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n the week gone by, global markets continued to move higher as investors I continued to assess the pace of economic recovery. Actually the global markets are awash with liquidity and this has boosted the confidence of the investors. Since the outbreak of Covid-19, major Central banks are aggressively pitching in with monetary stimulus and rate cuts. Recently, the European Central Bank (ECB) has boosted its pandemic emergency support program by an unexpectedly large 600 billion euros to 1.35 trillion euros ($1.5 trillion) in an effort to keep affordable credit flowing to the economy during the steep downturn caused by the virus outbreak. The ECB also extended its monetary stimulus program to at least the end of June next year, from the end of 2020 currently. On the data front, the US trade deficit surged in April by 16.7 percent to $49.4 billion as the COVID-19 pandemic upended the global flow of goods and services, pushing exports to a 10-year low. Now, investors are awaiting plans for the next round of U.S. economic stimulus.
Back at home, domestic market rallied amid opening up of economic activities across India. Consumer durables, Banks and Metal indices performed well during the week. Moreover, it could be seen that confidence has started returning back. The recent Reliance industries deal with leading global technology and growth investors including Facebook, Silver Lake, Vista Equity Partners, General Atlantic, KKR and Mubadala in less than six week has helped Jio Platforms to raise Rs 87,655.35 crore. Even Kotak Mahindra Bank and HDFC Life Insurance Company have witnessed huge block deal and all these sum up to indicate that large institution players are taking keen interest in the India conglomerate. However, Moody's Investors Service downgraded India's sovereign rating and due to weakness among global peers. In another development, Sebi is considering an unprecedented one-time listing window for existing unlisted NCDs to ease stress at various mutual funds. Meanwhile, India’s fiscal deficit widened to 4.59% of gross domestic product (GDP) for the previous fiscal, overshooting the government’s revised target of 3.8%. Going forward, markets would be forward looking, ignoring the recent quarterly results and economic data, and anticipating a turnaround in the economy.
On the commodity market front, range bound movement was noticed in market on mixed news. Gold prices saw saturation on higher side and dipped down marginally as world got some better numbers in economic releases. Gold rally is getting tired as global equities continue to rally, nevertheless the main trend is up and it is likely to trade in a range of 45800-47000. Gold will remain supported by the stimulus trade, but upside will be capped as global economic recovery seems it will be much faster than anyone expected. Silver may follow the footsteps of gold and likely to lock in the range of 47000-49500 level. Mandies are gradually reopening and trading activities have improved. Now the supply side has improved and offtake also got improved, injecting more volatility in futures platform. Japan’s GDP Growth Annualized, Euro Zone GDP, Inflation Rate and New Yuan Loans of China, Core Inflation Rate, FOMC Economic Projections, Fed Interest Rate Decision and Michigan Consumer Sentiment of US, GDP of UK etc are some events scheduled this week.
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 SEBI registered 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.
• Mubadala Investment Company (Mubadala), the Abu Dhabi-based sovereign investor, will invest Rs 9,093.60 crore for 1.85% equity stake in Jio Platforms. The sixth investment in Jio will be at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore.
• Larsen & Toubro Construction has secured an order from the Irrigation and Command Area Development Department (I&CAD), Govt. of Telangana, which is undertaking the Sita Rama Lift Irrigation scheme to irrigate a command area of about 9.36 lakh acres in the districts of Khammam, Kothagudem and Mahabubabad.
• TTK Prestige opened the doors of its first-ever Prestige Lifestyle store at Hennur Road in Bengaluru, marking the brand's foray into the luxury kitchen segment. Prestige Lifestyle is a new line of premium stores aimed at catering to the discerning Indian home chef, who seeks a state-of-the-art kitchen. As the leader in the kitchen appliances segment, TTK Prestige's expansion into new categories such as dishwashers, built-in ovens and island chimneys, is in keeping with their existing strategy of gaining a strong foothold in this fastgrowing segment.
• Aurobindo Pharma announced that the United States Food and Drug Administration (US FDA) inspected AuroLife Pharma LLC's oral solid manufacturing facility situated at Dayton, New Jersey, a wholly owned stepdown subsidiary of the Company, from 13 January to 12 February 2020. At the end of the inspection, a ‘Form 483' has been issued with 9 observations. With respect to the mentioned inspection, we have received a letter from USFDAclassifying the inspection as “Official Action Indicated".
