n the week gone by, global markets looked cautious due to subdued global markets I amid persistent worries over the status of trade negotiations between the US and China. U.S. President Donald Trump said that the United States would raise tariffs on Chinese imports if no deal is reached with Beijing to end a trade war. However, President Xi Jinping has said that China wants to work out an initial trade agreement with the United States and has been trying to avoid a trade war, but it is not afraid to retaliate when necessary. The recent Fed minutes offered little guidance on what would cause policymakers to change their outlook after they decided at the October meeting on the third interest rate cut of 2019 and signalled they were done with the easing. The US House of Representatives on Wednesday passed two bills intended to support protesters in Hong Kong and send a warning to China about human rights. On the data front, Germany’s exports grew 1.7% year-on-year in the third quarter after a 1.3% decline in the second. Meanwhile, crude oil prices moved up, as investors continued observing the escalating geopolitical frictions between Yemen's Houthi rebels and the Saudi-led coalition in the Middle East.
Back at home, the Indian market also looked cautious following mixed global cues amid persistent concerns over of the trade negotiations between China and the US even as the Union cabinet approved the government’s mega divestment exercise. In the biggest privatisation drive ever, the Union Cabinet on Wednesday approved sale of government's stake in blue-chip oil firm BPCL, shipping firm SCI and onland cargo mover Concor. Sale of stake in these three PSUs is expected to fetch the government about Rs 78,400 crore. The Organisation for Economic Co-operation and Development (OECD) on Thursday marginally cut India’s economic growth forecast for 2019 to 5.8%, but said it would pick up to 6.2% in 2020 and further to 6.4% in 2021. The focus of the investors now will be on next week’s Q2GDP data which is expected to be below the 5 percent reported in Q1. Investors will also watch out for developments around the USChina trade deal.
On the commodity market front, some recovery from lower level was noticed in commodities and CRB moved above 190 after making a low below 187. Dollar index saw see saw movements throughout the week on ambiguity in the market. Even bullion counter didn’t trade with clarity. Bullion counter may trade with sideways to downside bias as a report of China's efforts to smooth the way for trade talks with the United States offset worries that an interim deal might not occur until next year. Gold may trade in a wider range of 37500-38200 levels whereas on the other had silver may test 43900 levels and face resistance near 45300 levels. Crude prices may trade with bullish bias as Saudi Arabia wants to focus first on boosting adherence to OPEC's production pact before committing to any more cuts. German Ifo Business Climate Index, Consumer Confidence (Nov), New Home Sales (Oct), Core Durable Goods Orders, GDP, Pending Home Sales, Crude Oil Inventories of US German Unemployment Change (Nov), Manufacturing PMI (Nov) of China, GDP of Canada, CPI of Euro etc are few important triggers for commodities.
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• Tata Consultancy Services announced the launch of a first-of-its-kind Innovation Hub in Hyderabad, India. With support from Qualcomm Technologies, Inc., an industry leader in wireless technology, the new hub willbeusedtobuilddomain-specific solutions thatutilizethecombinatorial power of AI, IoT and 5G technologies to help global enterprises across industriesacceleratetheirdigitaltransformationjourneys.
• Infosys announced it has been selected as a strategic end-to-end partner for Digital Ecosystem Application portfolio by ARLANXEO – a global market leader in synthetic elastomers. ARLANXEO has embarked on a digital transformation journey with S/4HANA as the core platform which will be leveraged across the organization. Infosys will deliver best in class Application Services to enable the platforms and applications for ARLANXEO's next-generation IT.
• Blue Star announced the launch of a new and innovative model of a room air conditioner with in-built air purifier, which cools and purifies the air in the room at the same time. Blue Star's new 5 Star inverter AC with in-built air purifier not only delivers powerful cooling during summers, but also simultaneously purifiers the indoor air.
• Dr Reddy's Laboratories, which has plans to launch over 70 products in the East Asian country, has started outsourcing manufacture of some of the drugs to local partners. The company which won the tender to market Olanzapine drug in China,is expected to launch it beginning next year.
• Maruti Suzuki will introduce a BS-6 petrol version of its two models, Brezza and S-Cross, before April 1, 2020.
• V-Mart Retail has opened a new store in the state of Jammu & Kashmir. With this total number of stores of V-Mart increased to 254 stores in 189 cities across 19 states and totaltally of stores in Jammu & Kashmirto 8.
• Subros announced the inauguration of its manufacturing plant in Gujarat. The production and supply of automotive air conditioning parts and engine cooling modules will be ramped-up in accordance with the requirement of the customers.
• Britannia Industries has postponed product launches on account of a consumption slowdown in the country, which it said is expected to revive in the next 9-12 months.
• Dilip Buildcon has bagged an order worth Rs 2,122.74 crore from Northern Coalfields Ltd, a subsidiary of Coal India, for removal of overburden at a mining project in Madhya Pradesh. In mining, overburden is the overlying material (such as rock, soil) that generally has no commercial value.
• UPL, which has been on an acquisition spree in recent years, has announced yet another deal, involving Yoloo (Laoting) Bio- technology, a Chinese agrochemicals firm,forareportedconsiderationofaroundRs95crore.
