Contents

  • Equity 4-7
  • Derivatives 8-9
  • Commodity 10-13
  • Currency 14
  • IPO 15
  • FD Monitor 16
  • Mutual Fund 17-18

From The Desk Of Editor

In the week gone by, anxiety that spread of Covid-19 variants could upend growthn going forward, back-pedalled reflation trades in global markets. Global market also remained weak following sharp moves in government bonds that hinted at slower growth and inflation than previously expected. Losses were led by companies that would benefit from a rapid economic comeback from the virus. On the data front, the Labor Department’s latest jobless claims data came in unexpectedly higher at 373,000, signaling a possible slowdown in the labor picture amid the Covid recovery. The Fed minutes indicated officials weren’t ready to communicate a schedule for scaling back their bond-buying program, due to high uncertainty over the course of the recovery. Meanwhile, China's consumer price index for June rose 1.1% as compared with a year ago. Whereas the producer price index for June rose 8.8% as compared with a year ago.

Back at home, pessimistic global cues dented the morale of domestic market with selling pressure seen across the sectors amid high volatility. Meanwhile, Automobile retail sales data showed signs of recovery in June due to pent-up demand as states eased lockdown restrictions and showrooms slowly reopened, raising expectations of better sales in July. On the flip side, devastated by the second wave of the pandemic, activity in the country’s crucial services sector contracted at its sharpest pace in nearly one year in June as firms witnessed decline in sales and output. Registering 41.2 in June, the India Services Business Activity Index highlighted a further contraction in output. In its first Cabinet meeting after reshuffle, the Centre approved the Rs 23,123 crore package allocated for emergency response to Covid-19, with the focus on immediate needs for the next nine months of FY 21-22. Global ratings firm Fitch cut its forecast on India’s growth to 10% for the ongoing fiscal year from the 12.8% expansion projected in March, as lockdowns amid the second wave of the pandemic have hurt banking sector prospects. As we are into earning season, we will see stock specific movement in the market. Going forward market will take direction from outcomes of macroeconomic data, Inflow and outflow of Foreign as well as domestic institutional fund, crude oil prices and Rupee movement amid global factors.

On the commodity front, various important meetings, including OPEC+ and many Central Banks put the investors on their toes. CRB traded in a range with downside bias. Dollar index took the benefit and traded above 92 levels as safe haven buying return. Crude oil saw a breather in rally on surge in Delta variant in many countries amid delay in OPEC+ members decision. Crude may trade in a wide range of 5200- 5700. China said it would continue to release stocks of metal in the near future after auctioning 100,000 tonnes of copper, aluminium and zinc on July 5. The sales are designed to cool prices. It may cap the upside and base metals may trade in a range. Gold may move in a range with a downside bias on a stronger dollar index and trade within 47350-48800. New Yuan Loans, Inflation Rate of Germany, Core Inflation Rate, Retail Sales, Michigan Consumer Sentiment Prel and Inflation Rate of US, Westpac Consumer Confidence Index of Australia, Interest Rate Decision of Newzeland, BoCInterest Rate Decision, Core Inflation Rate, Employment Change and Inflation Rate of UK, GDP Growth Rate of China, BoJ Interest Rate Decision and BoJ Quarterly Outlook Report, Core Inflation Rate of Eueo Area etc are lots of triggers scheduled this week.

(Saurabh Jain)

SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.

SMC is a SEBIregistered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market.

SMC or its associates including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. SMC or its associates and relatives does not have any material conflict of interest. SMC or its associates/analyst has not received any compensation from the company covered by Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any compensation or other benefits from the company covered by analyst or third party in connection with the research report. The Analyst has not served as an officer, director or employee of company covered by Analyst and SMC has not been engaged in market making activity of the company covered by Analyst.

The views expressed are based solely on information available publicly available/internal data/ other reliable sources believed to be true.

SMC does not represent/ provide any warranty express or implied to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.

DISCLAIMER: This report is for informational purpose only and contains information, opinion, material obtained from reliable sources and every effort has been made to avoid errors and omissions and is not to be construed as an advice or an offer to act on views expressed therein or an offer to buy and/or sell any securities or related financial instruments, SMC, its employees and its group companies shall not be responsible and/or liable to anyone for any direct or consequential use of the contents thereof. Reproduction of the contents of this report in any form or by any means without prior written permission of the SMC is prohibited. Please note that we and our affiliates, officers, directors and employees, including person involved in the preparation or issuance of this material may; (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) may trade in this securities in ways different from those discussed in this report or (c) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instrument of the company (ies) discussed herein or may perform or seek to perform investment banking services for such Company (ies) or act as advisor or lender / borrower to such company (ies) or have other potential conflict of interest with respect of any recommendation and related information and opinions, All disputes shall be subject to the exclusive jurisdiction or Delhi High Court.

SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.