• Persistent Systems and IBM announced a new collaboration to help accelerate IBM Cloud Pak deployments to speed clients of enterprise modernization and their move to the cloud.
Oil & Gas
• GAIL (India) and Energy Efficiency Services have signed a Memorandum of Understanding (MoU) today in New Delhi for cooperation in development of Trigeneration projects in India. The MoU aims at building a closer strategic partnership between the two. companies by jointly exploring business opportunities in Trigeneration business segment in India.
• Ashok Leyland launched BSVI range of medium and heavy trucks based on a new modular platform. The new modular truck range, under the brand name AVTR, is a first-of-its-kind in the Indian commercial vehicle industry giving customers multiple options of axle configurations, loading spans, cabins, suspensions, and drivetrains on a single platform.
• US trade deficit widened to $49.4 billion in April from a revised $42.3 billion in March. Economists had expected the trade deficit to widen to $49.0 billion from the $44.4 billion originally reported for the previous month.
• US initial jobless claims tumbled to 1.877 million, a decrease of 249,000 from the previous week's revised level of 2.126 million. However, economists had expected jobless claims to slump to 1.800 million from the 2.123 million originally reported for the previous week.
• US new orders plunged by 13.0 percent in April after plummeting by a revised 11.0 percent in March. Economists had expected factory orders to tumble by 14.0 percent compared to the 10.3 percent slump originally reported for the previous month.
• US construction spending tumbled by 2.9 percent to an annual rate of $1.346 trillion in April after inching up by less than a tenth of a percent to a revised $1.387 trillion in March. Economists had expected construction spending to show an even more substantial 6.5 percent nosedive following the 0.9 percent increase originally reported for the previous month.
• The European Central Bank has increased the size of its emergency asset purchase programme and maintained its commitment to ease policy stance further if needed, as the euro area faces its worst recession in decades due to the impact of the coronavirus, or Covid-19, pandemic. The central bank left its key interest rates unchanged as expected.
• The Japan leading index declined to the lowest in eleven years. The leading index, which measures the future economic activity, fell to 76.2 in April from 85.1 in March. Economists had expected a score of 84.5.
KEC INTERNATIONAL LIMITED
Target Price: 286
|Face Value (Rs.)||2.00|
|52 Week High/Low||358.30/154.50|
|M.Cap (Rs. in Cr.)||6330.80|
|P/E Ratio (times)||11.19|
|P/B Ratio (times)||2.26|
|Dividend Yield (%)||1.10|
• KEC International is a global infrastructure engineering, procurement and construction (EPC) major. It has presence in the verticals of power transmission and distribution, railways, civil, solar, smartinfrastructure and cables.
• Capex will be about Rs 100 crore for FY21 as against earlier planned Rs 200-250 crore.
• Order Intake in Q4FY20 stood at Rs 2765 crore and that for FY20 was Rs 11331 crore. Of the FY20 order intake 78% was domestic orders with 22% international. Further the company received orders worth Rs 739 crore so far in Fy21.
• Order book including L1 orders stands at about Rs 24000 crore. Of the order book about 36% is international with balance domestic. Of the order book T&D is 54% (SAE 5%; T&D 49%) , civil 13%, railways 29%. Considering it robust and well diversified order book the company is confident of delivering a strong performance in FY21.
• The company’s revenue growth and profitability would be supported by its healthy order book position, strong execution capabilities as well as an improving diversity in the business segments that comprise T&D, Railways and Civil works.
• Going forward, given the current situation, the management believes T&Ddomestic, Railways and Civil segment would be the main growth driver’s for FY21E. Management expects Civil business revenue to be around Rs 15 bn in FY21E (order in hand – DMRC, Cochin Metro and 6 large residential projects) while Railways business is expected to grow 30-40% in FY21E.