• Tech Mahindra has signed a Memorandum of Understanding with Business Finland to set up a 5G and 6G innovation lab in Finland.
• US leading economic index edged down by 0.1 percent in October after dipping by 0.2 percent in both September and August. Economists had been expecting another 0.2 percent drop.
• US existing home sales jumped by 1.9 percent to an annual rate of 5.46 million in October after tumbling by 2.5 percent to a revised rate of 5.360 million in September.
• US initialjobless claims came in at 227,000, unchanged from the previous week's revised level. Economists had expected jobless claims to dip to 219,000 from the 225,000 originally reported forthe previous week.
• US housing starts surged up by 3.8 percent to an annual rate of 1.314 million in October after plunging by 7.9 percent to a revised rate of 1.266 million in September.
• China revised up its nominal 2018 gross domestic product (GDP) by 2.1% to 91.93 trillion yuan ($13.08 trillion), keeping it on track to achieving its goal of doubling the size ofits economy by 2020 from 2010.
• Overall consumer prices in Japan were up 0.2 percent on year in October. That was unchanged from the September reading, although it was shy of estimates for a gain of 0.3 percent.
|Stocks||*Closing Price||Trend||Date Trend Changed||Rate Trend Changed||SUPPORT||RESISTANCE||Closing S/l|
|S&P BSE SENSEX||40359||UP||08.02.19||36546||36300||35300|
*NIFTYIT has broken support of 15200**Maruti has broken support of 7100
Closing as on 22-11-2019
1) These levels should not be confused with the daily trend sheet, which is sent every morning by e-mail in the name of "Morning Mantra ".
2) Sometimes you will find the stop loss to be too far but if we change the stop loss once, we will find more strength coming into the stock. At the moment, the stop loss will be far as we are seeing the graphs on weekly basis and taking a long-term view and not a short-term view.
|25-Nov-19||Rain Industries||Interim Dividend - Rs 1 Per Share|
|25-Nov-19||Career Point||Interim Dividend Rs 1 Per Share|
|28-Nov-19||Jamna Auto Industries||Interim Dividend - Rs 0.18 Per Share|
|4-Dec-19||Manugraph India||Dividend - Rs 0.50 Per Share|
|13-Dec-19||Trident||FV Split (Sub-Division) - From Rs 10/- To Rs 1/- Per Share|
|Meeting Date||Company name||Purpose|
|25-Nov-19||Dewan Housing Finance Corporation||Financial Results|
|25-Nov-19||Piramal Enterp||Conversion, Preferential Issue|
|26-Nov-19||Central Bank||Raising of Capital|
|27-Nov-19||Gammon Infrastructure Project||Financial Results|
|27-Nov-19||Videocon Industries||Financial Results|
|28-Nov-19||Talwalkars Healthclubs||Financial Results|
|30-Nov-19||Aurobindo Pharma||Scheme of Amalgamation|
|3-Dec-19||Gufic Biosciences||Financial Results|
Target Price: 434
|Face Value (Rs.)||1.00|
|52 Week High/Low||403.70/325.00|
|M.Cap (Rs. in Cr.)||46054.44|
|P/E Ratio (times)||37.68|
|P/B Ratio (times)||13.03|
|Dividend Yield (%)||1.28|
• The company will continue to drive sustained profitable volume-led growth over the medium term, through its focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.
• Over the medium term, the company retains the target of 8-10% volume growth, top line growth of 13-15% and healthy market share gains in the India business. Operating margin is expected to be maintained at 18-19% over the medium term.
• The company aims to build Healthy Foods, Premium Hair Nourishment and Male Grooming into growth engines of the future and expects to deliver value growth at 20% plus CAGR over the medium term in these portfolios.
• During Q2 September 2019, its International business grew by 9% in constant currency terms to Rs 431 crore led by broad based growth in Bangladesh. Gross margin expansion in the Bangladesh business led to a rise in the operating margin of the international business from 19.1% in Q2FY19 to 21.6% in Q2FY20. However, margins should moderate as the firm continues to invest and plough back savings to drive incremental growth. The company aims to maintain international operating margin at circa 20% overthe medium term.
• The Company delivered a decent performance in a challenging demand environment for the industry at large. As the management hope for a recovery in the overall sentiment towards the second half of the year, it will continue to push for volume driven growth and market share gains.
• With sluggishness in wholesale persisting, rural stayed ahead of urban in the traditional channel. Modern Trade and E-Commerce continued to
headline growth, while CSD had a normal quarter. Modern Trade grew by 30%. Modern Trade and Ecommerce contributes 13% and 4% of the India business respectively. E-Commerce almost doubled.
• In the International business, the company expects to clock organic broad-based double-digit constant currency growth over the medium term.
• Currency Fluctuation
• Inflationary trend in commodity prices
The company will continue to drive sustained profitable volume-led growth over the medium term, through its focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass. Over the medium term, the company retains the target of 8-10% volume growth and healthy market share gains in the India business. Thus itis expected thatthe stock will see a price target of Rs. 434 in 8-10 months time frame on an expected PE multiple of 45 times and FY21E EPS of Rs. 9.65.