EQUITY

NEWS

DOMESTIC
Economy
  • According to the survey data from IHS Markit, India's service sector contracted sharply in June as the emergence of the pandemic and the reintroduction of containment measures restricted demand. The services Purchasing Managers' Index fell unexpectedly to 41.2 in June from 46.4 in May. Economists had forecast the index to rise to 48.0.
Pharmaceuticals
  • Alembic Pharmaceuticals has received US Food & Drug Administration (USFDA) Final Approval for Desipramine Hydrochloride Tablets USP, 10 mg, 25 mg, 50 mg, 75 mg, 100 mg, and 150 mg. The approved ANDA is therapeutically equivalent to the reference listed drug product (RLD), Norpramin Tablets, 10 mg, 25 mg, 50 mg, 75 mg, 100 mg, and 150 mg, of Validus Pharmaceuticals LLC. Desipramine Hydrochloride Tablets, USP are indicated for the treatment of depression.
  • Pfizer and BioNTech announced that they would seek regulatory authorization for a third dose of their Covid-19 vaccine. It comes after initial data from an ongoing trial showed a third shot pushed antibody levels five to 10 times higher against the original coronavirus strain and the Beta variant, first found in South Africa, compared to the first two doses alone.
  • Sanofi and GSK have received approval for their Phase 3 clinical study in India to assess the safety, efficacy and immunogenicity of their adjuvanted recombinant-protein COVID-19 vaccine candidate. The global, randomised, double-blind Phase 3 study will include more than 35,000 volunteers aged 18 and older across sites in the US, Asia, Africa, and Latin America.
  • Bajaj Healthcare has received a licence from DRDO to Manufacture and Market of “2-Deoxy-D-Glucose” (2-DG) as approved medication for the treatment of COVID-19 patients. 2-Deoxy-D-Glucose” (2-DG) helps in the faster recovery of hospitalised patients and reduces supplemental oxygen dependence. The drug works by selectively accumulating in the virusinfected cells and prevents virus growth by stopping viral synthesis and energy production.
Automobile
  • Mahindra & Mahindra (M&M) has launched Supro Profit truck range in the country, with price starting at Rs 5.4 lakh (ex-showroom Mumbai). Supro Profit Truck Mini price starts at Rs 5.4 lakh, while Supro Profit Truck Maxi begins at Rs 6.22 lakh.
Defence
  • Bharat Dynamics Limited (BDL) signed a contract worth about Rs 499 crore with the Ministry of Defence for the manufacture and supply of Akash missiles to the Indian Air Force (IAF).
Information Technologies
  • Larsen & Toubro Infotech (LTI) has completed acquisition of Cuelogic Technologies, a digital engineering and outsourced product development company. In June this year, LTI said it will acquire Cuelogic Technologies for USD 8.4 million (about Rs 61.6 crore).
Telecom
  • RailTel Corporation of India has received a work order amounting to Rs. 23.43 crore (Excluding GST) from Sagar Cable Network towards providing of Multicast drop and carry with 1.5G capacity at 66 locations for a period of 5 years.

TREND SHEET

FORTHCOMING EVENTS

INTERNATIONAL NEWS
  • US initial jobless claims crept up to 373,000, an increase of 2,000 from the previous week's revised level of 371,000. The uptick surprised economists, who had expected jobless claims to drop to 350,000 from the 364,000 originally reported for the previous week.
  • US factory orders surged up by 1.7 percent in May after edging down by a revised 0.1 percent in April. Economists had expected factory orders to jump by 1.5 percent compared to the 0.6 percent drop originally reported for the previous month.
  • US trade deficit widened to $71.2 billion in May from a revised $69.1 billion in April. Economists had expected the trade deficit to widen $71.4 billion from the $68.9 billion originally reported for the previous month.
  • The European Central Bank has adopted a symmetric 2 percent inflation target that will allow a temporary overshoot and decided to incorporate climate change considerations into its policy framework, following a monetary policy review that was launched last year.
  • The European Central Bank has adopted a symmetric 2 percent inflation target that will allow a temporary overshoot and decided to incorporate climate change considerations into its policy framework, following a monetary policy review that was launched last year.
  • Japan posted a current account surplus of 1,979.7 billion yen in May, the Ministry of Finance said on Thursday - up 85.3 percent on year. That exceeded expectations for a surplus of 1,820.4 billion following the 1,321.8 billion yen surplus in April.
4

EQUITY

INDIAN INDICES (% Change)

SECTORAL INDICES (% Change)

GLOBAL INDICES (% Change)

FII/FPI & DII ACTIVITY (In Rs. Crores)

BSE SENSEX TOP GAINERS & LOSERS (% Change)

NSE NIFTY TOP GAINERS & LOSERS (% Change)

5

EQUITY

Beat the street - Fundamental Analysis

WELSPUN INDIA LIMITED
CMP: 106.40
Target Price: 129
Upside: 21%
VALUE PARAMETERS
  • Face Value (Rs.) 1.00
  • 52 Week High/Low 109.50/31.00
  • M.Cap (Rs. in Cr.) 10690.28
  • EPS (Rs.) 5.37
  • P/E Ratio (times) 19.81
  • P/B Ratio (times) 2.93
  • Dividend Yield (%) 0.14
  • Stock Exchange BSE
% OF SHARE HOLDING

Investment Rationale

  • Welspun India Ltd (WIL) is a global leader in Home textiles. With a distribution network in more than 50 countries and world class manufacturing facilities in India, Welspun is strategic partners with top global retailers. The company is driven by its differentiation strategy based on Branding, Innovation and Sustainability.
  • The capital light expansion at Vapi and Anjar which was announced in Q3FY21 is on track and the benefits from this investment will start accruing in phases from the Q2 Fy22.
  • The company plans to gradually expand the home textiles capacity to grab large opportunities in home textile exports. Company’s flooring products are not only gaining strong traction in the domestic market but also getting higher export enquiries from international market.
  • Greenfield Spunlace Capacity addition project in Telangana is on course and the company expect commercial operation to commence from H2 FY22. Hard flooring capacity doubled in January 2021 & further doubling of capacity of Hard Flooring by Q2FY22. The company has been focusing on brands to tap the underpenetrated domestic market, which is being catered by unorganised players.
  • In FY21, the company had spent Rs. 453.40 crore. In spite of investments in growth businesses, Net Debt has remained below Rs. 2400 crore as on 31st March 21. The management is focused on becoming net long-term debt free through its strong internal cash accruals.
  • Net Sales at Rs 2,135.71 crore in March 2021

up 32.05% from Rs. 1,617.32 crore in March 2020. Quarterly Net Profit at Rs. 130.11 crore in March 2021 up 52% from Rs. 85.60 crore in March 2020.

Risk

  • Slowdown in Economy
  • Any large debt-funded capex/inorganic acquisition, decline in liquidity buffers and/or a significant reduction in profitability.