• High working capital intensity in the EPC business
• High competitive pressures
The company is well equipped to tackle the temporary disruption due to complete lockdown in its India business between March 25, 2020 - till May 3, 2020. The company has received approvals to resume work at few domestic sites in phased manner and has applied for others. KEC’s overseas facilities viz., Mexico and Brazil were categorized under essential services and hence have been operational over last month.Going ahead; management expects healthy ordering from domestic as well as international market especially from African region, SAARC countries and MENA regions. Thus, it is expected that the stock will see a price target of Rs.286 in 8 to 10 months time frame on a current P/BVx of 2.26x and FY21 BVPS of Rs.126.74.
|Face Value (Rs.)||10.00|
|52 Week High/Low||331.00/191.00|
|M.Cap (Rs. in Cr.)||6138.75|
|P/E Ratio (times)||9.78|
|P/B Ratio (times)||2.31|
|Dividend Yield (%)||4.30|
• RITES Limited is a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise and a leading player in the transport consultancy and engineering sectorin India, and have diversified services and geographical reach.As of 31 March2020,theGovernmentofIndiaholds72.02%stakein the company. It is the only export arm of Indian Railways forprovidingrollingstockoverseas.
• The management of the company expects good order book in coming quarters with the fresh order inflow from Exports, turnkey projects and consultancy.
• The management of the company is focusing on key business deals like exports to Africa and in line with that recently signed an agreement to buy 24% stake in of IRSDC and also key project activities have been resumed at various sites like rail line doubling project at Goothy-Darmawaram, railway electrification work in Rajasthan, Project Monitoring Services at several rail connectivity works of power plants and coal mines etc. With these operations, the company is estimated to have achieved more than half of its capacity and will scale up its activities.
• Exports have shown substantial increase in Q3FY20 due to continued exports of DEMUs and Locomotives to Sri Lanka. The company is developing prototype for passenger coaches for exports for various gauges apart from meter/broad gauges markets.
• The company is debt free and continues to be a zerodebt company with a strong liquidity position and improved operating margins.
• The order book as end of Dec 31, 2019 thus stood at Rs 5782 crore out of which turnkey orders were Rs 2264 crore, consultancy was RS 2530 crore.. To continue the growth momentum the company is planning to acquire 10 more locomotives to take the total locomotives for leasing operations to 70 numbers very soon. Recently, it has secured a consulting work award with fee income of Rs 60 crore
from the Government of Kerala
• During Q3FY20, the company’s revenue from operations (i.e. excluding other income) has also grown by 15.9% to Rs. 620 crore from Rs.535 crore and Operating profit of the company for the quarter has increased by 8.1% and stands at Rs.157 crore against Rs.145 crore in Q3 FY2019. EBITDA and PAT have grown by 4.7% and 10.5%,respectively.
• High competition
• Currency fluctuation
The Company has been consistently profitable and during the September quarter reported robust growth driven by growth in exports, turnkey works and leasing; besides consultancy continue to be the key segment. Its focus on exports has been productive and management seeing steady upward momentum from clients. Thus, it is expected that the stock will see a price target of Rs.284 in 8 to 10 months time frame on an two year average P/Bvx of 2.44x and FY21 BVPS of Rs.116.40.
Source: Company Website Reuters Capitaline
Above calls are recommended with a time horizon of 8 to 10 months.
The stock closed at Rs 91.75 on 05th June 2020. It made a 52-week low at Rs 58 on 24th March 2020 and a 52-week high of Rs. 119.80 on 19th February, 2020. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 83.95
As we can see on chart, that stock has formed a “Bull Flag” pattern on weekly charts, which is bullish in nature. Last week, stock has given the breakout of same by registered gains over 7% and also has managed to close above the breakout levels. Apart from this, technical indicators such as RSI and MACD are suggesting buying for the stock. Therefore, one can buy in the range of 89-90 levels for the upside target of 102-105 levels with SL below 83 levels.