LARSEN & TOUBRO INFOTECH LIMITED
Target Price: 1985
|Face Value (Rs.)||1.00|
|52 Week High/Low||1896.70/1436.65|
|M.Cap (Rs. in Cr.)||29449.83|
|P/E Ratio (times)||20.03|
|P/B Ratio (times)||5.75|
|Dividend Yield (%)||0.74|
• Larsen & Toubro InfoTech (LTI) is a global technology consulting and digital solutions Company helping more than 360 clients, succeed in a converging world. With operations in 30 countries,the company goes the extra mile for its clients and accelerates their digital transformation with LTI’s Mosaic platform enabling their mobile, social, analytics,IoT and cloud journeys.
• During Q2, the company has delivered a steady 11.9% YoY growth in constant currency driven by on-track ramp up of large deal wins that it announced earlier. It has won three large deals in this quarter, all of them from new clients, aggregating to net-new TCV of ~US$100 million. The clients were from the United States, Europe and the Asia Pacific region.
• Recently, the Company has signed a definitive agreement to acquire PowerupCloud Technologies Private Limited for an enterprise value of US$15 million. PowerupCloud is an AWS Premier Consulting company with capabilities in cloud consulting with FY19 revenue of US$3.5 million and 180 employee base. This is the 4th acquisition in FY19. This acquisition will help LTI strengthen its cloud services capabilities through a combination of right leadership, team, assets and ecosystem connects, which in turn will enable LTI to provide better services to its existing and new clients.
• LTI, which draws close to 40 per cent of its revenue from digital services, the management of the company said it would grow further in the coming quarters.
• Management indicates growth in top client and hitech client is expected to see revival in Q3FY20E whileAfrican banking client would remain softinH2.
Another thing to highlight is that dependence on top 10 and top 20 clients have come down on YoY basis, which reduces the risk of client concentration.
• Net workforce additions were also robust at 1,632 taking the headcount to 30,979 with flat attrition at 18.4% (decline on quarterly annualised basis).
• Intense competition in IT services
• Adverse exchange rate fluctuations
With the strong quarter on revenue execution front, receding of client specific issues, deal winning momentumandbetter outlook forbanking segment gives a belief ofimproving trajectory ahead.The management of the company believes that high growth in digital will continue as customers leverage new/exponential technologies. The Company has a strong domain expertise derived from its parentage. Thus, we expect the stock to see a price target of Rs 1985 in 8 to 10 month’s time frame on a one yearexpectedP/E of 19.91x andFY21(E)earningsofRs.99.69.
Source: Company Website Reuters Capitaline
Above calls are recommended with a time horizon of 8 to 10 months.
The stock closed at Rs 217.25 on 22nd November, 2019. It made a 52-week low of Rs 132.55 on 01st October 2019 and a 52-week high of Rs. 219.35 on 22nd November 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 178.25
After testing 135 levels, the stock has completed double bottom and started moving higher in higher highs and higher lows. Apart from this, the stock has breached its earlier resistance and also has managed to close above the same in last week, so follow up buying can continue in coming days. Therefore, one can buy in the range of 212-215 levels for the upside target of 235-240 levels with SL below 198.
The stock closed at Rs 793.20 on 22nd November, 2019. It made a 52-week low at Rs 633.60 on 07th October 2019 and a 52-week high of Rs. 959.80 on 27th May 2019. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 803.51
As we can see on charts that stock has formed an inverted Head and Shoulder pattern on weekly charts and has given the neckline breakout of pattern and also has managed to close above the same along with decent volumes, so buying momentum can continue for coming days. Therefore, one can buy in the range of 780-785 levels for the upside target of 840-860 levels with SL below 740.
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
The tug of war among bulls and bears once again kept the Indian markets within a range and Nifty managed to hold above 11900 mark and ended the week near the unchanged line. Bank nifty also witnessed profit booking in later part of the week and ended well below 31200 mark. Profit booking in heavyweights like HDFC Bank, Reliance, TCS & Infosys capped any sharp gains in index while on sectoral front, some buying momentum was seen in metal auto and energy counter in later part of the week. At current juncture, derivative data suggest that call writers are adding hefty open interest in 11950 & 12000 strike, which should act strong hurdle for Nifty moving forward. However, on downside 11800 puts hold with maximum OI build up and act as immediate support. The Implied Volatility (IV) of calls closed at 13.17% while that for put options closed at 14.10%. The Nifty VIX for the week closed at 14.98% and is expected to remain volatile. PCR OI for the week closed at 1.22. From technical front, we expect that the consolidation in index is likely to continue in coming sessions as well as secondary oscillators are not suggesting any sharp moves. We expect Nifty to trade within a broader range of 11800-12000 with stock specific action. However, as far banknify is concerned 31000-30800 is strong support zone while on higher side, 31350 should act as immediate hurdle.
