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

Coming week, lower level buying can be seen near 6550 levels in turmeric futures (Apr), eyeing a target of 6750-6850 levels. It is expected that this counter would hold on to 6500 levels & the downside may remain capped. The fresh crop is likely to enter the spot markets in mid-January, but prices are unlikely to fall for the time due to lower carryover stocks. Prices of good quality turmeric are showing signs of improvement at the markets in Erode and the buyers are purchasing medium and even the poor quality to fulfil their local orders. Jeera futures (Mar) is expected to remain trapped in a consolidation zone in the range of 17000-18200 levels with upside getting capped. The export demand at present is said to be sluggish, while domestic buyers are doing need-based buying due to expectations of correction ahead amid good crop outlook. Sowing of Jeera in Gujarat almost completed with area reached at 3.21 lakh hectares against normal (5 year average) area of 3.18 lakh hectares. An upside bias may be seen in coriander futures (Apr) as it can test 7000 levels. In markets of Rajasthan, buyers are actively procuring any commodity available due to expectations of better return amid concern about crop. Already, there are estimates of lower output this season & on the top of it, the winter temperature has been dropping below ideal level required for crops in many parts, has raised worries about crop loss. Under present conditions, it is being assessed that the crop is unlikely to hurt significantly, but quality is likely to damage extensively and thus coriander prices are in bullish momentum.

BULLIONS

Bullion counter, which have witnessed steady upside on safe haven buying on weaker greenback, tumbling stock markets and fears of a global economic slowdown, is expected to extend its rally further. However, on the domestic bourses, some appreciation in local currency may cap the upside. Gold can again test the resistance of 32200 taking support near 31500 while silver can move further northwards and can test 40200. Meanwhile weaker US economic data slammed the stock markets and pushed investors to bet that the Federal Reserve could reverse its policy tightening before the end of this year. Meanwhile Fed funds futures market now shows a 90% chance the Federal Reserve will stand pat on interest rates in 2019, or even make a cut. ISM manufacturing data for November month came at 54.1 against previous reading of 59.3 raising concern about health of US economy, which has been attracting gold as safe investment. Uncertainty related to US government shutdown is also keeping yellow metals supported on lower levels. The new Democratic-held House passed legislation that would end a partial government shutdown. The temporary spending measure would give lawmakers more time to work out an immigration compromise. But it would also delay, rather than resolve, the border wall impasse. U.S. Mint sales of American Eagle gold and silver coins dropped to their lowest in 11 years during 2018, U.S. Mint data showed recently as investors favored higher-yielding assets, despite global stock and bond market volatility late in the year. SPDR Gold Trust, holdings stood at 795.31 tonne recently.

OIL AND OILSEEDS

Since past two weeks, soybean prices on the domestic bourse have shown a decent upside on the back of slow farmers selling on the spot markets. Going ahead, the same positive momentum is likely to continue & the forward month contract (Feb) is expected to test 3580 levels. Soybean arrivals had dropped significantly in the country due to slow farmers selling at lower rates and they are waiting for appreciation in prices. Soybean outlook in the domestic market seems to be steady to positive due to prospects of better meal exports this FY 2018-19 followed by good domestic demand. According to market participants Iran, missing from the list of major buyers of Indian soymeal for years, may end up buying a significant quantity from India in 2018-19 (OctSep) & may become one of the largest buyers of Indian soymeal this year. Mustard futures (Jan) is likely to witness a lower level buying near 3880 & move higher to test 4000-4020 levels. The sentiments are positive due to improved demand from oil millers and mustard meal exporters. However, it is advised to keep a cautious approach as the stocks with farmers, processors, stockists and state-run agencies as on 31st Dec were estimated around 9.5 lakh tonnes & the new crop arrivals will begin in February and gain momentum by March. CPO futures (Dec) is trading near its 4-weeks high on the national bourse & in days to come we can see more upside of 540 levels, taking support near 520 levels. While, soy oil futures (Jan) is expected to surpass the resistance near 742 & test 748 levels. Once again, the weakening rupee has come into the picture making imports costlier.