Valuation

The Company remains committed in its long-term aspiration of delivering sustainable and profitable volume led growth, building on strong brand equity and accelerated focus on emerging businesses and implementation of government of PLI scheme for textile sector with large focus on growing the prospects of advance textile and man-made-fibres. Despite a strong capex plan to support growth in key segments, net debt is expected to remain at Rs. 2,400 crore as large capex funding will be done by improving cash flows. It is expected that the stock will see a price target of Rs.129 in 8 to 10 months time frame on a target P/BVx of 3.10x and FY22 BVPS of Rs.41.70.

P/B Chart

PSP PROJECTS LIMITED
CMP: 446.00
Target Price: 554
Upside: 24%
VALUE PARAMETERS
  • Face Value (Rs.) 10.00
  • 52 Week High/Low 506.00/336.75
  • M.Cap (Rs. in Cr.) 1605.60
  • EPS (Rs.) 22.65
  • P/E Ratio (times) 19.69
  • P/B Ratio (times) 3.00
  • Dividend Yield (%) 0.90
  • Stock Exchange BSE
% OF SHARE HOLDING

Investment Rationale

  • PSP Projects is a multidisciplinary construction company offering a diversified range of construction and allied services across industrial, institutional, government, government residential and residential projects in the country.
  • On the development front, the company is currently constructing world’s biggest office complex (Surat Diamond Bourse) having Contract Value of Rs. 1575 Cr and 66 Lakhs Sq. Ft Built-up area.
  • During FY21, it has robust and highest ever order book of 4120.97 crore out of which around 83% of order book is fully mobilised and work has already started. Order books comprises of 43.86% government, 17.71% industrial, 13.89% residential and 23.61% institutional orders and around 42.15% related to Maharashtra.
  • It has a bid pipeline of Rs5000 crore such as MNC township of Rs2000 crore, Hospital University and 12 other tenders worth Rs1500 crore in UP and Rs.500 crore residential project in Ahmedabad. Other project values are Rs200 crore Mall in Ahmedabad, Rs200 crore stadium in Baroda, Complex of Torrent of Rs100 crore worth.
  • During the FY21, Gross Debt stood at Rs90 crore which reduced to Rs.70 crore by utilising its working capital efficiently with maintaining Debtor days - 65, creditor’s days - 76, and inventory days - 26. Out of total credit facilities of 610 crores, utilized limit as on March 31, 2021, was 430 crores of which 68 crores are fund-based utilization and 362 crores is non-fund based utilization. Work on hand as on March 31, 2021, is Rs. 4121 crores, which comprises of Rs. 382 crores for Surat Diamond Bourse project and Rs. 3739 crores for other projects.
  • The management of the company has guided

    for 20-25%YoY revenue growth in FY22 and margin guidance of 11-13% depending on the activity of the project.

Risk

  • Economy slowdown
  • Regulatory, taxation and environmental risks

Valuation

Despite businesses taking a hit due to the Covid-19 pandemic, the company has witnessed robust sales driven by residential business along with continued stability in the Intuitional business. The management hopes that the strong pipeline of ongoing and upcoming projects, and favourable market conditions will help the company to maintain the momentum going forward. Thus, it is expected that the stock will see a price target of Rs.554 in 8 to 10 months time frame on a target P/BVx of 3.01x and FY22 BVPS of Rs.184.14.

P/E Chart

Above calls are recommended with a time horizon of 8 to 10 months.

6

EQUITY

Beat the street - Technical Analysis

Alkem Laboratories Limited (ALKEM)

The stock closed at Rs 3350.70 on 09th July, 2021. It made a 52-week low at Rs 2332.45 on 08th July, 2020 and a 52-week high of Rs. 3377.95 on 09th July, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 2879.07.

As we can see on charts that stock is trading in higher highs and higher lows on charts, since May 2020. Apart from this, stock has formed a “Rising Wedge” on weekly charts, which is considered to be bullish. Last week, the stock has given the pattern breakout along with high volumes and also has managed to close above the same so buying momentum may continue for coming days. Therefore, one can buy in the range of 3310-3330 levels for the upside target of 3550-3600 levels with SL below 3150 levels.

Shriram Transport Finance Company Limited (SRTRANSFIN)

The stock closed at Rs 1455.70 on 09th July, 2021. It made a 52-week low of Rs 555.55 on 24th September, 2020 and a 52- week high of Rs. 1534.95 on 15th February, 2021. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 1225.78.

Short term, medium term and long term bias are looking positive for the stock as it is trading in higher highs and higher lows on charts. Apart from this, stock is forming a “Bullish Flag” pattern on weekly charts, which is bullish in nature. Last week, the stock tried to give the breakout of same, couldn’t hold the high levels but its consolidation from few weeks indicates that there may be strong spurt in coming days. Therefore, one can buy in the range of 1430- 1440 levels for the upside target of 1570-1590 levels with SL below 1380 levels.


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: RELIABLE SOFTWARE

Charts by Reliable software

Above calls are recommended with a time horizon of 1-2 months

7

DERIVATIVES

WEEKLY VIEW OF THE MARKET

Bears tried to keep Indian markets under pressure and Nifty indices once again could not managed to breach key psychological level of 16000 and closed near the unchanged line on week on week basis. However metal and banking counter along with mid-caps gave support to markets in the week gone by. From derivative front, call writers remained active at 15700 & 15800 strikes while put writers held maximum open interest at 15600 strike. The Implied Volatility (IV) of calls closed at 12.56 % while that for put options closed at 14.07%. The Nifty VIX for the week closed at 13.56%. PCR OI for the week closed at 1.32. Technical indicators suggested that volatility is likely to grip markets in coming week as well. Nifty likely to face strong hurdle at 15850 levels while 36000 levels for Bank Nifty would remain crucial. On downside 15550-15500 zone likely to provide support.