**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 (Dec) is likely to plunge further to test 5600-5500 levels. The factors of sluggish demand from domestic stockists and expectations of a higher crop in 2019-20 (Jul-Jun) season keep the counter in the negative zone. Jeera futures (Dec) is trading near its four month low & this bearishness is likely to get extended towards 15500, if breaks 15950 levels. This season the acreage in Gujarat has gained pace due to availability of good moisture in soil. So far in the 2019-20 (Oct-Sep) Rabi season, the progressive acreage under jeera as on 18th November was at 19,723 ha, higher by 5.86% over normal area, according to the Gujarat farm department. Dhaniya futures (Dec) is expected to trade on a bullish note towards 7200, taking support near 6780 levels. The reason being is that the pace of sowing in key growing regions of Rajasthan is slower than usual. The domestic demand has kept the prices steady so far on the spot market. In Ramganj, a key trading center in Rajasthan, the badami machine clean coriander variety sold at 5800-6000 rupees per 100 kg, and the eagle variety at 6200-62500 rupees, at Kota market. Cardamom futures (Dec) would possibly hold on to its 200 days EMA support near 2590 & trade with an upside bias to test 3000-3100 levels. The auction market has remained strong, especially on the availability of good quality. Farmers are also in high spirits following the upward trend in prices. According to traders, the market has witnessed an average price increase of Rs.50 per kg on a daily basis, on the back of strong demand from exporters, North Indian buyers and stockists.
Bullion counter may trade with sideways to downside bias as a report of China's efforts to smooth the way for trade talks with the United States offset worries that an interim deal might not occur until next year. China has invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing amid continued efforts to strike at least a limited deal, the Wall Street Journal reported on Thursday, citing unnamed sources. China will strive to reach the agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said. On concerns that US-China trade deal could get delayed after US lawmakers passed legislation supporting Hong Kong protesters, which Beijing condemned. The main driver in gold currently is the uncertainty about the trade deal and the market is in a wait-and-see mode. The number of Americans filing applications for unemployment benefits was unexpectedly unchanged at a five-month high last week, suggesting some softening in the labour market. Gold may trade in a wider range of 37500-38200 whereas on the other had silver may test 43900 and face resistance near 45300. There have been some buyers on dips and the holders of gold still hope prices will go higher. But if this does not materialize in the near-term, they will likely take profit on longs, pushing prices lower. The market, yet to swallow the report, was still wary about the fate of a trade deal after the United States passed two bills intended to support protesters in Hong Kong and send a warning to China about human rights.
Soybean futures (Dec) may continue to remain steady & witness consolidation in the range of 3925-4060 levels. This oilseed counter is steady on the spot markets supported by good buying support from local crushing plants amid weak supply from producing belts. It is reported by the Reuters that after the ample monsoon rains, the Solvent Extractors’Association (SEA) had expected India soybean harvest to be more than 10 million tonnes, just a little down on 2018’s 10.3 million tonnes. The heavy recent rains damaged the crop in Maharashtra and Madhya Pradesh, which account for more than 85% of India’s output, and forced the trade body to cut that estimate to below 9 million tonnes. Mustard futures (Dec) is expected to post gains for the third consecutive week & move higher towards 4350-4380, holding on to the support near 4230 levels. This seasonthere may not be drop in overall acreage of mustard but due to late rains in September and October, farmers are waited for water to dry up from their fields in low-lying areas. This season sowing has been delayed & the latest statistic show that all India as on 15th November 43.09 lakh hectares has been sown as compared to 44.02 lakh hectares. The bullish momentum is likely to persist in CPO futures (Dec) as it has the potential to test 670 levels, while soy oil futures (Dec) may trade with an upside bias in the range of 795-815. The supply situation has become tight with both Indonesia and Malaysia the countries that account for most of palm oil production globally deciding to increase their bio-diesel mandate substantially from next year.
Oil gained more than 6% in previous week after data showed a smaller than expected builds in U.S. inventories. Also getting support from report that OPEC and its allies are likely to extend production cuts until mid-2020 when they meet early next month. In coming week, prices may trade with bullish bias as Saudi Arabia wants to focus first on boosting adherence to OPEC's production pact before committing to any more cuts. Rising tensions in the Middle East could also be impacting oil prices since one-fifth of the world’s oil flows through the Strait of Hormuz. Separately, Russian President Vladimir Putin said Wednesday he would continue to cooperate with OPEC on reducing output, according to Reuters. Russia is a member of OPEC+. At last December’s meeting of OPEC and its allies, the group agreed to cut daily production by 1.2 million barrels. The cartel meets on Dec. 5 in Vienna, and could consider an even steeper cut. Natural gas saw fresh buying from the low after a steep downfall. On MCX Crude oil may trade with bullish bias it can test 4350 where as taking support at 4120. Yemen’s Houthi rebels said Wednesday they intercepted a Saudi F-15 warplane, Earlier, Reuters had said the plane had been shot down. Weather is major trigger for this commodity and we see a rise seasonal demand during winter. Right now it is trapped in a range of 195-170. If it breaches the mark of 195 then more upside should be seen in this commodity. The next upside level which market may see in the month of Dec is in between 210-230.
