Power Finance Corporation Limited (PFC)

Titan Company Limited (TITAN)

WEEKLY VIEW OF THE MARKET

Nifty ended the week on negative note and sectors such as FMCG, Banking, Auto and pharma witnessed selling pressure. Since the start of the week, call writers were seen active in 12000 & 11900 strikes while marginal put unwinding was witnessed in 11700 put strikes. In coming sessions, it is expected that market undertone is likely to remain bearish as far nifty is trading below 11950 levels. On downside, immediate support is placed at 11700 levels. However, any slide below 11700 can add further selling pressure, which could take Nifty towards 11580 levels as well. Among Nifty Call options, the 12000 strike call has the highest open interest of more than 46 lakh shares, while in put options 11500 strike hold the maximum open interest of more than 23 lakh shares. The Implied Volatility (IV) of calls closed at 14.98% while that for put options closed at 15.32%. The Nifty VIX for the week closed at 13.66% and is expected to remain volatile. The PCR OI for the week closed down at 1.35 from week high of 1.42, which indicates more call writing. On the technical front, 11750-11700 spot levels is strong support zone and current trend is likely to remain under pressure as far we are trading below 11950.

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

This week, the probabilities are higher that turmeric futures (July) might break the major support near 6500 & decline further to test 6400-6200 levels. In the current season (2019-20) turmeric sowing turmeric sowing is likely to start in the month of June. However, in the initial stage it is being estimated that acreage is expected to rise by 25% on year in 2019-20 (Jul-Jun). Forecast of a good monsoon indicates the likelihood of higher output in the upcoming kharif season. While on the spot markets, in Erode, a key market in Tamil Nadu, the finger variety was sold at 6,300-6,400 rupees per 100 kg, and the bulb variety at 5,900-6,000 rupees per 100 kg. Jeera futures (July) is likely to witness steep correction towards 17050-16800 levels. On the spot markets, prices have already started declining because supply is seen rising. On the demand side, the exports have fallen due to sluggish demand from China and Bangladesh. The conviction is high that cardamom futures may continue to make new life time highs due to acute shortage in the supply side. In days to come, the July contract is expected to rally towards 2600 levels. The fundamentals highlight that forecast of weak rainfall in the key growing areas of Kerala, may affect plantations. The growers were expecting a fresh harvest in June, but there would be a 60-day delay, which in all probability would be in August only. Moreover, as there is no carry-over stock either with farmers or traders due to last year’s production loss and anticipation of a delayed production this year have boosted the sentiment in the cardamom auction market.

BULLIONS

Bullion counter may continue its upside momentum as safe haven buying amid Middle East tensions and uncertainty regarding resolution of trade war tensions can assist the prices higher but profit booking at higher levels can be seen. Also supporting gold price is dovish tilt of major central banks and increasing economic uncertainty amid growth slowdown and trade conflict. Expectations that the US and China leaders will be able to reach a deal at the G20 summit on June 28-29 is still uncertain. President Donald Trump admitted to being the current obstacle to a trade deal with China as he mentioned that “It’s him right now that’s holding up the deal, as he needed Beijing to agree to four or five “major points”, without specifying what they were. Gold can take support near 32200 and recover towards 33700 levels while silver can test 38500 levels while taking support near 36500 levels. Expectation of a rate cut by the U.S. Federal Reserve considering global scenario weighed on the dollar and in turn supported gold prices. Markets will have a keen watch on the next meeting of the US Fed policymakers which is to be held on June 18-19 in this week. Markets are pricing in a 20% chance of a 25-basis-point cut at the June meeting, according to CME fed funds futures, with those odds jumping to 66% at the July meeting. The number of Americans filing applications for unemployment benefits unexpectedly rose in penultimate week, adding to concerns about U.S. labour market after job growth slowed sharply in May.