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)

8

DERIVATIVES

SENTIMENT INDICATOR (NIFTY)

SENTIMENT INDICATOR (BANKNIFTY)

FII’S ACTIVITY IN INDEX FUTURE

FII’s ACTIVITY IN DERIVATIVE SEGMENT

Top 10 Long Buildup

Top 10 Short Buildup

Note: All equity derivative data as on 8th July, 2021

**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

9

COMMODITY

OUTLOOK

SPICES

Turmeric futures (Aug) is likely to consolidate in the range of 7200-7600 levels. The upside may remain capped because demand from local consuming centres and overseas markets has slowed down. Export demand is very negligible in all the mandis. However, on spot prices in Erode and Nanded mandis, prices are getting some support as demand picked up from local buyers. The arrival of better quality was also priced higher. According to trade sources, few bags of turmeric of excellent quality were sold as high as Rs. 7700 per quintal. But turmeric remained bearish in Kesamudram and Warangal mandis. The arrival of poor quality Gattha was sold lower. Jeera futures (Aug) is expected to break the support level near 13200 and plunge further towards 12800 due to subdued demand from local and overseas markets and a likely arrivals pressure in spot markets. As of now, of the total production this season, only 45-50% of the crop has arrived in the market. In Unjha, the benchmark market, arrivals were steady at 15,000 bags (1 bag = 55 kg). Exchange quality jeera was sold at 13,200 rupees per 100 kg. Dhaniya futures (Aug) is expected to see lower levels of 6400-6300 tracking weak cues from the spot market and tepid demand from bulk buyers. The buyers from south are avoiding purchases from the mandis of Rajasthan, Gujarat and Madhya Pradesh. Higher production estimates also weighing on prices. Production of coriander was pegged at 822,210 tn in 2020-21 (Jul-Jun) season, up 17.3% on year, according to data from Spices Board India. Good quality Eagle and Badami coriander were sold at a brisk rate of Rs 70 per quintal. In Gujarat's Rajkot mandi, the arrival was affected as the farmers were busy in sowing.

BULLIONS

Gold prices were set for the third straight weekly gain, as a slight pullback in the dollar made bullion less expensive for other currency holders, while a drop in U.S. Treasury yields also offered support to the safe-haven metal. The dollar index retreated from a three-month peak against its rivals. Benchmark U.S. 10-year Treasury yields languished near more than four-month low, reducing the opportunity cost of holding non-interest bearing gold. S&P 500 and the Nasdaq pulling back from record closing highs in a broad sell-off, driven by uncertainties surrounding the pace of the U.S. economic recovery. The European Central Bank set a new inflation target on Thursday and carved out a major role in the fight against climate change, embarking on a fundamental transformation of Europe’s most powerful financial institution. The new rise in the Delta variant causing some concerns on the global growth and the data out of U.S. started to ease off a little bit is helping gold. Minutes of the U.S. Federal Reserve's June policy meeting showed that while the economic recovery "was generally seen as not having yet been met," Fed officials agreed they should be poised to act if inflation. Fears over an imminent monetary policy tightening by the Fed have weighed on bullion, sending gold down 7% in June. Ahead in this week, we may continue to witness huge volatility and gold and range would be 46000-49200 whereas, Silver may trade in the range of 66300-71400 levels. Whereas on COMEX gold may trade in the range of $1730-$1840 and Silver may trade in the range of $25.10-$27.40.

OIL AND OILSEEDS

Soybean futures (Aug) is expected to trade with a downside bias and remain below -7250 levels in days to come. The reason being, area under soybean planting is likely to increase by 5-7% across the country this kharif season despite speculation in the market over the shortage of seeds. Farmers, however, are keeping their fingers crossed due to the break in monsoon and hope for a revival of the monsoon to ensure a good crop. Record high prices for the oilseed could prompt some to switch from cultivating competing commodities such as cotton and pulses. If we look at the demand side, it seems that it has slowed down as data shows that India's soymeal exports were largely unchanged on year and flat on month at 80,000 tn in June. On the supply side, by the end of June, mills, traders, and farmers were left with around 1.9 mln tn of soybean stock. RM Seed futures (Aug) may witness further correction towards 6400-6200 levels as the arrivals pressure has started mounting on this counter. Mustard arrivals at major markets increased to 200,000 bags. In Jaipur, the benchmark market, the oilseed was sold at 7,100–7,125 rupees per 100 kg. Soy oil futures (Aug) is likely to trade sideways to down in the range of 1220-1280, while CPO futures (July) will probably see selling pressure with every rise, facing resistance near 1035. The government is considering imposing stock limits on edible oils and oilseeds to cool prices in the domestic market. This comes as prices remain elevated despite recent measures, including easing of import restrictions. The Reserve Bank of India's Monetary Policy Committee has been encouraging the government to take supply-side measures to reduce inflation.

ENERGY COMPLEX

Crude Oil prices fell as investors feared what this week's collapse in OPEC+ talks meant for worldwide production. Crude markets have been volatile over the week following the breakdown of discussions between major oil producers Saudi Arabia and United Arab Emirates. The OPEC+, have restrained supply for more than a year since demand crashed during the coronavirus pandemic. The group is maintaining nearly 6 million bpd of output cuts and was expected to add to supply, but three days of meetings failed to close divisions between the Saudis and the Emiratis. For now, the existing agreement that keeps supply restrained remains in force. But the breakdown also could lead producers, eager to capitalize on the rebound in demand, to start supplying more oil previously predicted. Russia is now leading efforts to close divisions between the Saudis and UAE to help strike a deal to raise oil output in coming months, three OPEC+ sources said. Saudi Energy Minister Prince Abdulaziz bin Salman dampened concerns of a price war. Ahead in the week crude oil prices may continue to trade with bullish bias in the range of 5220-5780 levels with higher volatility. Natural Gas dipped as forecasts projected cooler weather over the next two weeks, while output is expected to rise. Data provider Refinitiv projected average gas demand, including exports, would dip from 89.7 bcfd this week to 88.6 bcfd next week as milder weather curbs air conditioning use. Refinitiv said gas output in the Lower 48 U.S. states fell to an average of 90.7 bcfd so far in July due mostly to pipeline problems in West Virginia. Ahead in week it is expected that prices may continue to trade with mixed bias as range would be 256-289 levels.

