RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue041.pdf ·...

ISSUE: 041

15TH JUNE, 2019

RULE THE MARKET

From The Desk Of Research Head

Disclaimer: Karvy Stock Broking Limited [KSBL] is registered as a research analyst with SEBI (Registration No INZ000172733). KSBL is also a SEBI registered Stock Broker, Depository Participant, Portfolio Manager and also distributes financial products. The subsidiaries and group companies including associates of KSBL provide services as Registrars and Share Transfer Agents, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, financial consultancy and advisory services, realty services, data management, data analytics, market research, solar power, film distribution and production, profiling and related services. Therefore associates of KSBL are likely to have business relations with most of the companies whose securities are traded on the exchange platform. The information and views presented in this report are prepared by Karvy Stock Broking Limited and are subject to change without any notice. This report is based on information obtained from public sources, the respective corporate under coverage and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of KSBL. While we would endeavor to update the information herein on a reasonable basis, KSBL is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent KSBL from doing so. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. KSBL will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity.KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. Compensation of KSBL’s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report. Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. It is confirmed that Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities.

Inflationary Pressures Remain Benign

CPI for the month of May increased marginally to 3.05% from a revised 2.99% for the

month of April. This indicates that inflationary pressures remain benign in the economy.

This is in line with a decrease in inflationary expectations of households. The expectation

for inflation 3 months ahead has declined by 20 bps in the latest survey. Though food

inflation continues to be benign at 2.03%, what is more important is that core inflation

continues to decline, coming in at 4.2% vs. 4.6% in the month of April, again a sign that

inflationary pressures are contained, this we believe opens the door for a rate cut by RBI

later in the year.

More encouragingly, IIP or Index of Industrial Production picked up pace, growing at

3.4% YoY for April 2019 against consensus expectations of 0.6% growth and a revised

figure of 0.4% YoY for March 2019. The pickup was broad based with mining growing at

5.1%, manufacturing at 2.8% and electricity growing at 6%. IIP is a volatile series and the

3 month moving average is more useful which stands at 1.29%. Though it’s early days, this

may indicate that inventory correction may be close to running its course. Capital Goods,

an important component grew at 2.5% compared to a decline of 8.4% in March 2019. This

is the first growth for this component since December 2018. Consumer Durables grew at

2.4% and Consumer Non-Durables at 5.2%.

While the acceleration in IIP is welcome, the number is still subpar. We would need to

wait for inventory correction to finish in order to assess the health of underlying final

consumer demand. More importantly for growth to recover, it is important for money

market conditions to normalize. While the monetary system liquidity has turned positive

and the 75 bps rate cut will have an impact as well, though this will be with a lag. Going

forward, we expect the economy to recover gradually by Q2FY2019-20. We also expect

that the pickup in growth will be led by improvement in capex spending.

We thus believe that after the election related rally, the market is likely to be sideways but

better improvement in economic numbers should result in better corporate earnings. This

should trigger the next leg of rally in equity markets.

CONTENTSEquity 2-7

Derivatives 8-9

Commodity 10-13

Currency 14

Events 15-17

TeamDr. Ravi Singh

Syed Hasan Jafar

Aditya Kistampally

Viplav Dhandhukia

Srinivas Krishnan Bobba

Vaishali Paruthi

Chetan K Waghray

Konpal Pali

Rahul Sharma

Kiran Prasad

Vivek Ranjan Misra

Veeresh Hiremath

Siddhesh Ghare

Ramesh Chanchala

Ravi Pandey

Ravikanth P

Kushal Asthana

Arpit Chandna

Vinod J

Amit Kumar

Karvy Head Office

Karvy Stock Broking Limited, Plot No.31/P, Karvy Millennium Towers, Nanakramguda, Financial District, Gachibowli, Hyderabad, Telangana-500032, India.

For More updates & Stock ResearchVisit: www.karvyonline.com

Toll free: 1800 419 8283

Email: [email protected]

Analyst CertificationThe following Karvy Research Desk, who is (are) primarily responsible for this report and whose name(s) is/ are mentioned therein, certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

- VIVEK RANJAN MISRAHead-Fundamental Research

Economy

• Finance Minister Nirmala Sitharaman met representatives from the financial sector and capital markets in which the need for distinguishing solvency, governance and liquidity issues were discussed. Meeting was part of a series of consultations with stakeholders to be chaired by Sitharaman, ahead of the presentation of the full Budget for 2019-20.

• The markets regulator have directed credit rating companies to start disclosing the probability of default for the issuers they rate, troubled by the raters’ track record of detecting defaults or near-defaults.

Banking

• The government plans to enrol 10 million more farmers under the Kisan Credit Card scheme in the first 100 days of assuming office to help them avail bank credit for arranging inputs.

• Banks are in a fix over the RBI’s revised circular addressing resolution of stressed assets which insists on an inter-creditor agreement to start any process.