OIL AND OILSEEDS

Soybean futures (July) is expected to take support near 3620 levels & expected to rise towards 3765 levels on fear over delay in sowing. In recent update, the Skymet advised farmers in Maharashtra and Rajasthan, the leading soybean growers, to delay sowing of Kharif crops due to a weak monsoon current. Moreover, firmness in U.S soybean futures on Chicago Board of Trade is also trading near its two months high as the near-term weather forecasts turned wetter, a bad prognosis for a crop. Further, the acres that have been planted may not reach the high yields of recent years because of significantly delayed development, adding more risk to production. Soy oil futures (July) will possibly take support near 730 levels & witness a rise towards 750 levels. The strength to the domestic edible oils is being lent by the rally in the U.S soybean oil taking support near 27 cents per pound. On the spot markets, the majority of oils traded higher on improved demand, with soy refined quoting at Rs.760-62 for 10 kg, while soy solvent ruled at Rs.720- 25. The bearish trend of CPO futures (June) may take a pause near 492 levels & the downside may remain capped. The palm oil prices in the international markets have started to reverse from multi month lows on the news that Indonesia began testing biodiesel with a bio-content of 30% in cars to boost local markets for its vast palm oil crop. Mustard futures (July) is looking bullish & if trades above 3960, then we may see rising towards 3980-4020 levels. The sentiments are optimistic due to paucity of stocks in wholesale markets as peak arrival season has drawn to a close.

ENERGY COMPLEX

Crude oil prices may witness some lower level buying amid supply disruptions in Strait of Hormuz and Middle East tensions. Last week attacks on two oil tankers in the Gulf of Oman stoked concerns of reduced crude trade flows through one of the world’s key shipping routes. Fresh worries rising from the Middle East stoked tension between Iran and U.S. further hampering the prospects for Crude. Crude oil may take support near 3500 levels and can recover towards 3850 levels in near term. OPEC monthly report showed that OPEC brought its oil production down to 29.876 Mbpd in May, a five-year low for the oil cartel as it struggles to control member production to keep oil prices out of the doldrums. OPEC cut its forecast for growth in global oil demand due to trade disputes and pointed to risk of a further reduction, building a case for prolonged supply restraint in the rest of 2019. Natural gas may remain under selling pressure on unfavorable weather as it can test 150 levels by facing resistance near 175 levels. U.S. natural gas futures hit threeyear low hit last week after a federal report showed a bigger-than-usual storage build even though the increase was less than expected. The U.S. Energy Information Administration (EIA) said utilities added 102 bcf of gas to inventories during the week ended June 7. That was the fifth week in a row utilities injected over 100 bcf of gas into storage, the most since June 2014 when they added gas in the triple digits for seven consecutive weeks.

OTHER COMMODITIES

Cotton futures (July) is expected to trade in the downward trajectory within the range of 20900-21700 levels. The sentiments related to this soft commodity in the international market is bearish as the market participants are cautious because of two major triggering factors in the current scenario. Firstly, in the ongoing planting season, the weather this spring has been rough across the U.S. agriculture belt. Secondly, all eyes would be on the outcome of any solution to the trade war when U.S. President Donald Trump and Chinese President Xi Jinping will likely meet on the sidelines of the Group of 20 summit later this month in Japan. Back at home, huge quantities of cotton are being imported from West Africa and the US. So far, India has signed import deals for around 2.6 mln bales in the current year. Of this, 900,000 bales have already arrived, and the remaining quantum is likely to get delivered between JunSep. The bullish trend is likely to prevail in mentha oil futures (June) & rally may extend towards1360-1390 levels. The reason being new arrivals are only half of what is expected at this time because the farmers are stocking what they are harvesting as the pipeline had emptied last season. Cocud futures (July) is breaking all the resistances on the way & is seen heading towards 3000 levels. The sentiments are bullish on the back of an expected demand for cattle feed in Jul-Aug, as supply of green fodder doesn’t fulfill the protein requirement of cattle. This year, low stocks of cottonseed may lead to shortage of good-quality oilcake during the high-demand season and push

BASE METALS

In base metal counter, nickel and copper may witness lower levels buying but aluminum may trade sideways. Expectation of an interest rate cut by Fed weighed on the U.S. dollar index and in turn supported the Industrial metal prices. Data from China showed that the world’s largest vehicle market in May had its worst-ever monthly automobile sales drop and factory inflation slowed during the same period as faltering manufacturing hit demand. Copper may recover lower towards 420 levels while taking support near 400 levels. Copper prices rose and witnessed their first weekly gain in nine weeks, on concerns that supply would tighten further as unionised workers at a Codelco mine decided to strike after a labour deal fell through. Latest data showed that copper inventories at warehouses tracked by the LME jumped to 248,550 tonnes, the highest since September 2018. Meanwhile Lead may recover towards 157 while taking support near 150 levels. Nickel can recover towards 900 levels while taking support near 840 levels amid worries that floods in Indonesia could disrupt supplies of nickel. Aluminium may test 148 levels while taking support near 140 levels. Zinc may trade with sideways to upside bias as it can test 214 levels while taking support near 200 levels. China's iron ore were under pressure after surging to record highs, but expectations of tight supply and brisk demand were seen intact, limiting the downside in Zinc prices. Providing additional support to prices was the demand outlook for steelmaking ingredients as China may roll out more infrastructure projects to support its slowing economy.