OTHER COMMODITIES

Cotton futures (July) is expected to trade sideways in the range of 24000- 26000. In the present scenario, the sentiments are mixed amid slower pace of exports &sowing also. The sowing has picked up in recent weeks; however, it still lags due to the delayed harvest of winter crops coupled with delayed monsoon, which has affected the overall sowing of Kharif. On the demand side, persistently high prices in the domestic market continued to be a drag on India's cotton exports. India's exports are priced at 97-98 cents a pound on a cost-and-freight basis, slightly higher than the superior quality crop from Brazil and the US. Industry experts say cotton exports may touch 6.5-7.0 mln bales by September-end. The Cotton Association of India has estimated exports at 7.2 mln bales for the current season. Guar seed futures (Aug) may trade with a downside bias in the range of 4000-4200, while guar gum futures (Aug) is expected to remain range bound within 6200-6600. Guar seed and gum prices are seen under pressure since last month amid weak demand. Moreover, progress of monsoon may force farmers to cultivate guar due to delay in the sowing of other crops. As per the IMD, the southwest monsoon is likely to advance over remaining parts of west Uttar Pradesh, some more parts of Punjab, Haryana and Rajasthan and Delhi around 10th July. Chana futures (Aug) is expected to take support around 4750 & witness some pull back towards 5100. As per market sources, auction schedule for Nafed PSF Chana Rabi 2019 and Rabi 2020 for state of Andhra Pradesh, Telangana and Karnataka has been suspended till further information. Also, Nafed stopped selling Rabi 2020 Chana in Maharashtra from tomorrow onwards.

BASE METALS

Base metals may trade with bearish bias as well as high volatility. The prices are being pressured after the U.S. Federal Reserve confirmed plans to tighten monetary policy sooner than expected amid doubts about the pace of the global economic recovery. China also raised expectations that it could ease monetary policy to support its economy, which was interpreted by the market as sign of weakness in the world’s top metals consumer. The rapid spread of the highly-contagious Delta variant of COVID-19 in many countries has raised concerns that the global economic rebound might be derailed, dampening expectations for metals demand. Copper may trade with bearish bias in the range of 690-740 levels. Total stocks in LME-registered warehouses are at their highest in more than a year at 212,575 tonnes. The LME cash contract is at a $33 a tonne discount to the three-month price, pointing to plentiful supply. Zinc may trade in the range of 230-245. The mining company Central Asia Metals PLC said zinc output fell 3.4% quarter-on-quarter to 5,549 metric tons in the three months to June. Lead can move in the range of 174-184. A jump in demand for traditional lead-acid car batteries and lingering freight problems have created shortages and driven up lead prices. Nickel may trade in the range of 1340-1410. The metal is taking support by growing demand from automakers, as it recently has attracted strong demand from the electric vehicle industry. Aluminum may move in the range of 190-205. Plans by Russia to impose taxes on exports of aluminium have fuelled a surge in spot market costs for consumers in Europe and the United States.

10

COMMODITY

TREND SHEET

TECHNICAL RECOMMENDATIONS

COPPER MCX (JUL) contract closed at Rs. 720.60 on 08th Jul’2021. The contract made its high of Rs. 804.60 on 12th May’2021 and a low of Rs. 690.00 on 21st Jun’2021. The 18- day Exponential Moving Average of the commodity is currently at Rs 722.80. On the daily chart, the commodity has Relative Strength Index (14-day) value of 46.633.

One can buy above Rs. 720 for a target of Rs. 750 with the stop loss of Rs. 705.

GOLD MCX (AUG) contract closed at Rs. 47721.00 on 08th Jul’2021. The contract made its high of Rs. 49721.00 on 01st Jun’2021 and a low of Rs. 44501.00 on 30th Mar’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 47505.21. On the daily chart, the commodity has Relative Strength Index (14-day) value of 51.376.

One can sell near Rs. 48000 for a target of Rs. 46300 with the stop loss of Rs. 48800.

TMC NCDEX (AUG) contract was closed at Rs. 7364.00 on 08th Jul’2021. The contract made its high of Rs. 8300.00 on 28th May’2021 and a low of Rs. 7234.00 on 29th Jun’2021. The 18-day Exponential Moving Average of the commodity is currently at Rs. 7463.63. On the daily chart, the commodity has Relative Strength Index (14-day) value of 34.970.

One can buy above Rs. 7390 for a target of Rs. 7790 with the stop loss of Rs 7190.

11

COMMODITY

NEWS DIGEST

  • The Union Cabinet approved modifications in the central sector scheme of financing facility under ‘Agriculture Infrastructure Fund’. Eligibility has now been extended to State Agencies/APMCs, National & State Federations of Cooperatives, Federations of FPO’s and Federations of Self Help Groups (SHGs).
  • Stock limits have been prescribed for all pulses except moong until October 31 for all states and Union Territories. Wholesale traders can stock 200 tonne (but not more than 100 tonne of one variety) while retailers can stock a maximum of 5 tonne. Dal millers can stock 25% of their annual installed capacity or the last three months of production, whichever is higher.
  • India's soymeal exports were largely unchanged on year and flat on month at 80,000 tn in June, SOPA data showed.
  • CME raised soybean futures margins by 2% for august 2021. Raised soybean futures maintenance margins by 2% to $5,000 per contract from $4,900 for August 2021. Says initial margin rates are 110% of maintenance margin rates. rates will be effective after the close of business on July 7, 2021
  • Brent crude oil on the Intercontinental Exchange is seen at $68.78 per barrel, higher from $65.19 per bbl estimated earlier, the agency said in its 'Short Term Energy Outlook' report. - US EIA
  • Global gold exchange-traded funds saw inflows of 2.9 tn or $191.3 mln in June, as per WGC.
  • China's National Food and Strategic Reserves Administration said it would continue to release stocks in the near future after completing the auction of 100,000 tonnes of copper, aluminium and zinc on July 5.
  • MCX saw highest turnover of Rs 5,304.87 cr in crude oil options; surpassed Rs 5,000 cr turnover in crude oil options.