Telecommunication

• Digital Communications Commission has asked the Telecom Regulatory Authority of India to review its recommendations on the upcoming spectrum auctions. The Indian government will take a “calibrated” decision very soon on whether to allow Chinese equipment-maker Huawei for 5G development in the country without compromising on security.

Power

• The government has allowed distribution companies to use purchase of bundled power-- solar with thermal--for meeting renewable power purchase obligation.

Information Technology

• HCL Technologies is all set to roll out “Tech Bee”, a company initiative under which it trains and hires students who have completed plus two, across several states. The company was looking at Tamil Nadu, Telangana, AP and Karnataka in the south and looking at Haryana, UP, Uttarakhand and Maharashtra in the North.

Infrastructure

• The National Highways Authority of India is looking to tweak the build-operate-transfer framework of highways development as the government plans to revive the model which has failed to elicit interest from the private sector.

• The National Highways Authority of India has invited bids for the third bundle of toll-operate-transfer auctions, looking to raise a minimum of Rs. 49.95 Bn as it gets cracking on the asset monetization programme of the government.

NEWS

INTERNATIONAL NEWS

• US import price index fell 0.3% on a monthly basis in May amid lower fuel prices and dragged the annual rate down to -1.5% from -0.2%.

• ECB said that international use of the euro increases and the euro’s share in global foreign exchange reserves rose by 1.2% points in 2018. They further added that role of euro also strengthened in debt issuance and remained stable as invoicing currency; Policies for deeper economic and monetary union are key to supporting a further rise in international role of the euro.

• Iran’s Supreme Leader Ayatollah Ali Khamenei told that Iran will not repeat its “bitter experience” of negotiating with the US.

TRENDSHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 39452.07 38924 39188 39891 40330 Up

NIFTY 11823.30 11671 11747 11950 12076 Down

NIFTYBANK 30614.35 29950 30282 31173 31731 Down

IBULHSGFIN 672.25 505 589 755 839 Down

YESBANK 115.05 92 104 136 156 Down

INDUSINDBK 1426.80 1289 1358 1549 1672 Down

RELIANCE 1317.55 1292 1305 1334 1351 Down

TCS 2254.50 2142 2198 2298 2341 Up

AXISBANK 801.20 781 791 817 833 Up

HDFCBANK 2435.10 2386 2411 2465 2494 Up

HDFC 2185.85 2127 2157 2220 2254 Up

SBIN 343.80 335 340 348 352 Down

ICICIBANK 417.75 407 413 423 429 Up

FORTHCOMING EVENTSCOMPANY NAME EVENT EX-DATE

KPR Mill Ltd Buy Back of Shares 18-Jun-19

MAS Financial Services Ltd Final Dividend - Rs. - 3.60 18-Jun-19

Polycab India Ltd Dividend - Rs. - 3.00 18-Jun-19

Triveni Engineering & Industries Ltd

Final Dividend - Rs. - 1.25 18-Jun-19

ICICI Lombard General Insurance Co Ltd

Buy Back of Shares 19-Jun-19

Rallis India Limited Final Dividend - Rs. - 2.50 18-Jun-19

Shriram Transport Finance Company Ltd

Final Dividend - Rs. - 7.00 19-Jun-19

Adani Ports and Special Economic Zone Ltd

Buy Back of Shares 20-Jun-19

Bandhan Bank Ltd Dividend - Rs. - 3.00 20-Jun-19

Graphite India Ltd Final Dividend - Rs. - 35.00 20-Jun-19

HDFC Bank Limited Dividend - Rs. - 15.00 20-Jun-19

Hindustan Unilever Ltd Final Dividend - Rs. - 13.00 20-Jun-19

Nilkamal Ltd Final Dividend - Rs. - 9.00 20-Jun-19

Wipro Limited Buy Back of Shares 20-Jun-19

KSTREET - 15TH JUNE 20192

EQUITY

INDIAN INDICES (% CHANGE)

GLOBAL INDICES (% CHANGE)

NIFTY MIDCAP100TOP GAINERS & LOSERS (1W)

SECTORAL INDICES (% CHANGE)

FII/FPI & DII TRADING (IN RS. CRORES)

NSE NIFTY TOP GAINERS & LOSERS (1W)