Cotton futures (Dec) may trade with a downside bias in the range of 18900- 19200 levels. The spot rates of raw cotton in markets of Vidarbha are fetching rates even below the minimum support price (MSP) that was five years ago, while the farmers in Telangana are resorting to distress sale. The reason being is that the unseasonal rains had wet the standing crop and moisture-ridden crop this season. In order to arrest the fall in prices the Cotton Corporation of India (CCI) has commenced the procurement of cotton in many states. Farmers are slowly bringing their produce to the procurement centres. They have been advised to bring cotton with moisture content not more than 12 per cent. In the international market, ICE cotton futures is trading near its multiweek low as mixed signals on the US-China trade talks is continuously weighing on investor sentiments. This soft commodity is also being pressurized by weak export sales for the 2019/20 marketing year, which recently cited that it is down 34% from the previous week. Chana futures (Dec) may witness correction towards 4390-4360 levels. It is reported that the government is monitoring the prices of all the major kharif pulses and may intervene if they continue to rise. Going ahead, chana prices trend in spot market will depend on the sowing figures, weather condition in major producing areas, imports of kabuli Chana and also on Nafed policy on liquidation old procured stocks. Mentha oil futures (Nov) is expected to maintain its upside momentum & may even go higher towards 1315 levels. The demand is increasing from the consuming industries with the start of the winter season.
Base metal counter may trade with subdued path as weak manufacturing and investment data from China fuelled concerns about Chinese economy. China and the United States are holding “in-depth” discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal. Copper may trade sideways to downside bias and it can take support near 420 levels and resistance near 435 levels. Miner FreeportMcMoRan Inc and two large Chinese copper smelters - Jiangxi Copper and Tongling Nonferrous Metals - agreed to a 23% cut in annual treatment and refining charges (TC/RCs) for 2020, pushing the industry benchmark to a nineyear low. China will strive to reach an initial trade agreement with the US as both sides keep communication channels open, the Chinese commerce ministry said. Meanwhile, lead may remain sideways as it can move in the range of 151-158 levels. Zinc may continue to fall and test 180 levels while facing resistance near 192 levels. Nickel prices can move with weaker path and may dip lower towards 1040 levels while taking resistance near 1140 levels. Indonesia’s mining ministry is revising the rules that govern the domestic price of nickel ore to ensure smelters follow government benchmark prices. Aluminium can further dip towards 126 levels while facing resistance near 132 levels. LME is considering creating a new market for "green" aluminium, using warehouse ownership documents to identify low-carbon material instead of spinning off a new futures contract. Global primary aluminium output rose to 5.392 million tonnes in October from revised 5.222 million tonnes in September, data from the International Aluminium Institute (IAI) showed.
NATURALGAS MCX (DEC) contract closed at Rs. 189.10 on 21st Nov’19. The contract made its high of Rs. 212.30 on 06th Nov’19 and a low of Rs. 180.90 on 24th Oct’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 194.06. On the daily chart, the commodity has Relative Strength Index (14-day) value of 44.910.
One can buy between Rs. 182-184 for a target of Rs. 210 with the stop loss of Rs. 172.
CRUDEOIL MCX (DEC) contract closed at Rs. 4191.00 on 21st Nov’19. The contract made its high of Rs. 4199.00 on 21st Nov’19 and a low of Rs. 3696.00 on 03rd Oct’19. The 18- day Exponential Moving Average of the commodity is currently at Rs. 4070.39. On the daily chart, the commodity has Relative Strength Index (14-day) value of 60.751.
One can buy between Rs.4080-4100 for a target of Rs.4350 with the stop loss of Rs.3980.
JEERA NCDEX (DEC) contract was closed at Rs. 16150.00 on 21st Nov’19. The contract made its high of Rs. 17155.00 on 04th Nov’19 and a low of Rs. 15910.00 on 22nd Nov’19. The 18-day Exponential Moving Average of the commodity is currently at Rs. 16312.00. On the daily chart, the commodity has Relative Strength Index (14-day) value of 37.934.
One can sell near Rs. 16150 for a target of Rs. 15400 with the stop loss of Rs 16525.
• The Baltic Exchange’s index ticked lower for a sixth straight session on Thursday, hurt by weaker demand for capesize vessels.
• The Commodity Participants’ Association of India plans to create a registry of individual clients trading on the exchange platform to avoid defaulted members from one exchange moving to another.
• China will accelerate the launch of futures contracts for rare earths on the Shanghai Futures Exchange, used in devices such as mobile telephones and batteries.
• Gold miners’ body World Gold Council (WGC) has recommended that the Indian government launch bullion banking by carving the niche bullion business out of the core banking system to bring in more transparency in business.
• The USDA in its weekly cotton export-sales report showed net sales of 227,600 running bales (RB) for the 2019/20 marketing year, down 34% from the previous week, but up 20% from the prior 4-week average, for the period ended Nov. 14.
• Miner Freeport-McMoRan Inc and two large Chinese copper smelters on Thursday agreed a 23% cut in annual treatment and refining charges (TC/RCs) for 2020.
• Silver demand will creep up by 1% this year, reducing global oversupply of the metal to the lowest since 2015.