WEEKLY COMMENTARY

Various important meetings, including OPEC+ and many Central Banks put the investors on their toes. CRB traded in a range with downside bias. Dollar index took the benefit and traded above 92 levels as safe haven buying return. The dollar traded near its highest in three months versus major peers on Thursday after minutes of the Federal Reserve's June policy meeting confirmed the world's biggest central bank is moving toward tapering its asset purchases as soon as this year. Fed officials said substantial further progress on economic recovery "was generally seen as not having yet been met," although participants expected progress to continue and agreed they must be ready to act if inflation or other risks materialize, according to the minutes of the Federal Open Market Committee (FOMC)'s June policy meeting released Wednesday. Crude oil saw a breather in rally on surge in Delta variant in many countries amid delay in OPEC+ members decision. Rally looked tired from the higher levels. Oil was down on Thursday, falling for a third consecutive session. Investors continued to keep an eye on the ongoing production dispute between Saudi Arabia and the United Arab Emirates (UAE) influencing global fuel supply. Natural gas saw a fall despite bullish fundamentals on fall in crude prices. U.S. natural gas prices jumped in previous week amid a tight natural gas market and expectations of high demand for electricity in hotter than usual weather in many parts of the United States. Gold held steady on Thursday as lower U.S. Treasury yields countered a stronger dollar after minutes from the Federal Reserve’s last meeting showed that the central bank is moving towards tapering its asset purchases as soon as this year. Silver too closed weak on pressure in both gold and base metals. Base metals noticed pressure from higher side and moved down on tapering news in US. China will continue to push real lending rates lower and reduce financing costs for small companies through targeted monetary policy tools. The People's Bank of China will also make timely adjustments to policy tools and keep the yuan exchange rate stable to help exporters. This news limited the downside of base metals.

Chana continued to trade weak as import allowed after a year of ban and stock release by NAFED. Oil seeds and edible oils also saw pressure, as there was an expectation by the market participants that government may take decision to cool off the prices; like chana. It is reported that the area under soybean planting is likely to increase by 5-7% across the country this kharif season despite speculation in the market over the shortage of seeds. Cotton futures remained traded firm taking positive cues from slower arrivals pace and higher demand from mills.

NCDEX TOP GAINERS & LOSERS (% Change)

MCX TOP GAINERS & LOSERS (% Change)

WEEKLY STOCK POSITIONS IN WAREHOUSE (NCDEX)

WEEKLY STOCK POSITIONS IN WAREHOUSE (MCX)

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COMMODITY

Spot Prices (% Change)

WEEKLY STOCK POSITIONS IN LME (IN TONNES)

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

GUAREX and SOYDEX ……….less cost & more profit

In a bid to provides real-time commodity futures price index, the National Commodity and Derivatives Exchange (NCDEX) has launched two sectoral indices — GUAREX and SOYDEX on July 05, 2021. Both indexes are designed to provide exposure of guar & Soy Complex Commodity respectively to market participants. These are price based Indices showing price changes taking place in the Guar Complex and Soy Complex Commodities market. GUAREX and SOYDEX are also the country''s first sectoral indices in the agri-commodities space.

GUAREX is a return-based index tracking the price movement in the futures contracts of its underlying, that is guar seed and guar gum refined splits on a realtime basis. Similarly, SOYDEX will follow the price changes in futures contracts of soybean and refined soy oil traded on NCDEX. The Index will act as an important tool in benchmarking and trading for the market.

Initially, both the indices will be available on the agri-commodity exchange's website and will be representative only to gauge the performance of guar complex and soy complex. The futures trading in these indices will be launched in due course, NCDEX stated.

Some highlights of the Indices are:

  • The commodities are selected based on SEBI criteria and should belong to that particular sector.
  • 50%-50% weights are assigned based on national production (average of last 5 fi¬nancial years) and traded value(last calendar year) on exchange.
  • Rebalanced annually on fi¬rst trading day of financial year.
  • Cap of 70% and Floor of 30% is enforced upon the weights

The weightage of Commodities in indices

Commodities are weighted based on their national production value and their total traded value on the Exchange platform.

Key benefits :

  • GUAREX and SOYDEX will offer a lot of opportunities to value chain participants with respect to trading strategies and risk management exercises.
  • Being cash-settled contracts, Guarex and Soydex will become perfect products for hedgers who have been in a constant search of low-cost products.
  • SEBI’s cross margin benefit will further sweeten the deal for hedgers in terms of significant reduction in the transaction by using these indices

In May 2020, NCDEX had launched AGRIDEX, a return-based composite index tracking futures price movement in 10 commodities on NCDEX. The index has given over 40 per cent return in its first full year of operations, establishing itself as a benchmark for the commodity market participants.

INTERNATIONAL COMMODITY PRICES

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CURRENCY

Currency Table

Market Stance

Indian Rupee failed to reverse its losing streak this week amid strong bid in dollar kept the USDINR pair higher. However ease in oil prices from its three year high capped abrupt fall in the domestic unit. Next week domestic inflation for the month of June will be key for rupee. Although it is widely expected the headline print likely to touch near 6.8% which can turn out to be negative for rupee in coming days. We will maintain bullish stance in the USDINR pair for next week. Earlier the dollar index traded higher versus some peers amid risk off appetite. Additionally Fed minutes revealed officials are not ready to adhere to a tapering timeline, but expect conditions to be met somewhat earlier than they had anticipated at previous meetings. On the majors, pound dropped below 1.38 vs dollar amid deep concerns over rising covid cases. Inevitably rising covid cases in the UK likely to tamper recovery which will weigh pound in coming days. On the other hand euro remained steady after ECB set inflation target of 2%. However later ECB chair Laggard commented that the ECB doesn’t see 2% inflation as a ceiling in a hawkish change of tone. We think next week euro remains supported by the ECB latest comments for inflation.