TREND SHEET

TECHNICAL RECOMMENDATIONS

LEAD MCX (JUN) contract closed at Rs. 154.40 on 13th Jun’19. The contract made its high of Rs. 156.25 on 11th Jun’19 and a low of Rs. 146.00 on 02nd May’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 152.35.On the daily chart, the commodity has Relative Strength Index (14-day) value of 55.403

One can buy near Rs. 151 for a target of Rs. 159 with the stop loss of Rs. 147.

NATURAL GAS MCX (JUN) contract closed at Rs. 163.20 on 13th Jun’19. The contract made its high of Rs. 198.90 on 28th Mar’19 and a low of Rs. 160.30 on 06th Jun’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 170.53. On the daily chart, the commodity has Relative Strength Index (14-day) value of 32.778.

One can buy around Rs. 158 for a target of Rs. 170 with the stop loss of Rs. 154.

JEERA NCDEX (JUL) contract was closed at Rs. 17415.00 on 13th Jun’19. The contract made its high of Rs. 18195.00 on 16th May’19 and a low of Rs. 17135.00 on 03rd May’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 17572.30. On the daily chart, the commodity has Relative Strength Index (14-day) value of 43.688.

One can sell below Rs. 17100 for a target of Rs. 16300 with the stop loss of Rs 17500.

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NEWS DIGEST

• The Multi Commodity Exchange of India will launch 2.5 tons copper futures contracts on Tuesday with compulsory delivery in Thane, Maharashtra, the exchange said in a circular.

• Since Jun 1, the country has received 29.9 mm rainfall, 42% below the normal weighted average of 52.0 mm for the period, according to the weather department.

• Food grain stocks in the Central government pool were at 74.1 million tons as of Jun 1, up 9% from a year ago, according to Food Corporation of India.

• National Commodity Clearing Ltd has revised the concentration margin and threshold level for commodities with effect from Jul 1, 2019.

• The US Department of Agriculture has scaled up its estimate for India's cotton exports in 2019-20 (Aug-Jul) to 4.8 million bales (1 US bale = 218 kg) from 4.5 million bales.

• US initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 222,000 for the week ended June 8.

• Chinese banks doled out more loans in May to support the slowing economy hurt by a trade war, with further policy easing likely even amid accelerating consumer inflation.

• China's crude imports dropped to 40.23 million tonnes in May from 43.73 million tonnes in April, General Administration of Customs data showed recently.

• According to OPEC “World oil demand will rise by 1.14 million barrels per day (bpd) this year, 70,000 bpd less than previously expected”.

WEEKLY COMMENTARY

Commodities saw minor upside and CRB traded near 182 levels as sharp fall in crude capped the upside. Dollar index saw some bounce back after a sharp fall of the previous week. Crude prices were highly volatile whereas natural gas saw further decline on weak technical amid mild demand. Oil prices fell sharply on Wednesday, hitting the lowest settlement level since January following the U.S. Energy Department's latest inventory release. That put WTI down 23% from its Apr 23 high of $66.30, reversing a strong rally in the earlier part of the year that saw prices jump more than 50% to a nearly six-month high. The federal government’s EIA report revealed that crude inventories rose by 2.2 million barrels for the week ending Jun 7 to a nearly 2-year high. On MCX it made a low of 3536. On Thursday, it recovered some of its losses after attacks on two oil tankers in the Gulf of Oman stoked concerns of reduced crude trade flows through one of the world's key shipping routes. Gold prices continued its upward journey from past few weeks as trade and political turmoil’s, along with U.S. rate cut expectations propped up the precious metal. In MCX, gold crossed the crucial level of 33000 whereas in COMEX it made a high of. Silver couldn’t take the benefit of solid upside in gold and struggled in a range on some weakness in base metals. However, it managed to give closing above 37000 owing to some fresh buying in second half. In base metals, copper, aluminum and nickel recovered from the low; especially which saw positive price movements after a fall of 7 weeks. On the other hand, lead and zinc remained weak.