Some recovery from lower level was noticed in commodities and CRB moved above 190 after making a low below 187. Dollar index saw see saw movements throughout the week on ambiguity in the market. Even bullion counter didn’t trade with clarity. Gold in the international market was marginally lower, however though silver saw some upside whereas in Indian market gold somehow managed to gain marginally and silver was up. In the energy counter, crude saw good jump whereas natural gas traded lower. Saudi is trying to keep oil prices up ahead of taking Saudi Aramco public. Furthermore prices are already reacting positively on a news leak that OPEC’s existing production cuts will be extended until June. Russian President Vladimir Putin’s indication that Moscow will support the Organization of the Petroleum Exporting Countries in whatever way necessary on production cuts when the cartel meets next month; also supported prices. Crude was trading near 4200 levels whereas natural gas prices saw dip on moderate weather issue. Beijing has invited U.S. trade negotiators for a new round of face-to-face talks ahead of President Donald Trump’s threat to pile another round of tariffs on Chinese goods starting Dec. 15. Ambiguity in trade deal between China and US tension in Hongkong and US support to Hongkong pressurized base metals prices. The LME Index fell for a third day last week, touching the lowest since early Sept. Copper consumption outside of China fell 1.5% during the first 8-months of the year, ICSG said. Alumunium total LME warehouse stocks rose for an 8th straight day. Zinc saw decline on build up in short positions. It is the biggest net short since the last week of August last year. Nickel was complete grip of bears. The metal dipped to $14,150 – the lowest since July 29 - and breaking below the 200-day moving average at $14,265. Available nickel in LME warehouses stood at 43,965 tons, up around 50% since reaching a 2007-low a month ago.
In agri cotton, counter was bearish as ICE cotton futures fell over 1% to a more than one-month low after a report said a "phase one" trade deal between Washington and Beijing may not be completed this year. Chana futures were in range. It is reported that the government is monitoring the prices of all the major kharif pulses and may intervene, if they continue to rise. In spices, coriander saw some good buying momentum. At present the seasonal domestic consumption is higher due to ongoing winter season. According to traders, the price of Eagle and Badami varieties is trading higher at the Ramganj and Baran markets in Rajasthan due to good buying.
Diamonds are an investor’s best friend. It is mostly considered as a secure investment. The online trading of diamond futures is available at platform Indian Commodity Exchange (ICEX), the only exchange in the world, started inAugust 2017 to provide exporters with a hedging tool.
Global scenario of diamond
Major Diamond mines are in Botswana, Zimbabwe, Namibia, SouthAfrica,Angola, Russia, Canada and Australia. Major cutting and Polishing countries of Diamonds are Belgium, Israel, USA, Indi a and China . Important centres of diamond cutting and trading are Surat (India), Antwerp (Belgium), London (UK), New York (USA), Tel Aviv (Israel), Amsterdam (Netherlands). More than 50% of the world’s production of rough, polished and industrial diamond passes through Antwerp. USA, Japan, China, Gu lf r e g i o n a n d I n d i a constitute approximately 70% of Diamond Jewellery sales.Global supply ofrough diamonds (in carats)is expected to expand at a CAGR ofthree per cent between 2016 and 2022, peaking in 2021 (Bank ofAmerica Merrill Lynch).
Indian scenario of diamond
Production or mining ofrough diamond in India is negligible. ButIndia is the world’s largest cutting and polishing centre for diamonds where 14 out of every 15 rough diamonds in the world are polished. Surat is the major centre for cutting, polishing and processing of rough diamonds. It contributes more than 85% of diamonds trading in India.
India is the world's third largest diamond consumer with 8% market share. India ranks first with 16.7 % market share in total export of diamond.India exports 95 per cent oftotal imported rough diamond the world’s diamonds,as per statistics from the Gems and Jewellery Export promotion Council(GJEPC).
India's Imports of rough diamonds & export of cut and polished diamonds during last ten years (In million $)
In its latest financial report for Q3 2019, Rio Tinto said that its overall diamond production at its Argyle Mines and Diavik Mine fell sharply year-on-year. At Argyle, production in Q3 totaled 3.83 millioncarats,adropof19%year-on-year.AtDiavik,productionfell9%year-on-yearto1.06million carats. Rio Tinto’s diamond production guidance for 2018 was between 17 and 20 million carats while for 2019 is between 15 and 17millioncarats.
AngloAmerican, De Beers’parent company, has announced that De Beers’ Q3 production dropped 14% year-on-year to total 7.4 million carats.
D e B e e r s ’ y e a r-t o - d a t e production totals 23 million carats – a drop of 12% year-onyear. However, the miner still expects a full-year production of around 31 million carats.
|19th NOV||Boris Johnson’s popularity marginally edged higher over Jeremy Corbyn in ITV debate.|
|20th NOV||FED minutes show rates on hold, little hurry to change course|
|20th NOV||Government approved disinvestment of 5 PSU’s including BPCL.|
|21st NOV||Trump signing pro-Hong Kong rights bill into law will worsen US-China relationship.|
|21st NOV||US-China trade war could spark real war: Henry Kissinger.|
Indian Rupee will continue the negative trend this week following the global headwind coming-in from trade war front. Reuters reported that phase one of a USChina trade deal may not be completed this year. Additionally the US Senate has passed a bill that would force the Trump administration to annually re-examine Hong Kong’s special status received during colonial era. In wake of the bill, Chinese foreign ministry said “Any attempted tricks by the US to interference in China’s internal affairs and hinder China’s development will not prevail ". Meanwhile FM Nirmala Sitharaman announced that cabinet committee of economic affairs approved for a large scale divestment programs including privatization of BPCL and SCI which will help center to raise Rs 1.07 trillion in current fiscal to keep check in budget deficit to 3.3% of GDP. Indian Rupee will remain vulnerable ahead of GDP release later next week. Initial estimates are in consensus that GDP growth to have fallen to a 26-quarter low of 4.6% in the previous quarter. FOMC meeting minutes showed that Federal Reserve officials believed that political risks to growth had eased “a bit” since the end of the summer but spent some time discussing high levels of corporate debt at their last meeting. Going forward in absence of major economic releases from developed economies, major pairs will remain in a narrow range.