EQUITY

Source: Bloomberg

-0.015

-0.010

-0.005

0.000

0.005

0.010

Nifty

Sensex

BSE Midcap

BSE Smallcap

Nifty N

ext 50

Nifty M

idcap 100

-0.02

-0.02

-0.01

-0.01

0.00

0.01

0.01

0.02

0.02

0.03

Auto

Bank

Services

FMC

G

Pharma

IT Metal

Energy

Consum

ption

Realty

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

200

400

07-06-2019 10-06-19 11-06-19 12-06-19 13-06-19

FII/FPI DII-1.20

-1.00

-0.80

-0.60

-0.40

-0.20

0.00

0.20

Nasdaq

Dow

Jones

S&P 50

0

Nikkei

Hang Seng

Shanghai Com

p

FTSE 100

CA

C 40

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

BATA

IND

IA LTD

AD

AN

I POW

ER LTD

GRA

PHITE IN

DIA

LTD

BERGER PA

INTS IN

DIA

LTD

GM

R INFRA

STRUC

TURE LTD

GRU

H FIN

AN

CE LTD

ESCO

RTS LTD

CEN

TRAL BA

NK

OF IN

DIA

BHA

RAT FIN

AN

CIA

L INC

LUSIO

N

DILIP BU

ILDC

ON

LTD

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

GRA

SIM IN

DU

STRIES LTD

VED

AN

TA LTD

TATA

CO

NSU

LTAN

CY SV

CS LTD

JSW STEEL LTD

TATA

STEEL LTD

YES BAN

K LTD

IND

IABU

LLS HO

USIN

G FIN

AN

CE

BHA

RAT PETRO

LEUM

CO

RP LTD

CO

AL IN

DIA

LTD

HERO

MO

TOC

ORP LTD

KSTREET - 15TH JUNE 2019 3

EQUITY

% OF SHAREHOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY19 FY20E FY21E

REVENUE 41205 44524 47129

EBITDA 8499 9418 9951

EBITDA Margin(%) 20.6 21.2 21.1

PAT 5030 5632 5970

EPS (Rs.) 21.4 23.9 25.4

ROE (%) 20.1 18.9 17.1

BEAT THE STREET - FUNDAMENTAL ANALYSIS

KRBL Ltd CMP Rs.326Target Price Rs.403Upside 24%

Investment Rationale• KRBL Limited has posted robust consolidated operating

performances on both quarterly and full year basis on the back of strong sales and realization in domestic and export markets. During full year FY19, domestic market rice sales at 352829 Mts increased by 13% in volume and sales value at Rs.19490 Mn grew by 17% whereas price realization in domestic market sales at Rs. 55244 per Mts grew by 3.6% over FY18.

• Export market sales at 218320 Mts in FY19 grew by 29% in volume and export value at Rs. 18420 Mn grew by 42% over FY18. Export realization at Rs. 84369 per Mts has increased by 9.6%. Strong realization in export market has been the result of superior product mix comprising of high end brands, a depreciation in INR and increase in the prices in the export market.

• Strong domestic and export demand for Basmati rice to accelerate sales and thereby profitability for KRBL. In FY19, India exported 4.4 Mn tonnes of basmati rice and consumed 2.2 Mn tonnes domestically. The management sees huge opportunity in domestic market in view of growing shift in preference for branded goods.

VALUE PARAMETERSFace Value (Rs.) 1.0

52 Week High/Low (Rs.) 558/277

M.Cap (Rs. Bn/US $Bn) 76.7/1.1

EPS (Rs.) 21.4

P/E Ratio (times) (FY21E) 13.4

Dividend Yield (%) 0.8

Stock Exchange NSE/BSE

P/E CHARTValuationWe believe that KRBL with great brand recall and with its huge penetration in the M-E region is well positioned to capitalize on the opportunity. We value the stock at PE 15.9Xof FY21 EPS which gives TP of Rs. 403 with potential upside of 24%. Risk to valuation could be escalating of pesticide issue in Saudi Arabia and Europe.

58.8

6.9 0.9

33.4 Promoter

FII

DII

Others

0.0

100.0

200.0

300.0

400.0

500.0

May-16 May-17 May-18 May-19

KRBL Sensex

46%

16%

21%

17%

Promoters

FIIs

DII

Others

600

750

900

1,050

28,900

31,100

33,300

35,500

37,700

39,900

Jun-

18

Jul-

18

Sep-

18

Oct

-18

Nov

-18

Jan-

19

Feb-

19

Mar

-19

May

-19

Jun-

19

Sensex (LHS) Ipca Labs. (RHS)

58.8

6.9 0.9

33.4 Promoter

FII

DII

Others

0.0

100.0

200.0

300.0

400.0

500.0


KRBL Sensex

46%

16%

21%

17%

Promoters

FIIs

DII

Others

600

750

900

1,050

28,900

31,100

33,300

35,500

37,700

39,900

Jun-

18

Jul-

18

Sep-

18

Oct

-18

Nov

-18

Jan-

19

Feb-

19

Mar

-19

May

-19

Jun-

19



EQUITY

% OF SHAREHOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY19 FY20 FY21

REVENUE 36,332 41,455 47,506

EBITDA 6,932 8,951 10,648

EBITDA(%) 19.1 21.6 22.4

PAT 4,549 5,928 7,360

EPS (Rs.) 36.0 46.9 58.3

RoE (%) 15.2 17.3 18.2

PE (x) 26.1 20.0 16.1

BEAT THE STREET - FUNDAMENTAL ANALYSIS

IPCA Labs Ltd CMP Rs.938Target Price Rs.1090Upside 16%

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 1046/590

M.Cap (Rs. Bn/US $mn) 118/1697

EPS (Rs.) 58.3

P/E Ratio (times) (FY20E) 16.1

Dividend Yield (%) -

Stock Exchange NSE

EQUITY

P/E CHART

Investment Rationale• Domestic formulations to witness healthy mid double digit

revenue growth in FY20E. We expect despite challenges in anti-malaria segment, company will continue to outperform in Pain, Derma and Urology segment in domestic market. Company has guided for 12-14% growth for FY20E on the back of healthy growth in the pain, cardiac and anti-bacterial segments will boost the gross margins.