The stock closed at Rs 97.75 on 05th June 2020. It made a 52-week low of Rs 73.20 on 23rd March 2020 and a 52-week high of Rs. 145.84 on 01st July, 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 106.65
After massive correction from higher levels, stock tested yearly low of 73 levels and recovered sharply with huge volumes, formed a “Triangle” pattern on weekly charts which is considered to be bullish. Last week, stock has given the breakout of same along with decent volumes so buying momentum may continue for coming days. Therefore, one can buy in the range of 96-97 levels for the upside target of 108-110 levels with SL below 91 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: CAPITAL LINE
Charts by Spider Software India Ltd
Above calls are recommended with a time horizon of 1-2 months
IIndian markets ended the week on positive note once again with Nifty reclaiming 10100 levels on the back of sharp surge in banking stocks after State Bank of India posted good quarterly numbers and surged nearly 8% in single trading session. From derivative front, put writers are now shifting to higher band which suggests rally to continue in coming sessions as well and bulls are likely to keep control over the markets. However, from technical front, now 10250 level would act as immediate hurdle for Nifty as 200 days exponential moving average is placed on weekly charts, above which further upside can be seen till 10400 level as well. On the downside, now 10000 would be crucial support and will act as psychological level for Nifty. The Implied Volatility (IV) of calls closed at 27.62% while that for put options closed at 28.57%. The Nifty VIX for the week closed at 29.69% and is expected to remain sideways. PCR OI for the week closed at 1.68 up as compared to last week at 1.52 which indicates more put writing than call. For coming week, we believe that any dip into prices should be use to create fresh longs as bias is likely to remain bullish for Nifty.
**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric futures (June) is taking support near 5200 levels since past four weeks & in days to come it is expected to hold the same. Regarding price outlook, it is expected to show an upside momentum towards 5650-5800 levels, on account of lower level buying & increased consumption for the purpose of medicinal use. In this pandemic, the HoReca industry has appended their menu, for immunity of the consumers. The eating habits of people have taken a turnaround sharply, which has prompted to venture into healthy foods &turmeric is proving to be a standout ingredient. A coffee chain in India has introduced turmeric latte to boost body’s immunity, while a milk federation in the South India has launched turmeric milk to lower the risk of infections & disease. Jeera futures (June) is expected to trade sideways in the range of 13500-14300 levels. Demand from bulk buyers is sluggish as they are buying limited due to financial problems and uncertainty because of coronavirus.Cardamom futures (June) may continue to take support near 1520, while the upside may get extended to 1650-1700 levels. Cardamom auctions at Bodinayakanur, resumed after a gap of more than 80 days, has registered aRs.50/kg increase in prices compared to the previous auction in Puttady.The rise in prices is being attributed to quality arrivals with graded materials (7-8 mm capsules) and better participation of Tamil Nadu dealers. Also, the exporters are getting increased enquiries, which is a positive sign for the revival of the market. Dhaniya futures (June) is likely to witness a plunge & test 5300-5200 levels. The bearish sentiments are being added by higher crop estimate and rise supply of the spice increased in spot markets.
Bullion posted a correction in the previous week amid an improvement in risk sentiment as the government announced more steps to reopen the economy. However a weak dollar and lingering US-China tensions continue to support gold’s haven demand. Meanwhile, investors may take a cautious stance on the hopes of a quick economic turnaround. However, investors are still waiting to see whether the easing of restrictions will lead to a second wave of infections, supporting demand for gold. The World Gold Council said that Gold-backed exchange-traded funds (ETFs) added 623 tonnes of the metal worth $34 billion to their stockpile from January to May, exceeding in five months every fullyear increase on record. Meanwhile the European Central Bank raised bond purchases by 600 billion euros ($674 billion) to 1.35 trillion euros and extended their duration, briefly boosting equities. U.S. weekly jobless claims dipped below 2 million for the first time since mid-March. Re-igniting worries about an economic slowdown, the U.S. trade deficit surged in April as the COVID-19 pandemic upended the global flow of goods and services, pushing exports to a 10-year low. The dollar also held near its lowest level in about three months, making gold cheaper for holders of other currencies. Based on weekly charts there is still room for correction in bullion counter. For the coming week, gold may trade in the range of 45300-47100. Silver may trade in the range of 45300-48200. U.S. Federal Reserve’s two-day policy meeting next week is also on investors’radar. More stimulus and lower interest rates tend to benefit gold, which is often seen as a hedge against inflation and currency debasement.