USDINR is likely to stay within the range of 71.35 and 72.05 in the next week.
USD/INR (DEC) contract closed at 72.0025 on 21st Nov’19. The contract made its high of 72.2575 on 19th Nov’19 and a low of 71.8525 on 18th Nov’19 (Weekly Basis). The 14-day Exponential MovingAverage oftheUSD/INR is currently at 71.84.
On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 56.15. One can sell at 71.95 for the target of 71.35 with the stop loss of 72.25.
EUR/INR (DEC) contract closed at 79.91 on 21st Nov’19. The contract made its high of 80.15 on 19th Nov’19 and a low of 79.6675 on 18th Nov’19 (Weekly Basis). The 14-day Exponential Moving Average of the EUR/INR is currently at 79.66.
On the daily chart, EUR/INR has Relative Strength Index (14-day) value of 56.15. One can sell at 79.75 for a target of 79.15 with the stop loss of 80.05.
GBP/INR (DEC) contract closed at 93.18 on 21st Nov’19. The contract made its high of 93.63 on 19th Nov’19 and a low of 92.60 on 20th Nov’19 (Weekly Basis). The 14-day Exponential Moving Average of the GBP/INR is currently at 92.60.
On the daily chart, GBP/INR has Relative Strength Index (14-day) value of 63.39. One can sell at 93 for a target of 92.40 with the stop loss of 93.30.
JPY/INR (DEC) contract closed at 66.4150 on 21stNov’19.The contract made its high of 66.6950 on 20th Nov’19 and a low of 66.0125 on 20th Nov’19 (Weekly Basis). The 14-day Exponential MovingAverage ofthe JPY/INR is currently at 66.25.
On the daily chart, JPY/INR has Relative Strength Index (14-day) value of 51.48. One can sell at 66.35 for a target of 65.75 with the stop loss of 66.65.
|Total Issue (Shares) - Offer for sale||19,778,298|
|Total Issue (Shares) - Fresh Issue||1,230,769|
|Net Offer to the Public||21,009,067|
|Issue Size (Rs. Cr.)||405-410|
|Price Band (Rs.)||193-195|
|Lot Size||75 Shares|
|Total Issue for Sale||21,009,067|
1. To augment Bank's Tier-I capital base to meet the Bank's future capital requirements;
2. To achieve the benefits of listing the Equity Shares on the Stock Exchanges and Offer for Sale.
|Book Running Lead||
|Axis Capital Limited||IIFL Securities Limited|
Name of the registrar Link Intime India Private Limited
Considering the P/BVx valuation on the upper end of the price band of Rs. 195, the stock is priced at P/B ratio of 2.19x on the pre issue book value of Rs. 89.19 and on the post issue book value of Rs. 92.49, the P/B comes out to 2.11x.
On the lower end of the price band of Rs.193 the stock is priced at P/B ratio of 2.16x on the pre issue book value of Rs. 89.19 and on the post issue book value of Rs. 92.49, the P/B comes out to 2.09x.
About the company:
Incorporated in 1920, Kerala based CSB Bank Ltd, formerly known as Catholic Syrian Bank, is one of the oldest private sector banks in India. The bank has a significant presence in Kerala, Karnataka, Tamil Nadu and Maharashtra. CSB Bank Ltd has four business areas such as SME Banking, Wholesale Banking, Retail Banking and Treasury Operations. The company also has a contractual arrangement to distribute life insurance products of HDFC, Edelweiss Tokio, and ICICI Prudential Life Insurance Company Ltd and general insurance products of Reliance General Insurance Company Ltd.
Strong channel network and trusted brand in South India:CSB has a strong base in Kerala along with a significant presence in Tamil Nadu, Karnataka, and Maharashtra. It has an overall customer base of 1.3 million as of September 2019, and delivers products and services through multiple channels, including 412 branches (excluding three service branches and three asset recovery branches) and 290 ATMs spread across 16 states and four union territories.
Strong capital base for growth:Its capital position has been significantly strengthened post FIHMs investment in its Bank. Pursuant to a preferential allotment of Equity Shares and warrants to FIHM, for which it received Rs720.75 cr in Fiscal 2019 and the balance amount of Rs. 487 cr in Fiscal 2020, it has a strong capital base for growth acceleration, something which it was not able to accomplish in past due to paucity of capital.