• Export formulations to show good traction: In generic exports, the issues related to UK distributor has been resolved and management expects to gain lost market share in UK in the due course of time. In case of Institutional business, company is confident closing FY20E with revenue of Rs 2.5 Bn. This includes

• Rs. 150 Mn of orders deferred from March quarter. Company is hopeful of better global fund allocation from new round which will be incremental to our revenue estimates.

• According to management, current API order book is healthy and recent addition of Sartan capacity in API plant will enhance company’s overall production capacity and revenues.

ValuationWe reduce our Revenues by 3.4%/2.7% for FY20E/FY21E due to downgrade in Generics and Branded business. We upgrade our EBITDAM for FY20E/FY21E by 180 bps for both the years to 21.6% /22.4%respectively due to better product mix, lower remediation costs and R & D costs. We upgrade our EPS estimates by 8.2% /6.2% to Rs. 46.9/Rs. 58.3 for FY 20E/FY21E. We maintain our BUY rating and price target of Rs. 1090 based on 18.6x FY21E.

58.8

6.9 0.9

33.4 Promoter

FII

DII

Others

0.0

100.0

200.0

300.0

400.0

500.0


KRBL Sensex

46%

16%

21%

17%

Promoters

FIIs

DII

Others

600

750

900

1,050

28,900

31,100

33,300

35,500

37,700

39,900

Jun-

18

Jul-

18

Sep-

18

Oct

-18

Nov

-18

Jan-

19

Feb-

19

Mar

-19

May

-19

Jun-

19


58.8

6.9 0.9

33.4 Promoter

FII

DII

Others

0.0

100.0

200.0

300.0

400.0

500.0


KRBL Sensex

46%

16%

21%

17%

Promoters

FIIs

DII

Others

600

750

900

1,050

28,900

31,100

33,300

35,500

37,700

39,900

Jun-

18

Jul-

18

Sep-

18

Oct

-18

Nov

-18

Jan-

19

Feb-

19

Mar

-19

May

-19

Jun-

19



EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

Housing Development Finance Corp Ltd

HDFC is our preferable bet from financial services for medium term. The stock is in uptrend and making higher highs on daily charts. The historical price action in the stock reflects that any meaningful dip in the stock may attract market participants. The stock is trading near all time highs on daily charts. Prior to that, the stock has seen profit taking from the zone of 2050 levels which dragged the stock to the low of around 1645 levels. Thereafter, the stock has bounced well from the said lower levels. The bounce from the said lower levels has seen supportive volume formation on daily charts. This indicated strength in the counter. The stock is trading above all its major moving averages on daily charts which confirm our bullish view in the stock. On technical setup, the 14 period RSI is pointing northward given positive crossover with signal line and trading comfortable above signal line on weekly charts. The parabolic SAR has triggered fresh buy on daily charts that reflects uptrend in the stock to remain intact in near term. The recent development in the stock suggests that the stock is well placed to take its up move. Hence, we suggest medium term investors to buy the stock around 2170 levels for the target of 2450-2470 levels with stop loss placed below 1950 levels and any dip towards 2060 levels can be used for averaging the stock.

Power Grid Corporation of India Limited

Power Grid Corporation of India Limited (POWERGRID) is an Indian state-owned electric utility company headquartered in Gurugram, India. POWERGRID transmits about 50% of the total power generated in India on its transmission network. Power grid is a company with 153,635 ckm Transmission Lines, 243 Sub-Stations, >99% System Availability & 367,097 MVA Transformation Capacity. It has domestic: Stable/ Highest Safety rating ‘AAA’ by CARE, CRISIL & ICRA. POWERGRID has rallied from 110 to 212 levels on monthly chart and has corrected to 38.20% Fibonacci retracement levels of the said rally i.e. around 173 on closing basis and bounced back from there to close above 23.6% Fibonacci retracement levels indicating end of the correction and a possible fresh leg of rally from these levels. Adding to it, Heiken candlesticks is signalling positive trend on the weekly charts reflecting the stock is well placed to move higher in the coming days. 14 periods RSI is trading above the 9 period averages on daily chart as well as weekly charts indicating positive momentum. The stock is trading well above all of its major moving averages on daily as well as weekly charts indicating strong positive momentum in the counter for all major time frames. On Bollinger bands, weekly chart stock has tested the mean and moving towards upper band while the bands are expanding indicating positive momentum. At the current levels, the stock has given an excellent opportunity for medium to long term investors to accumulate the stock around 193-194 levels for the potential upside targets of 239-254 levels over the next 6-9 months keeping a stop loss below 164 levels.