Soybean futures (June) is looking bullish & may move higher towards 4000- 4040 levels, taking support near 3820 levels. The counter is taking positive cues from the international market, wherein U.S. soybean futures hit their highest levels in nearly two months on the back of a weaker dollar bolstering export prospects for U.S. oilseeds. U.S. soybeans are now cheaper than those from Brazil, so that should help U.S. exporters to increase sales. The rally of mustard futures (June) may get extended to 4700 levels on the back of higher demand against lower supplies. Crushing of mustard seeds by mills in India rose 6.7% on year to 800,000 tn in May. Relaxations in the nationwide lockdown primarily in key mustard producing regions ramped up crushing of the oilseed. The easing of the lockdown for farm sector accelerated pace of transportation of the crop from farms to mandis, and from mandis to oil mills. Crushing is likely to gather momentum following further relaxations in the lockdown effective from Jun 8. Soy oil futures (June) may continue to trade with an upside bias taking support near 785, while the upside may get extended to 840 levels. While restaurants have started functioning at several parts of the country, the consumption of edible oils may increase from here, and steadily it will return to pre-covid levels.CPO futures (June) is expected to surpass the resistance near 670 & trade further higher to test 680-690 levels. The latest statistics show that imports are lowest in May month since 2011. Also, the sentiments of market participants are optimistic as Malaysian palm oil is on a bullish track on signs of improving demand as more countries ease coronavirus-induced lockdown restrictions.
Crude oil for coming week may trade with bullish bias. Crude Oil prices had corrected in the previous week as markets wait to see whether major producers will commit to an extension of record production cuts to support oil prices. Still, both benchmarks are set for a sixth weekly gain on the back of output cuts and signs of improving fuel demand as countries begin to ease restrictions to prevent the spread of the coronavirus. WTI is up nearly 5%, while Brent has risen about 13%. The OPEC+ had been expected to meet on June 4 to discuss extending output cuts, but the meeting was delayed amid talks over poor compliance by some producers. It is unclear when they will meet, but three OPEC+ sources said they could still hold a ministerial video conference on June 6 or June 7. The growing fear is that not only will a deal to extend the deep cuts not be reached, but producers may even relax their current over-compliance. This would ultimately see output rise in coming weeks. Crude may take support near 2560 whereas if prices continue to sustain above 2780 may extend the bullish rally towards 3050. The amount of natural gas flowing on pipelines to U.S. liquefied natural gas (LNG) export plants plunged to a 13-month low in June, a signal of weak worldwide demand due to government lockdowns to stop the spread of the new coronavirus. The price action on the weekly chart displays a pattern of marginally higher lows since late March which is suggesting base is forming around 120 in MCX. Natural gas may continue to trade in the range of 125-149.
Cotton futures (June)will possibly witness remain stable & trade with a positive bias in the range of 15900-17000 levels. With lockdown phase witnessing ease in many states across India and the textile units started their operations, demand for cotton is likely to rise in days to come. Several textile and apparel companies are taking innovative approaches to surviving the crisis while also helping to address the global shortage of personal protective equipment (PPE) by repurposing their manufacturing facilities. Chana futures (June) is expected to trade higher & test 4250-4300 levels, taking support near 4140. Riding on the hike in MSP and increased demand from millers, uptrend is being witnessed in most of the pulses at the mandis in Indore. Moreover, the major factor that will boost the demand is the decision taken by the Union Cabinet by bringing amendment to Essential Commodities Act, removing many commodities, including pulses from the list of essential commodities.The Cabinet also approved ordinances to remove restrictions on farmers selling their produce outside notified market yards, as well as to facilitate contract farming and allow farmers to engage in direct marketing. The supply pipelines, which have become empty, will also start filling up gradually, bringing some demand. Despite strength witnessed in mentha oil futures (June) during past trading sessions, the upside may remain capped near 1120, as the fundamentals are not supportive enough to add further gains to the counter. The export demand has been affected due to this lockdown due to regulations regarding the movement of vehicles. There are problems in arrival of raw materials and delivery of other finished goods.Due to lack of movement & export orders, most of themare operating at low capacity.