Technical Recommendation

USD/INR (JUL) contract closed at 74.9475 on 08-Jul-21. The contract made its high of 74.9975 on 08-Jul-21 and a low of 74.4250 on 06-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the USD/INR is currently at 74.4293.

On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 61.90. One can buy at 74.70 for the target of 75.70 with the stop loss of 74.20.

GBP/INR (JUL) contract closed at 103.2200 on 08-Jul-21. The contract made its high of 103.5475 on 06-Jul-21 and a low of 103.0625 on 08-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the GBP/INR is currently at 103.4653.

On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 44.49. One can sell at 103.50 for a target of 102.50 with the stop loss of 104.00.

News Flows of last week

09th JUL Top Fed official warns Delta variant poses threat to global recovery
08th JUL ECB changes inflation target, leaving extra room to keep rates low
07th JUL EU recovery boosted by fastest growth in decades, Brussels says
07th JUL Pandemic leaves 22m people out of work in advanced economies, OECD finds
07th JUL US piles pressure on EU to drop digital tax plan
06th JUL Inflation takes shine off booming central Europe
06th JUL Legal wrangle raises hurdles to EU implementation of global tax deal
05th JUL EU to develop investment initiative to counter Chinese influence
05th JUL Wallenberg warns against using Covid as excuse for protectionism

Economic gauge for the next week

EUR/INR (JUL) contract closed at 88.7650 on 08-Jul-21. The contract made its high of 88.8500 on 06-Jul-21 and a low of 88.3025 on 08-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the EUR/INR is currently at 88.8736.

On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 38.85. One can sell at 88.75 for a target of 87.75 with the stop loss of 89.25.

JPY/INR (JUL) ccontract closed at 68.2325 on 08-Jul-21. The contract made its high of 68.2925 on 08-Jul-21 and a low of 67.1800 on 05-Jul-21 (Weekly Basis). The 21-day Exponential Moving Average of the JPY/INR is currently at 67.4381.

On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 49.73. One can buy at 67.50 for a target of 68.50 with the stop loss of 67.00.

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IPO

IPO NEWS

GR Infraprojects IPO sees strong demand from investors, subscribed 5.75 times on day 2

The public offer of GR Infraprojects continued to witness overwhelming response from investors given the expected infrastructure boost in coming years and attractive valuations compared to peers, as it subscribed 5.75 times on July 8, the second day of bidding. The offer has received bids for 4.67 crore equity shares against IPO size of 81.23 lakh equity shares, the subscription data available on the exchanges showed. The retail investors have put in bids 7.49 times their reserved portion and non-institutional investors 6.31 times their portion set aside. A part set side for qualified institutional buyers has subscribed 2.78 times and that of employees 75 percent. The road sector contractor is planning to raise Rs 963 crore through its public issue which comprises a complete offer for sale by selling shareholders. The company already garnered Rs 283 crore from anchor investors on July 6, a day ahead of issue opening, at a higher end price band of Rs 828-837 per share.

Clean Science IPO subscribed 4.28 times on second day of bidding

The public offer of Clean Science, a technology-driven specialty chemical manufacturing company, has seen a strong demand from investors as it got subscribed 4.28 times so far on the second day of bidding, July 8. Investors have put in bids for 5.26 crore equity shares against the offer size of 1.23 crore equity shares, the subscription data available on the exchanges showed. The portion set aside for qualified institutional buyers has subscribed 2.12 times, while non-institutional investors have put in bids 4.51 times their reserved portion, and retail bidders 5.42 times their reserved portion. Clean Science and Technology opened its Rs 1,546.62 crore public issue for subscription on July 7, with a price band of Rs 880-900 per equity share. It is completely an offer for sale by existing selling shareholders, so the company will not get any money from the offer.

Zomato IPO: Price band fixed at Rs 72-76 for the Rs 9,375-crore issue

Food delivery giant Zomato announced in a press conference the price band for its much-awaited public issue at Rs 72-76 per equity share. The Rs 9,375-crore offer will open for subscription on July 14 and close on July 16. Anchor book, if any, will open for a day on July 13, a day before the issue opening. It is the largest IPO after SBI Card (Rs 10,355 crore) that was launched in March 2020. The public offer comprises a fresh issuance of Rs 9,000 crore, and an offer for sale of Rs 375 crore by existing selling shareholder Info Edge. The public issue includes a reservation of up to 65 lakh equity shares for its employees. Earlier, at the time of filing draft red herring prospectus in April this year, the total offer size was Rs 8,250 crore. As per the RHP, the fresh issue size has been increased to Rs 9,000 crore from the earlier Rs 7,500 crore, while Info Edge intimated exchanges last week that the offer-for-sale size has been reduced to Rs 375 crore from Rs 750 crore. Investors can apply for a minimum of 195 equity shares and in multiples of 195 shares thereafter. Zomato has reserved up to 75 percent of the total offer for qualified institutional buyers, up to 10 percent for retail investors, and the rest 15 percent for non-institutional buyers. The company in February this year had already mobilised $250 million in its pre-IPO placement from marquee investors such as Kora Management, Tiger Global, Fidelity, Dragoneer and Bow Wave, at a valuation of $5.4 billion.