STOCK HDFC

CMP 2185.85

ACTION BUY

ENTRY 2170

AVERAGE 2060

STOP LOSS 1950

TARGET 1 2450

TARGET 2 2470

TIME FRAME 6-9 MONTHS

STOCK POWERGRID

CMP 194.60

ACTION BUY

ENTRY 193-194

AVERAGE 175

STOP LOSS 164

TARGET 1 239

TARGET 2 254

TIME FRAME 6-9 MONTHS


EQUITY

EQUITY

Sentiment

Initiation 1420

Stop Loss 1460

Target 1370

Lot Size 600

Margin 1,50,000

21-DEMA 1404

Open Interest Shares 5370000

Change in OI -20400

Cost of Carry (%) 5.27

SECTORAL SNIPPETS

NIFTY METAL (2,944.90) index continued its sideways moves for third consecutive week and ended with a gain of more than 1.25%. The index has closed at 2944.90 levels and managed to outperform Nifty 50 index which has witnessed a cut of around 0.50% during the same period. Index continues to trade below last month broken bearish head and shoulders pattern. Over last few weeks, the index has retraced and tested the breakdown zone but the index is facing significant resistance at higher levels. The index stocks are getting supply at very short term moving averages but the index is trading in a tight range of 2875-3000 and breach of the said range shall trigger next major move. On a slight broader time frame, the index is forming a bearish flag pattern, where the breach and sustenance below 2875 shall confirm the same. The target of the said pattern comes around 2750 levels. Going into the internals of the metal index, it also suggests that sideways move on the index is more likely to persist, where the breadth of the index is neutral with 8 stocks closing in green while rest 7 stocks closing in red. Leading the leader board, TATASTEEL, SAIL, JSWSTEEL, JINDALSTEL and VEDL have gained in the range of 2-4% while on the flipside, major stock ended with cuts in the range of 2-5%. Over last few days, index is trading in the range of 2875-2975 and breach shall give the next major move and for now, the probability of moving lower is higher. For now, immediate supports for the NIFTY METAL index may be assumed at 2875-2850 levels followed by 2700-2750 levels. Whereas on the upside, immediate resistances may be assumed at 2975-3000 levels followed by 3150-3200 zone.

NIFTY BANK (30,614.35) underperformed the Nifty with a loss of 1.46% during the week passed by while the broader index Nifty lost by 0.40%. During the last week, the index witnessed a see-saw movement with a downward bias in the range of 31400-30500. The index may continue to trade with a bearish bias until and unless 31040 levels are taken off from downside. As per a report during the week, YES Bank and IndusInd appear most vulnerable to the NPL risks than current market expectations. Considering the disruption in NBFCs, ICICI Bank, Axis Bank, State Bank of India, HDFC Bank and Kotak Mahindra Bank are well placed in the emerging competitive landscape, given their strong presence in most financial products. During the week, PNB, J&KBank, Canara Bank, Indian Bank and Union Bank of India were among the key PSB losers. Similarly, YES Bank, IndusInd Bank were the biggest losers in the private banking space. The report also quoted that NBFC funding troubles could allow for better pricing / higher loan growth for banks in the near-term. State-owned banks are trading below or in line with their five-and 10-year average forward price/book value (P/BV) while most private banks are trading above their five-/10-year average P/BV. The market is not pricing in the structural opportunity available to ICICI Bank, Axis Bank and SBI due to near-term issues. NPL risk for YES Bank and IndusInd Bank does not seem to be fully priced in. As indicated by the derivatives data, BankNifty may face resistance at 31000 levels followed by 31200 levels. For the week ahead, support for the index can be pegged at 30500 levels followed by 30000 levels.

NIFTY REALTY (270.70) has ended the week with a loss of around 3.51% underperforming the benchmark Nifty-50 which closed with a cut of -0.50%.The breadth of the REALTY index was negative as 2 out of 10 stocks in the index ended on a positive note while 6 ended on a negative note; BRIGADE and PHOENIXLTD ended on a flat note. The stocks which gained last week were GODREJPROP and SOBHA which gained around 5.29% and 0.61% respectively while stocks which lost the most were IBREALEST, DLF, SUNTECK, PRESTIGE, OBEROIRLTY and MAHLIFE which lost around -11.41%,-7.02%,-4.97%,-4.76%,-3.39% and -1.48% respectively. Technically, the said index is trading above its weekly 20-period Simple moving average (SMA) while it has closed below its 20 SMA on daily charts indicating a weak bias in the near term. The Weekly and Daily 14-period RSI is trading below its 9 periods EMA indicating weak bias in the near term. Going ahead for the coming week, the index has support at 260 levels and below it at 252 levels while resistance is pegged at 277 levels and above it at 285 levels.