ENERGY COMPLEX

Crude oil prices may continue to hover in narrow range as it seems that the steep downfall being witnessed in past few weeks has paused for time being. Oil prices continue to remain downbeat as U.S. followed most other major economies into a manufacturing downturn, although supply cuts by producer club OPEC kept declines in check. Crude oil prices are expected to consolidate in range of 3100 -3480. Despite the global market turmoil, traders said oil prices are expected to receive some support as supply cuts announced late last year by the Organization of the Petroleum Exporting Countries (OPEC) start to kick in. OPEC, Russia and other non-members agreed last December to reduce supply by 1.2 million bpd in 2019 versus October 2018 levels. The other minor supportive factor for crude oil was disruption in Libya where the closure of Sharara oilfield will lead to supply disruption of 8,500 Bpd to looting after three security breaches in a week. U.S. crude production stood at a record 11.7 million barrels per day (bpd) in late 2018, making the United States the world's biggest oil producer. The natural gas counter can continue to remain fragile on warmer weather forecast as its prices can further dip towards 195 levels taking resistance near 215 levels. Natural gas prices held near their lowest in three months on forecasts for warmer-than-normal weather through mid-January. Warmer than normal weather is expected to cover most of the United States for the next 8-14 day which should put downward pressure on natural gas demand.

OTHER COMMODITIES

Despite the fact that cotton output for the year 2018-19 (November–October) is expected fall way below initial estimates & also that recent arrivals have been dismal, with the total this season standing at only 11.5 million bales, the prices may not see an upside momentum. Day’s ahead, cotton futures (Jan) on MCX is expected to face resistance near 21300 levels. The reason being, cotton import will rise to a record high. According to preliminary estimates by the Cotton Association of India, we may see imports of 2.7 million bales in the current year. Also, the exports are also expected to shrink to 5.3 million bales this year, from 6.5 million bales the last year. On the international front, prices have fallen sharply for the second week in a row due to the U.S government shutdown. Guar seed futures (Feb) may consolidate in the range of 4250-4475 levels, while guar gum futures (Feb) will possibly face resistance near 8800 levels. Amid, volatility in crude oil prices in the international markets and global economy concern, the stockists are mostly sidelined. On the demand front, questions are being raised on guargum exports after it is reported that in U.S thousands of shale wells that were drilled in the last five years are pumping less oil and gas than their owners forecast to investors, due to less profitability of the fracking boom. The Wall Street Journal’s findings suggest current production levels may be hard to sustain without greater spending because operators will have to drill more wells to meet growth targets. Yet shale drillers are under pressure to cut spending in the face of a 40% crude-oil price decline since October.

BASE METALS

In base metal counter, prices can remain subdued on weaker Chinese economic data. China’s manufacturing sector remains an area of concern, while industrial profits are now barely positive, raising disinflationary concerns. China has launched a number of measures, including reductions in RRR for banks, tax cuts and more infrastructure spending, to ward off sharp growth deceleration. Copper may continue to extend its bearish momentum as its prices can test 390 level in MCX. Meanwhile Lead may remain on sideways bias as it can take support near 136 level while it has resistance near in 148level. Aluminium can witness further lower level buying as it can recover towards 136 taking support near 125 levels. Indian manufacturers urged the government to hike import duty on aluminium scrap and primary aluminium to 10 percent from 2.5 percent and 7.5 percent, respectively. Geopolitical factors such as sluggish growth in China, the world’s largest consumer of aluminium and the lifting of American sanctions on Russian producer Rusal, too, hit prices. Zinc can continue its weakness as it can test 164 levels. Chinese steel futures jumped to the highest in more than two months, buoyed by expectations that steel mills would replenish their stocks of the raw material. Nickel prices is also expected to continue last week recovery as it can test 780 taking support near 740 levels. A global nickel market deficit will nearly halve to 49,000 tonnes in 2019 from 93,000 tonnes this year on higher output of primary metals by global suppliers.

TREND SHEET

TECHNICAL RECOMMENDATIONS

CRUDEOIL MCX (JAN)contract closed at Rs. 3285 on 3rd Jan’19. The contract made its high of Rs. 5533 on 3rd Oct’18 and a low of Rs. 2993 on 26th Dec’18. The 18-day Exponential Moving Average of the commodity is currently at Rs. 3376. On the daily chart, the commodity has Relative Strength Index (14-day) value of 42.98.

One can buy at Rs. 3270 for a target of Rs. 3440 with the stop loss of Rs. 3200.

GOLD MCX (FEB) contract closed at Rs. 31789 on 3rd Jan’19. The contract made its high of Rs. 32530 on 15th Oct’18 and a low of Rs. 29838 on 16th Aug’18. The 18-day Exponential Moving Average of the commodity is currently at Rs. 31498. On the daily chart, the commodity has Relative Strength Index (14-day) value of 56.82.