Paytm IPO size to be about Rs 16,600 crore

Paytm’s initial public offering (IPO) will be worth around Rs 16,600 crore (about $2.23 billion) and the Noida-based fintech firm is likely to file a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) soon after its extraordinary general meeting (EGM) on July 12. Paytm may also seek shareholders’ approval to increase the size of the IPO to nearly Rs 19,318 crore ($2.6 billion) closer to the date of its proposed listing, one of the sources added. The proposal, if approved, will make it one of the largest IPOs in dollar terms after Coal India (about $3.3 billion) and Reliance Power (around $2.4 billion). Last month, Paytm told shareholders in a note that it intended to issue fresh shares worth Rs 12,000 crore, or $1.6 billion, in the IPO. The OFS option, where Paytm’s investors can directly sell their stakes during the IPO, will form the rest of the issue size, of about $600 million (Rs 4, 580 crore).

Rs 80,000 crore IPO bonanza: About 40 companies line up public issues

The primary market is set for a bumper Rs 80,000-crore bonanza with 30 companies already filing IPO papers to raise Rs 55,000 crore, while around 10 more are lined up for this month itself, seeking to mop up another Rs 25,000 crore, say investment bankers. The market has been on a non-stop rally, hitting new records almost every week, on the back of an influx of investors — a vast majority of them first-timers — coupled with a flood of liquidity. Foreign funds alone had pumped in a record USD 35 billion into the market in FY21, while the trend has continued this fiscal as well. Domestic institutions led by LIC have also infused trillions of rupees, helping woo retail investors in troves — the year saw over 20 million new investors coming to the market. Having already raised Rs 27,426 crore from 22 issues so far this year, 2021 is set to be a record year for fundraising through initial public offerings (IPOs). In 2020, 16 issues had mopped up Rs 26,628 crore, and a similar number of IPOs had collected Rs 12,687 crore in 2019, but 2018 was the best year so far for the primary market as 25 companies had raised Rs 31,731 crore.

IPO TRACKER

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FIXED DEPOSIT MONITOR

FIXED DEPOSIT COMPANIES

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MUTUAL FUND

INDUSTRY & FUND UPDATE

Equity MFs see Rs 5,988 crore of net inflows in June: AMFI

Equity mutual funs (MFs) saw Rs 5,988 crore of inflows in June, compared with inflow of Rs 10,082.9 crore in May, according to data from the AMFI. Net inflow for the MF industry stood at Rs 15,320 crore in June, vs outflow of Rs 38,602 crore in May.

Invesco Mutual Fund unveils Invesco India Medium Duration Fund

Invesco Mutual Fund announced the launch of its new fund Invesco India Medium Duration Fund - an open-ended medium term debt scheme investing in instruments such that the Macaulay duration of the portfolio is between 3 to 4 years. The new fund offer (NFO) will close for subscription on July 13. The fund will be benchmarked to CRISIL Medium Term Debt Index and will be managed by Vikas Garg and Krishna Cheemalapati. The press release mentions that the Invesco India Medium Duration Fund seeks to generate income by investing in a portfolio of debt and money market securities. As per the press release the fund would be constructed following a detailed assessment of liquidity, interest rate view and credit environment. over 75% - 85% of exposure will be to 'AAA' rated corporate and government securities (G-Secs including SDLs).With an aim to enhance the portfolio yield, the fund will invest 15% - 25% of the net assets in selective 'AA' category corporate bonds and will utilize its in-house proprietary credit assessment framework to select such issuers.

SBI Mutual Fund launches consumption ETF

SBI Mutual Fund has announced the launch of SBI ETF Consumption, an open-ended scheme tracking Nifty India Consumption Index. The New Fund Offer opens on June 30 and closes on July 14. The investment objective of the scheme is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error. The minimum application amount (during the NFO period) required is of Rs 5,000 and in multiples of Re 1 thereafter. The scheme would invest a minimum 95% and maximum 100% of its assets in securities covered by Nifty India Consumption Index with up to 5% in equity derivatives and up to 5% in money market instruments (including commercial papers, commercial bills, treasury bills, triparty repo, Government securities having an unexpired maturity up to one year, call or notice money, certificate of deposit, usance bills, and any other like instruments as specified by the Reserve Bank of India from time to time) and units of liquid mutual fund.

Navi Mutual Fund to launch lowest cost index fund

Navi Mutual Fund, owned by Flipkart co-founder Sachin Bansal, is set to launch a Nifty-tracking index fund that will cost the lowest in the segment to invest. The new entrant into the domestic mutual fund industry will charge an expense ratio of 0.06% for the index fund even as many established players more than doubled this annual fee. The NFO will open on July 3 and close for subscriptions on July 12. Currently, the Nifty fund operated by ICICI Prudential MF and Motilal Oswal MF that charges 0.1% as the expense ratio is the cheapest fund tracking the benchmark index.

PGIM India Mutual Fund launches small cap fund

PGIM India Mutual Fund has announced the launch of PGIM India Small Cap Fund. The NFO will open for subscription on July 9 and will close on July 23. The fund will be benchmarked against Nifty Small Cap 100 Total Return Index. The minimum amount of investment during the NFO is Rs 5,000 and in multiples of Re 1 thereafter. The fund will invest a minimum of 65% assets in small cap stocks. The scheme will also invest in equity related instruments and overseas stocks. The different parts of the portfolio will be managed by three fund managers. The scheme will be managed by Aniruddha Naha for equity investments, Kumaresh Ramakrishnan for debt and money market investments and Ravi Adukia for overseas investments.

NEW FUND OFFER

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MUTUAL FUND

Performance Charts

EQUITY (Diversified)

TAX FUND

BALANCED

INCOME FUND

SHORT TERM FUND

Due to their inherent short term nature, Short term funds have been sorted on the basis of 6month returns
Note:Indicative corpus are including Growth & Dividend option . The above mentioned data is on the basis of 08/07/2021
Beta, Sharpe and Standard Deviation are calculated on the basis of period: 1 year, frequency: Weekly Friday, RF: 5.5%
*Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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