NIFTY IT (16,268.20) traded on a mixed to positive note, settled with gains of nearly 0.83% on weekly closing basis. On the stock front, few stocks managed to outperform the index; TCS 3.12%, INFY 1.56%, WIPRO 1.34%, HCLTECH 0.41%, TATAELXSI 0.33% & MINDTREE 0.14% managed to close on a positive note while NIITTECH -0.25%, OFSS -1.51%, TECHM -1.67% & INFIBEAM -3.67% closed in a negative territory on a weekly closing basis. NIFTY IT index after placing a swing low near 15972 levels witnessed recovery in the last few sessions. Technically, index found support above its 21-DEMA which is currently placed near 16133 levels and currently it is holding above its 50 & 200-DEMA placed near 15977 & 15235 levels respectively. On the momentum oscillator front, 14-pd RSI is consolidating between 50 & 64 levels indicating possibility of further consolidation in the index in the sessions to come. On the downside, index has an immediate support near 16150 levels followed by 15900 levels while on the higher side, 16400 will work as an immediate resistance followed by 16500-16700 levels. Going forward, index on sustaining above 16000 levels is likely to trade with mixed bias between 16000-16400 levels.

ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD: BUY ADANIPORTS (JUN FUTURE) | CMP: 424.25 SECTOR: INFRA

ADANIPORTS has witnessed a secular upside move from its breakout levels of 390-392 zone on weekly chart. However, from past two weeks, the stock has been witnessing some consolidation and is trading in a tight range of 415-430 levels. Technically, the stock is placed above all its major moving averages and on oscillator front,14 period RSI has witnessed positive crossover and is comfortably placed around 62-64 levels suggesting more upside room in the counter. Even the parabolic SAR is placed well below the price level in all time frames affirming the strength in the counter. On derivatives front, the stock has seen long addition on both daily and weekly basis indicating bullishness in the counter. Hence, it is advisable to go long in the counter keeping a stop loss placed below the support levels of 414 levels for an upside of 432 levels.

Sentiment

Initiation 422

Stop Loss 414

Target 432

Lot Size 2500

Margin 1,84,200

21-DEMA 386

Open Interest Shares 19497500

Change in OI 1127500

Cost of Carry (%) -14.16

ASIAN PAINTS LTD: SELL ASIANPAINT (JUN FUTURE) | CMP: 1415.40 SECTOR: CD

ASIANPAINT is currently consolidating near the resistance levels of 1440-1460 on the daily charts and is signaling first signs of reversal. On the weekly charts, the stock has formed bearish reversal candle after facing hurdle around the mean of the Bollinger band (20, 2) with good volumes. The counter has formed three consecutive Doji candles on the daily charts last week and is on the verge of breakdown below the last week lows. On the indicator front, 14-Day RSI has shown bearish crossover on the daily charts affirming our bearish view on the stock for short term period. We expect the weakness to exaggerate in the coming trades in the stock and any rise in the price may be used to create short positions for the short term trading perspective. The counter has immediate support around 1395 levels followed by 1365 levels while resistance is pegged around 1440 followed by 1460 levels on the daily charts. Short term traders may adopt the strategy of “Sell on Rise” in the stock for the near term downside targets of 1370 keeping strict stop loss of 1460 levels in the June derivative series.


EQUITY

WEEKLY VIEW OF THE MARKET

NIFTY (11823.30): Indian equity benchmark index Nifty 50 closed lower by 0.40%, for the second consecutive week due to concerns of geopolitical risks and slowing global growth. Market participants were also cautious ahead of the Federal Reserve review and the upcoming G-20 summit. The rise in crude oil prices as attacks on tankers in the gulf of Oman escalated US-Iran tensions and raised concerns over supply flows also added to the selling woes in the broader markets. For the week ahead to watch, market participants will focus on US Federal’s Interest Rate Decision and FOMC Economic Projections on 19th June. The index may also regain its volatility in view of the RBI MPC Meeting Minutes that will be released on 20th June. On the derivatives front, Open Interest data suggests that the index may find its supports around 11800 followed by 11500 levels while on the higher side, 11900 and 12000 may act as strong resistance.

DERIVATIVE STRATEGIES

TYPE CALL RATIO IN BANK NIFTY

FIRST LEG Buy 1 lot of BANKNIFTY 20 JUN 30700 CE @ 188

SECOND LEG Sell 2 lot of BANKNIFTY 20 JUN 31000 CE @ 92

BEP Lower BEP 30704, Upper BEP 31296

MAX PROFIT 5920

MAX LOSS 80 below LBEP and Unlimited above UBEP

RATIONALE From last couple of sessions Bank Nifty is trading with mixed bias, however, finding support on the downside. Going forward, index is likely to find support at lower levels and eventually resume its uptrend. Therefore, one may initiate Call Ratio spread in the index.

