. USDA estimates India cotton production for 2019/20 at 30.5 million 480-pound bales, up 3 percent from last month and up 15 percent from the previous year. Yield is estimated at 515 kilograms per hectare, up 12 percent from last year. In the international market, ICE cotton futures may trade sideways in the range of 61-64 cents per pound. In the latest estimates given by the US Department of Agriculture, U.S cotton production was lowered less than 1percent, to 21.7 million bales, largely the result of a reduction in Texas. At 7.0 million bales, U.S. ending stocks in 2019/20 are projected at 36 percent of use, compared with 27 percent in 2018/19. Chana futures (Nov) may witness a consolidation in the range of 4300-4400 levels. On the spot markets, the buyers are buying only to meet their immediate requirement for crushing amid lack of demand in the domestic market and also are cautious at prevailing rates as government is holding major stock of Chana. Actual demand in chana dal and besan from consumption centres is seen limited in the market. Mentha oil futures (Oct) may witness a rally till 1255, taking support near 1210levelsdue a fall in warehouse stocks. Mentha oil stocks at MCX-accredited warehouses were at 4,21,426.62 Kgs at end of last week, lesser by 32,401.15Kgs during the beginning of this month, according to data from the bourse.

TREND SHEET

TECHNICAL RECOMMENDATIONS

ALUMINIUM MCX (OCT) contract closed at Rs. 135.30 on 10th Oct’19. The contract made its high of Rs. 143.90 on 5th Sep’19 and a low of Rs. 133.50 on 3rd Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs.137.05. On the daily chart, the commodity has Relative Strength Index (14-day) value of 30.231.

One can sell near Rs. 138 for a target of Rs. 128 with the stop loss of Rs. 143.

COPPER MCX (OCT) contract closed at Rs. 441.55 on 10th Oct’19. The contract made its high of Rs. 460.95 on 13th Sep’19 and a low of Rs. 431.70 on 1st Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 442.46. On the daily chart, the commodity has Relative Strength Index (14-day) value of 47.994.

One can buy near Rs. 440 for a target of Rs. 456 with the stop loss of Rs. 432.

CHANA NCDEX (NOV) contract was closed at Rs. 4323.00 on 10th Oct’19. The contract made its high of Rs. 4517.00 on 26th Sep’19 and a low of Rs. 4010.00 on 18th Sep’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 4268.37. On the daily chart, the commodity has Relative Strength Index (14-day) value of 57.723.

One can buy above Rs. 4360 for a target of Rs. 4580 with the stop loss of Rs 4250.

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NEWS DIGEST

• An explosion has set an Iranian oil tanker on fire near the Saudi port city of Jeddah

• Chile's Codelco, the world's biggest copper producer, has agreed with some Chinese customers to keep its physical copper premium for 2020 unchanged from this year at $88 a tonne.

• Japan's copper output in the second half of the 2019/20 financial year to March 31 is forecast to climb 2.5% from a year earlier.

• The government is planning to set up a Rs 6,660 crore fund to nurture 10,000 farmer producer organisations (FPOs) across the country over the next five years.

• India and China signed more than 120 MoUs for export of various products from India, including sugar, chemicals, fish, plastics, pharmaceuticals and fertilisers.

• U.S soybean production is forecast at 3.6 billion bushels,down 83 million, mainly on lower yield. – USDA

• U.S cotton production is lowered less than 1percent, to 21.7 million bales, largely the result of a reduction in Texas. – USDA

• The state-run Cotton Corporation of India (CCI) has begun purchases of the cotton crop in Rajasthan and Punjab.

• India’s total soybean output may remain at 89.94 lakh tonnes in 2019, down 17.74 percent from 109.33 lakh tonnes in 2018, according to SOPA.

• Belgium’s Financial Services and Markets Authority have opened a formal investigation into zinc group Nyrstar, now majority-owned by commodities trader Trafigura.

• Venezuela's cash-strapped state-run oil company PDVSA expects crude output to rebound to above 1.2 million barrels per day (bpd) next year.

WEEKLY COMMENTARY

Trade talks between the United States and China remained on the market's radar as the world's top two economies seek to resolve a more-than-a-year-long trade row that has slowed global economic growth. The Baltic Exchange’s main sea freight index, which tracks rates for ships ferrying dry bulk commodities, hit a two-week high on Thursday, as vessel rates across the board continued to strengthen. Oil prices gained in second half of the week after OPEC indicated it expected supply from non-OPEC sources to grow slightly less than previously thought. Non-OPEC supply is expected to grow 2.20 million barrels per day, down from 2.25 million in OPEC’s September report. OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day (bpd), while leaving its 2020 demand growth estimate unchanged at 1.08 million bpd, according to OPEC's monthly report. Natural gas prices turned weaker. The U.S. EIA reported Thursday that domestic supplies of natural gas rose by 98 billion cubic feet for the week ended Oct. 4. The data were expected to show a build of 97 billion cubic feet, on average. US and China might be close to announcing a partial trade deal later last week, averting a further escalation in trade tensions boosted oil and some base metals prices. Everything doesn’t look rosy as earlier last week, the U.S. blacklisted eight Chinese technology firms and trade talk was shortened. In base metals nickel remain traded in upper zone but with limited upside. Copper and zinc were marginally higher. Bullion traded weak U.S. President Donald Trump’s remarks on progress in Sino-U.S. trade talks lifted risk.

India's soybean production in the year starting Oct 1 is likely to drop at least 25% as adverse weather conditions in Madhya Pradesh, Rajasthan and Maharashtra has badly damaged the crop. Crop losses in Madhya Pradesh and Rajasthan are worse, while the condition in Maharashtra is relatively better. As cotton prices come under pressure at the start of harvest, state-run Cotton Corporation of India (CCI) has begun purchases of the fibre crop in Rajasthan and Punjab. However, CCI’s purchases are in small quantities as the moisture content in the cotton being brought into the market is very high. Industry sources believe that good cotton will start arriving only by the first week of November; with a delay of 40-45 days. Castor prices strengthened from the multi week low on lower level buying. . Jeera prices saw decline due to a sharp rise in arrivals. Cardamom traded firm as sentiments were upbeat due to strong festival season demand & lesser supply. This is the peak season for cardamom.

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 $)

Soybean, chana and castor seed Futures on BSE Platform

Bombay Stock Exchange has expanded its agriculture contract offering by launching futures on chana and soyabean on October 07, 2019 with the option of compulsory delivery. BSE has also launched castor futures contract on its commodity platform despite of controversy in NCDEX over investors defaulting in castor seed contract. All the three new contracts are starting from November expiry. BSE has started three contracts of chana and castor seed expiring from November to January while four new contracts in soybean expiring from November to February has been launched.

Contract Specification of Soybean, chana and castorseed Futures

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week