Base metal prices may trade on firm note. Copper may move towards 435 levels while taking support near 419 levels. The Prices may get support on hopes of improving demand for the red metal amid more stimulus measures by many economies that reopened after months of lockdowns but rising tension between U.S.-China over Hong Kong and trade may hamper sentiment already marred by the pandemic. Manufacturing activity is recovering from its February meltdown and both the official and unofficial purchasing managers indices (PMI) are bouncing back into expansionary territory. The Caixin China services purchasing managers index (PMI) rose to 55 in May from 44.4 in April. Bonded warehouse copper stocks in China rose by 2,000 tonnes to 212,000 tonnes last week, according to Shanghai Metals Market, representing the first rise in nine weeks. Zinc may move towards 168 and taking support near 159. Chinese imports of zinc contained in zinc concentrates jumped 27.8% to 479,000 tons, while its net imports of refined zinc metal fell 50.8% year over year to 68,000 tons. Lead can move towards 145 while taking support near 133. The prices may get support on lower production. Global lead metal production fell 7.1% to 2.7 million tons. Nickel may trade with bullish bias where it may test 990 and taking support near 952. Indonesia will keep in place a ban on the export of nickel ore even as it relaxes exports of some other minerals under revisions to its mining law, the country’s energy and minerals ministry said. Aluminum may move towards 137 while taking support near 132. Global aluminium producer has offered Japanese buyers a premium of USD 85 per tonne for July-September, up 3.7% from the current quarter.
COPPER MCX (JUNE) contract closed at Rs. 423.65 on 04th June’2020. The contract made its high of Rs. 429.50 on 05th June’2020 and a low of Rs.380.00 on 22nd Apr’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs.414.52 On the daily chart, the commodity has Relative Strength Index (14-day) value of 69.45.
One can buy around Rs. 422 for a target of Rs.445 with the stop loss of Rs.413.
ZINC MCX (JUNE) contract closed at Rs. 161.45 on 04th June’2020. The contract made its high of Rs. 163.80 on 05th June’2020 and a low of Rs. 145.30 on 22nd Apr’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 158.55 on the daily chart, the commodity has Relative Strength Index (14-day) value of 62.72.
One can buy around Rs.157 for a target of Rs. 172 with the stop loss of Rs. 152.
CPO MCX (JUNE) contract was closed at Rs. 653.70 on 04th June’2020. The contract made its high of Rs. 670.90 on 16th Apr 2020 and a low of Rs. 557.40 on 07th May’2020. The 18-day Exponential Moving Average of the commodity is currently at Rs. 642.11 on the daily chart, the commodity has Relative Strength Index (14-day) value of 54.68.
One can buy at Rs. 640 for a target of Rs.675 with the stop loss of Rs 627.
• NSE and BSE are launching Gold Mini Option from this week.
• The government gave several landmark decisions to benefit farmers: Regulatory environment liberalized for farmers through amendment to Essential Commodities Act, Ordinance to promote barrier-free inter-state and intra-state trade in agriculture produce approved, Farmers empowered to engage with processors, aggregators, wholesalers, large retailers, exporters.
• The government decided that farmers, who availed short-term crop loans at a concessional rate of 4 per cent per annum and missed their repayment after March 1, can now repay by August 31 without paying any penalty.
• The Cabinet Committee on Economic Affairs (CCEA) approved an increase in MSP for all mandated kharif crops, for the 2020-21 marketing season.
• MCX has restored the second session of agricultural commodity trading up to 9 pm with effect from 2nd June, 2020.
• India is temporarily reducing import tariffs on lentils (Masur) originating from most countries.
• MP has extended the procurement period for chana, masur and mustard harvested in 2019-20 (Jul-Jun) to Jun 10 from May30.
• India's May 2020 edible oil imports reported at 707,478 tons compared to 1,180,789 tons in May 2019 down by 40%, on YoY basis: SEAof India.
• China’s gold sales jumped 54% in May compared with a month earlier. - China Gold Association.