TYPE BULL CALL IN NIFTY

FIRST LEG Buy 1 lot of NIFTY 27 JUN 11850 CE @ 98

SECOND LEG Sell 1 lot of NIFTY 27 JUN 12000 CE @ 41

BEP 11907

MAX PROFIT 6975

MAX LOSS 4275

RATIONALE Benchmark index Nifty after placing an all time high near 12100 levels entered into a consolidation mode and is sustaining near the support levels. Going forward, index is likely to find support at lower levels and eventually resume its uptrend. Therefore, one may initiate Bull Call spread in index.

TYPE BEAR PUT IN ESCORTS

FIRST LEG Buy 1 lot of ESCORTS 27 JUN 560 PE @ 15

SECOND LEG Sell 1 lot of ESCORTS 27 JUN 540 PE @ 7.50

BEP 552.5

MAX PROFIT 13750

MAX LOSS 8250

RATIONALEFrom last few weeks, stock price is trading with a weak bias holding below its short to medium term moving averages and also momentum in the counter is fading away. In the last session, stock witnessed addition in open interest with fall in price indicating short accumulation in the counter reaffirming underlying weakness in the counter.

TYPE BULL CALL IN TCS

FIRST LEG Buy 1 lot of TCS 27 JUN 2260 CE @ 33

SECOND LEG Sell 1 lot of TCS 27 JUN 2300 CE @ 18

BEP 2275

MAX PROFIT 6250

MAX LOSS 3750

RATIONALE From last few weeks, stock is gaining strength and last week, stock managed to outperform the underlying Nifty IT index. Also stock witnessed addition in open interest with rise in price indicating long accumulation in the counter depicting possibility of prices to scale higher in the sessions to come.