One can buy at Rs. 31620 for a target of Rs. 32020 with the stop loss of Rs. 31420.

JEERA NCDEX (MAR) contract closed at Rs. 17150 on 3rd Jan’19. The contract made its high of Rs. 19400 on 1th Nov’18 and a low of Rs. 16750 on 24th Dec’18. The 18-day Exponential Moving Average of the commodity is currently at Rs. 17302.85. On the daily chart, the commodity has Relative Strength Index (14-day) value of 42.129.

One can buy at Rs. 17100 for a target of Rs. 17400 with the stop loss of Rs 16950.

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NEWS DIGEST

• SEBI has allowed custodial services in the commodity derivatives market which would enable participation of institutional investors, including mutual funds, in the segment.

• The Cabinet Committee on Economic Affairs, has given its approval for including merchant exporters under the Interest Equalisation Scheme (IES) for Pre and Post Shipment Rupee Export Credit by allowing them interest equalisation rate of 3% on such credit for export of products covered under 416 tariff lines identified under the scheme.

• Russia’s Baikal Mining Company, operator of a large Udokan copper deposit, has agreed $1.25 billion of project financing from banks.

• China Caixin/Markit Manufacturing Purchasing Managers' Index for December fell to 49.7 from 50.2 in November.

• Libya's Sharara oilfield will be losing up to 11,000 barrels per day (bpd) when production restarts because of damage to the facility.

• India slashed import tax to 40 % from 44 %, while a tax on the refined variety was cut to 50 % from 54 % sourced from Southeast Asian (ASEAN) countries.

• Mustard oil mills across the country crushed 550,000 tn of the oilseed in December, up 29.4% on year. On a month-onmonth basis, crushing increased 22.2% from 450,000 tn in November. - Mustard Oil Producers Association of India.

• India's soymeal exports are expected to have declined 24% on month to around 200,000 tn in December. - Soybean Processors Association of India

WEEKLY COMMENTARY

The first week of 2019 was a mix week where we saw correction in industrial metals, some gains in precious metals; and fresh buying in crude and some agri commodities. If we talk about INR, it depreciated marginally amid strong dollar against major global currencies overseas and heavy selling in domestic equities. Dollar index traded negative third week in a row on weak data which caused concerns over the global growth. The latest PMI reading of US was the lowest seen since February 2016. Factory activity weakened across much of Europe and Asia in December as the US - China trade war and a slowdown in demand hit the production in many economies. A series of purchasing managers' indexes for December released on Wednesday mostly showed declines or slowdowns in manufacturing activity across the globe. It weighed on the sentiments of industrial metals and most of them traded negative; except nickel which saw some lower level buying. . Crude oil prices rose, drawing support from signs that Saudi Arabia is cutting crude output but pressured by concerns that slowing global economic growth could dent demand. In the week ending on December 21, US crude oil production was 11.7 MMbpd (million barrels per day)—back to its record levels. Gold advanced above $1,300 an ounce to extend a New Year rally. Investors flocked to the metal with global equities in retreat, signs of a slowdown stacking up, and the oldest of havens showing its mettle as exchange-traded funds draw in increased flows. Silver saw a terrific rise alongwith the upside in gold and in MCX both gold and silver crossed the mark of 31800 and 39500 respectively .

In the agri commodities, oil seeds and edible oil saw some gains. Malaysian palm oil futures rose to their highest in nearly two weeks on the first trading day of 2019, after world's largest edible oil importer India announced import tax cuts, amid expectations of a fall in production. India, the world's largest importer of edible oils will lower the duty on crude palm oil imports to 40 percent from 44 percent, while a tax on refined oils was cut to 50 percent from 54 percent. Some upside in crude prices gave much needed support to guar counter. Castor prices increased on lower level buying. Turmeric, jeera and dhaniya saw limited upside. It was mentha which gave good buying opportunity to the buyers in last three week.

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 $)

Modifications in Aluminium and Zinc Futures Contracts

MCX has revised contract specifications for Aluminium and Zinc Futures Contracts specified with regards to Price Quote, Delivery Unit, Delivery Centre, AdditionalDelivery Centre (s), Quality Specifications & Shape, Additional Deliverable Grade, DueDate Rate (Final Settlement Price) and Delivery Logic will be implemented w.e.f.January 03, 2019.

INTERNATIONAL COMMODITY PRICES

Currency Table

News Flows of last week