Range bound movement was noticed in the commodity market on mixed news. Gold prices saw saturation on higher side and dipped down marginally as world got some better numbers in economic releases. It ignored all negative news like tensions between the two countries have flared up since China approved national security laws for Hong Kong and Macau at the end of May. U.S. suspended flights into the U.S. by Chinese airlines with effect from June 16. Some lower level buying was seen in dollar index and this also stimulated selling. It breached the mark of $1700 in COMEX and 47000 in MCX. Silver too saw some profit booking from higher levels. Crude oil enjoyed more upside despite so many geopolitical tensions. Both WTI and Brent are down 40% on the year. But the U.K. benchmark is also up more than 100% from the end of April. Its U.S. peer has gained 260% in a rally that increasingly feels out of step with market realities that have evolved since WTI’s crash to subzero prices in late April. Here on MCX it was just few points away from 2800 mark whereas WTI traded near $37 in NYMEX. On the later part of the week, we witnessed some correction as market was expecting that OPEC+ may not take more aggressive decision on production cut as earlier as prices revived. Base metals prices revived on better manufacturing activities in China. China’s PMI improved to 55 from 44 in April, which is remarkable. Restart of manufacturing units of automobile and other plants lent support to the prices. Copper remained in upper zone. Bank of America analysts increased their price forecast for copper in 2020 by 5.4% to $5,621/t, while keeping the 2021 projection unchanged at $6,250/t. Despite rise in steel prices in China nickel didn’t see much upside outside China as a wider recovery is probably needed or a sharp rundown in inventory.
Mandies are gradually reopening and trading activities have improved. Now the supply side has improved and offtake also got improved, injecting more volatility in futures platform. In agri commodities, some of them really performed well. Mustard saw nonstop nine week rally and it was trading above 4600 mark on better crushing demand amid tight supply due to some restriction in transportation. In spices, jeera prices flared up whereas turmeric and coriander saw downside. In the present scenario, the auction of Jeera is being auctioned at the agricultural produce market committee on alternate days. After a gap of more than 60 days, cardamom auctions resumed at Puttady. Soyabean moved up on strong demand from China. State-owned Chinese firms bought at least three cargoes of U.S. soybeans on Monday, even as sources in China said the government had told them to halt purchases.
After a vehement shock by the Covid-19 pandemic, the government of India has taken the several steps to provide relief to the farm sector. One of them is to increase the minimum support prices of kharif crops for the current year. Generally increasing the MSP of crops to ensure remunerative prices to the growers for their produce is every year’s phenomena before arrival of monsoon. But this year is different as farmers and farming related activities have become more vulnerable in the lockdown situation than other sector as migrated labourers returned back to their native village and they will be extra burden on farming sector
The Indian government has decided to increase the minimum support prices of 14 kharif crops based on the formula by the commission for agricultural costs and prices. The return over cost for these 14 crops ranges from 50% to 83%.
The highest increase in MSP is proposed for nigerseed (Rs 755 per quintal) followed by sesamum (Rs 370 per quintal), urad (Rs 300 per quintal) and cotton (long staple) (Rs 275 per quintal). The differential remuneration is aimed at encouraging crop diversification.
The expected returns to farmers over their cost of production are estimated to be highest in case of Bajra (83%) followed by urad (64%), tur (58%) and maize (53%). For rest of the crops, return to farmers over their cost of production is estimated to be at least 50%.
Government’s strategy is one of promoting sustainable agriculture with diversified cropping pattern matching with the country's agro-climatic conditions, towards higher productivity without jeopardizing nation's bio-diversity. Support is in the form of MSP as well as procurement. Besides, with the intention of giving enough policy thrust to income security of the farmers. Government's production-centric approach has been replaced by income-centric approach.
In continuation with the above-mentioned measures, Government is taking holistic approach towards farming related activities. Efforts are being made to facilitate marketing of agricultural produce by the farmers. Advisories have been issued by the Union Government to State Governments / UT to facilitate Direct Marketing, enabling direct purchase from the fanners / FPOs / Cooperatives etc. by Bulk Buyers /Big Retailers / Processors by limiting regulation under State APMC Act.