Well established SME business:The bank believes that SMEs are more often confronted with challenges such as availability of adequate and timely financial resources than large corporates. The bank focuses on meeting the funding and banking requirements of SME customers. As a percentage of the bank’s total advances, loans to SME customers accounted for 43%, 37%, 32% and 29.47% as on March 31, 2017, March 31, 2018, March 31, 2019 and September 30, 2019, respectively.
Retail offering driven by strong gold loan portfolio: Gold loans constituted a major portion of the bank’s advances, contributing 24%, 26%, 31% and 33.17% of the bank’s total advances as on March 31, 2017, March 31, 2018, March 31, 2019, and September 30, 2019, respectively. As on March 31, 2019 and September 30, 2019, it had 522,248 and 595,121 gold loan accounts, with advances aggregating to Rs. 3333.10 cr and Rs. 3781.80, implying an average ticket size of approximately Rs 0.006 cr and 0.006 Cr, respectively.
Grow the bank’s asset business with focus on SME, agricultural and retail customers by leveraging the bank’s capital position: : To support its SME and Wholesale banking businesses, it also plans to launch capital market linked products including lending products linked to capital market instruments. It also intends to grow its agriculture based business by focusing on lending to customer service units, Primary Agricultural Credit Societies (“PACS”), Farmer’s Service Societies (“FSS”), and Large-sized Adivasi Multi-Purpose Societies (“LAMPS”), thereby mitigating the risk of lending directly to farmers.
Grow and diversify its distribution infrastructure in key geographical locations:The bank plans to open 425 branches in next five years, subject to regulatory approvals. It aims to focus on maintaining the significant advantage it enjoys in the Kerala sub-market by way of its branch reach. It aims to strengthen its presence in key locations in states such as Maharashtra, Gujarat, Andhra Pradesh, Punjab, Karnataka and Telangana in addition to its home state, Kerala. In rural locations, it will focus on expanding its presence largely through business correspondence model.
Focus on NPArecovery and improve asset quality:The bank intends to establish separate teams for retail, SME, and corporate segments dedicated towards recovery of provisioned portfolio and also managing and monitoring of ongoing stressed portfolios. It believes that its efforts in strengthening risk management have improved its asset quality.
• Regional concentration in southern India.
• Negative growth in revenues
• Business is vulnerable to investment risk
CSB Bank has posted a loss in the last 3 years. However, the management of the bank has said that it has opted for higher provisioning that stipulated by RBI and has done balance sheet cleaning exercises for the last three fiscals that have resulted in losses. As maximum provision is done, it could clock in net profit in coming quarters. However, on the valuation front the issue looks pricy. A long term investor may opt the issue.
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PPFAS mutual fund AUM crosses Rs 2,700 crore
PPFAS mutual fund, which started operations six-and-half years ago, crossed assets under management (AUM) of over Rs 2,700 crore, its Chairman and CEO Neil Parag Parikh said on November 21. Parikh said the flagship long-term equity fund scheme has an AUM of Rs 2,300 crore, and invests in both domestic and foreign equities.
L&T Mutual Fund announced the change in exit load of L&T Liquid Fund
L&T Mutual Fund announced the change in exit load of L&T Liquid Fund effective Oct 20, 2019. As per the revised structure, exit load of 0.0070% would be applicable on redemption/switch out on day 1 from the date of allotment, 0.0065% on day 2, 0.0060% on day 3 and so on until day 7 when no exit load is applicable.
ICICI Prudential Mutual Fund changes fundamental attributes of ICICI Prudential Dividend Yield Equity Fund
ICICI Prudential Mutual Fund announced the change in fundamental attributes of ICICI Prudential Dividend Yield Equity Fund. As per the revised provision, the fund will undergo alterations in asset allocation pattern and investment strategy effective Dec 26, 2019.
Aditya Birla Sun Life Mutual Fund announced change in the name of Aditya Birla Sun Life Short Term Opportunities Fund
Aditya Birla Sun Life Mutual Fund announced change in the name of Aditya Birla Sun Life Short Term Opportunities Fund to Aditya Birla Sun Life Short Term Fund effective Nov 21, 2019.
Invesco Mutual Fund announced the change in benchmark of some debt funds
Invesco Mutual Fund announced the change in benchmark of Invesco India Money Market Fund and Invesco India Banking & PSU Debt Fund. As per the revised provision,Invesco India Money Market Fund’s benchmark has changed from CRISIL Liquid Fund Index to CRISILMoney MarketIndex effective Nov 20, 2019.Invesco India Banking & PSUDebt Fund’s benchmark has changed from CRISILShortTerm Bond Fund Index to CRISILBanking and PSUDebtIndex.
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
Board and Committee Meeting of SMC Group Held at Hotel Jaypee Siddharth On Thursday,14th November,2019.
Dr. Dk Aggarwal(CMD,SMC Investments & President-PHDCCI) prsenting a memento to Mrs.Nirmala Sitharaman, Hon'ble Finance Minister to discuss vital growth provoking measures held on 13th November,2019 at New Delhi.
Mr. Narender Balasia (Regional Director,SMC Global Securites Ltd.) amd Mr.Pullin Behari Das(Vice President SMC Global Securites Ltd.) during the inugration of SMC's New Branch at Dhanbad and Ranchi.
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