Agri commodities saw a bounce back from crucial support levels. We saw this trend especially in oil seeds and edible oil counter along with guar, cotton etc. rebound in the international market also propped up edible oil and oilseeds futures. On CBOT, the most active soybean futures was up nearly by 4% for the week, rebounding after losses of 2.5% last week. Chana after trading above 4400, saw profit booking from higher levels. In recent update, the government has doubled the limit on import of tur to 400,000 tone and said it will issue licences within 10 days. It is also reported that the Centre will sell 200,000 tone tur from its buffer stock. Guar counter turned bearish owing to the bearish trend of oil prices in the international market & onset of southwest monsoon.

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 $)

The Timeline of the largest & costliest Trade War – When & What Next?

Since the evolvement of the Trade War between U.S & China, it’s been almost 342 days recording series of events & still counting with lots to happen more in days to come.

• June 28, 2016 - Donald Trump lays out plans to counter unfair trade practices from China & threatens to apply tariffs under sections 201 and 301 of U.S. trade legislation.

• March 31, 2017 – Trump signs two executive orders. One calls for tighter tariff enforcement in anti-subsidy and anti-dumping trade cases.

• April 7, 2017 - At their first meeting at Trump’s Mar-a-Lago estate in Florida, Trump and Chinese Premier Xi Jinping agree to a 100-day plan for trade talks.

• July 19, 2017 - The two sides fail to agree on new steps to reduce the U.S. deficit with China after the 100 days of talks.

• Aug. 14, 2017 - Trump orders “Section 301” probe into alleged Chinese intellectual property theft, described as his first direct trade measure against Beijing.

• Jan. 17, 2018 - Trump, in a Reuters interview, threatens a big “fine” on China over alleged IP theft, without providing details.

• Jan. 22, 2018 - Trump imposes tariffs on all imported washing machines and solar panels - not just those from China.

• March 8, 2018 - Trump orders 25% tariffs on steel imports and 10% on aluminum from all suppliers - not just China.

• April 2, 2018 - China imposes tariffs of up to 25% on 128 U.S. products.

• April 3, 2018 - Trump unveils plans for 25% tariffs on about $50 billion of Chinese imports.

• April 4, 2018 - China responds with plans for retaliatory tariffs on about $50 billion of U.S. imports.

• June 15, 2018 - United States sets effective date of July 6 for 25% levies on $34 billion of Chinese imports. China responds in kind with tariffs on $34 billion of U.S. goods.

• July 10, 2018 - US unveils plans for 10% tariffs on $200 billion of Chinese imports.

• Aug. 1, 2018 - Trump orders USTR to increase the tariffs on $200 billion of Chinese imports to 25% from the originally proposed 10%.

• Aug. 7, 2018 - United States releases the list of $16 billion of Chinese goods to be subject to 25% tariffs. China retaliates with 25% duties on $16 billion of U.S. goods.

• Aug. 23, 2018 - Tariffs on goods appearing on the Aug. 7 lists from both United States and China take effect.

• Sept. 7, 2018 - Trump threatens tariffs on $267 billion more of Chinese imports.

• Sept. 24, 2018 - United States implements 10% tariffs on $200 billion of Chinese imports. The administration says the rate will increase to 25% on Jan. 1, 2019. China answers with duties of its own on $60 billion of U.S. goods.

• Dec. 1, 2018 - United States and China agree on a 90-day halt to new tariffs. Trump agrees to put off the Jan. 1 scheduled increase on tariffs on $200 billion of Chinese goods until early March while talks between the two countries take place. China agrees to buy a “very substantial” amount of U.S. products.

• Feb. 24, 2019 - Trump extends the March 1 deadline, leaving the tariffs on $200 billion of Chinese goods at 10% on an open-ended basis.

• May 5, 2019 - Trump tweets that he intends to raise the tariffs rate on $200 billion of Chinese goods to 25% on May 10.

• May 8, 2019 - The Trump administration gives formal notice of its intent to raise tariffs on $200 billion of Chinese imports to 25% from 10%, effective May 10.

• May 13, 2019 – China announces that it will increase tariffs on US$60 billion worth of US goods from June 1, 2019, in response to the tariff increases imposed by the US on May 10.

• May 16, 2019 – US places Huawei on its ‘entity list’.

• May 31, 2019 – China announces that it will establish its very own unreliable entities list in retaliation to the US’ entity list.

• June 1, 2019 – China increases tariffs on US$60 billion worth of products.

• June 2, 2019 – China issues white paper on US-China economic relations.

• All the eyes are now next on the G20 meeting.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week