|2nd JUN||India's May gold imports fell 99% from a year ago to 1.4 tonnes - government source|
|2nd JUN||Russia earmarked $73 billion to jump-start economy by end-2021|
|3rd JUN||Japan's service sector activity shrank for fourth month in May - PMI|
|3rd JUN||Trump administration putting trust in global oil producers ahead of OPEC+ meet|
|4th JUN||U.S. trade deficit widens as exports hit 10-year low jumped 16.7% to $49.4 billion.|
|4th JUN||U.S. jobless claims dipped below 2 million last week for the first time since mid-March|
|4th JUN||India's 2018/19 jobless rate declines to 5.8% - government report|
Indian Rupee continued to move higher supported by dollar flows, however, strong intervention from RBI lifted dollar from 75.00 and subsequently risk-on sentiment supported rupee on the lower side. Apparently low inflation risk which implied loose monetary policy likely to continue as well as expectations of OMO's announcement to manage the benchmark yield will help rupee in coming days barring any headline of trade-war do not prompt in between to cap the rise in rupee. The biggest buzz in forex space is euro which climbed the longest winning streak in nine years. ECB in its latest monetary policy announces to expand bond buying program by another €600 billion against expectations of €500 billion. Now the total monetary stimulus stands at €1.3 trillion with positive approach for creating optimism in euro. Going forward euro likely to remain higher and may test 1.1450 in coming days. Meanwhile drag in sterling continues amid Brexit backstop in negotiations about transition period and further BoE governor asked bankers to prepare for a no-deal exit prompted high volatility in pound pairs. Going forward next week FOMC policy decision will guide the FX pairs although we think that US rate setters has reduced rates more than other central bankers in the wake of pandemic crisis that will fade the optimism of stronger dollar.
USD/INR (JUN) contract closed at 75.7350 on 04-Jun-2020. The contract made its high of 75.8325 on 02-Jun-2020 and a low of 75.1825 on 03-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheUSD/INR is currently at 75.90.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 44.50. One can buy @ 75.50 for the target of 76.25 with the stop loss of 74.99.
EUR/INR (JUN) contract closed at 84.8125 on 04-Jun-2020. The contract made its high of 85.0000 on 04-Jun-2020 and a low of 84.0000 on 02-Jun-2020 (Weekly Basis).The 21-day Exponential Moving Average of the EUR/INR is currently at 83.75
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 73.83. One can buy at 85.00 for a target of 86.00 with the stop loss of 84.50.
GBP/INR (JUN) contract closed at 94.8825 on 04-Jun-2020. The contract made its high of 94.9600 on 04-Jun-2020 and a low of 93.4150 on 01-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage oftheGBP/INR is currently at 94.00.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 63.50. One can buy at 95.00 for a target of 96 with the stop loss of 94.50.
JPY/INR (JUN) contract closed at 69.5700 on 04-Jun-2020. The contract made its high of 70.6000 on 01-Jun-2020 and a low of 69.2200 on 03-Jun-2020 (Weekly Basis). The 21-day Exponential MovingAverage ofthe JPY/INR is currently at 70.37
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 30.28. One can buy at 69.00 for a target of 70.00 with the stop loss of 68.50.
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Mirae Asset India launches Mirae Asset Arbitrage Fund
Mirae Asset Investment Managers India announced the launch of Mirae Asset Arbitrage Fund. The New Fund Offer or NFO will open for subscription from June 3 and close on June 12. The fund will be benchmarked against Nifty 50 Arbitrage Index. Jignesh N. Rao and Jigar ShethiaThe fund will manage the equity portion of the fund, and Mahendra Jajoo will manage the debt part. According to a press release from the fund house, the fund will predominantly invest in completely hedged arbitrage opportunities (simultaneous transactions of a long position in cash and exactly short position in futures). A small portion will be invested in other arbitrage opportunities (corporate action driven). The scheme aims to provide relatively risk-free returns without taking any directional views on equity markets. If arbitrage opportunities are limited, the scheme may invest a small portion in high quality low duration debt securities or money market instruments. The margin money requirement for the purposes of derivative exposure will be held in the form of term deposits, cash or cash equivalents. The minimum initial investment in the scheme will be Rs 5,000 and multiples of Re 1 thereafter. Units will be allotted in whole figures and the balance amount will be refunded
Mutual funds bet on recovery; file drafts for 10 new offerings
Fund houses have filed draft documents for 10 new schemes across categories since May 21. Industry participants attribute the newfound confidence to the ‘recovery’ in the market since the last one month.
Note:Indicative corpus are including Growth & Dividend option . The above mentioned data is on the basis of 08/08/2019 Beta, Sharpe and Standard Deviation are calculated on the basis of period: 1 year, frequency: Weekly Friday, RF: 7%
*Mutual Fund investments are subject to market risks, read all scheme related documents carefully
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