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

30300 30500 30700 30900 31100 31300 31500 31700 31900

-6000

-4000

-2000

0

2000

4000

6000

8000

11700 11800 11900 12000 12100 12200 12300

-10000

-5000

0

5000

10000

15000

460 510 560 610 660 710

-6000

-4000

-2000

0

2000

4000

6000

8000

2180 2230 2280 2330 2380

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

30300 30500 30700 30900 31100 31300 31500 31700 31900

-6000

-4000

-2000

0

2000

4000

6000

8000

11700 11800 11900 12000 12100 12200 12300

-10000

-5000

0

5000

10000

15000

460 510 560 610 660 710

-6000

-4000

-2000

0

2000

4000

6000

8000

2180 2230 2280 2330 2380

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

30300 30500 30700 30900 31100 31300 31500 31700 31900

-6000

-4000

-2000

0

2000

4000

6000

8000

11700 11800 11900 12000 12100 12200 12300

-10000

-5000

0

5000

10000

15000

460 510 560 610 660 710

-6000

-4000

-2000

0

2000

4000

6000

8000

2180 2230 2280 2330 2380

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

30300 30500 30700 30900 31100 31300 31500 31700 31900

-6000

-4000

-2000

0

2000

4000

6000

8000

11700 11800 11900 12000 12100 12200 12300

-10000

-5000

0

5000

10000

15000

460 510 560 610 660 710

-6000

-4000

-2000

0

2000

4000

6000

8000

2180 2230 2280 2330 2380


DERIVATIVES

DERIVATIVES

FII ACTIVITY IN INDEX FUTURES FII ACTIVITY IN STOCK FUTURES

TOP 6 LONG BUILD UP

Stock Name LTP % Price Change Open Int % OI Change

BATAINDIA 1426.85 3.46 1923000 23.32

POWERGRID 194.6 1.49 25628000 16.43

CANBK 263.3 0.13 11240000 13.01

JINDALSTEL 164.65 4.71 20872000 12.14

MANAPPURAM 142 7.49 12390000 9.9

NMDC 107.1 2.44 24972000 8.75

BANKNIFTY OPTION OI CONCENTRATION CHANGE IN BANKNIFTY OPTION OI

TOP 6 SHORT CLOSURE


MOTHERSUMI 123.25 7.59 30712000 -23.83

UBL 1348.1 2.94 1355000 -22

BSOFT 90.65 1.45 2579000 -13.39

SRF 2885.7 0.36 798000 -11.9

MGL 873.25 2.63 741000 -9.06

COLPAL 1159.95 0.36 2313000 -8.45

TOP 6 SHORT BUILD UP


ICICIPRULI 359.15 -6.85 5421000 39.21

UJJIVAN 336 -6.13 4227000 24.74

GAIL 308.5 -1.7 19986000 22.71

TORNTPOWER 245.3 -0.71 2838000 21.75

IGL 335.3 -0.3 3372000 18.91

TORNTPHARM 1495.65 -1.83 653000 16.83

TOP 6 LONG CLOSURE


INDIANB 264.15 -0.92 3466000 -21.9

BEML 896.1 -6.86 1243000 -21.59

CHENNPETRO 210.05 -3.23 1154000 -19.77

KTKBANK 106.65 -0.33 8759000 -17.31

VOLTAS 605 -1.98 4158000 -13.66

RPOWER 5.4 -12.2 64072000 -13.46

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI

0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250

10-Jun 11-Jun 12-Jun 13-Jun 14-Jun

Thou

sand

s

Index Fut. OI Index Fut. Net Buy

-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s

Stock Fut. OI Stock Fut. Net Buy

0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250


Thou

sand

s


-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s


0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250


Thou

sand

s


-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s


0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250


Thou

sand

s


-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s


0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250


Thou

sand

s


-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s


0

5

10

15

20

25

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

5000

10000

15000

20000

25000

1130

0

1140

0

1150

0

1160

0

1170

0

1180

0

1190

0

120

00

1210

0

1220

0

1230

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

0

10

20

30

40

50

60

70

80

90

3010

0

3020

0

3030

0

3040

0

3050

0

3060

0

3070

0

3080

0

3090

0

310

00

3110

0

Call Put

-400

-200

0

200

400

600

800

1000

1200

232

234

236

238

240

242

244

246

248

250


Thou

sand

s


-800

-600

-400

-200

0

200

400

600

800

1412

1414

1416

1418

1420

1422

1424

1426

1428

1430

1432


Thou

sand

s



DERIVATIVES

BULLIONGold prices staged a strong rally in the week to Jun 14, 2019 surging to the highest level since June 2018 on CME. CME gold prices witnessed fourth consecutive week of gains on follow through buying supported by safe asset buying. Increased expectation of interest rate hike by US Federal Reserve following previous week’s non-farm payroll data attracted the appeal of gold as safe haven. US non-farm payrolls had improved by just 75,000 in the month of May against April number of 224,000 defying market expectations of 177,000. Lower than expected economic numbers released from US may increase the probability of rate cut by US central bank. The focus of the market is on Federal Reserve’s meeting scheduled on 18-19 June 2019. During the week, major economic releases were US PPI and CPI data that came at 0.1% vs. 0.2% and 0.1% vs. 0.3% respectively. Number of Americans filing for unemployment claims surged surprisingly to 222,000 last week from 219,000 in the penultimate week. Market is waiting for release of retail sales and industrial production data from US on Friday. On domestic front, MCX gold futures surged to 4 month high to trade above Rs. 33000 per 10 grams.

CRUDE OILCrude oil prices remained subdued in this week owning to lower global demand outlook reported by EIA (US), OPEC MMR and IEA monthly reports after the trade war escalations between US & China. Brent oil prices jumped as much as 4% after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz a month after a similar incident in which four tankers in the region were struck. The US blamed Iran for attacks on two oil tankers in the Gulf of Oman on Thursday that drove up oil prices and raised concerns about a new US-Iranian confrontation but Tehran bluntly denied the allegation. EIA cut its forecasts for 2019 world oil demand growth and US crude oil production in a monthly report released on Tuesday. EIA expects global oil demand to grow by 1.2 million b/d in 2019, 0.2 million b/d lower than the May forecast. Global liquid fuels supply is forecast to rise by 2.0 million b/d in 2020 with 1.4 million of that growth coming from the US. EIA also forecasts that US production will increase by 1.4 million b/d in 2019 and by 0.9 million b/d in 2020 with 2020 production averaging 13.3 million b/d. In line to EIA forecasts, OPEC has also cut its forecast for growth in global oil demand due to trade disputes and pointed to the risk of a further reduction, building a case for prolonged supply restraint in the rest of 2019. The downward revision by OPEC was mainly to account for sluggish oil demand data in the OECD region during Q1-19. International Energy Agency (IEA) said on Friday that the outlook for oil demand growth in 2019 has dimmed due to worsening prospects for world trade. IEA revised down its 2019 demand growth estimate by 100,000 barrels to 1.2 million barrels per day (bpd) but said it would climb to 1.4 million bpd for 2020. Separately, US crude oil stockpiles rose unexpectedly for a second straight week despite the highest refining rates in six months and lower imports and production. National Statistics Bureau showed that China’s crude oil throughput rose 2.8% in May from a year earlier but eased from record levels struck the month before to 12.22 million barrels per day (bpd).

BASE METALSMetals traded on an optimistic note for the week ended on Jun 14 after trade tensions eased initially followed by the better trade data received from Chinese end on Tuesday. During May, exports of unwrought aluminum and aluminum semis increased in China despite the export profits narrowing with the rising SHFE/LME aluminum price ratio. As per China customs data, the imports stood at 536,000 tons in May, up from 498,000 tons in April. The Jan-May exports grew 12.4% year on year to 2.48 million tons. By the end of May, imported bauxite inventories with Chinese producers stood at 32.8 million tons which was up 0.2% from April and down 1.5% compared to April 2018. Unwrought copper imports in China stood at 1.95 million tons till May 2019 which was down 9.4% on a yearly basis as per the China Customs data. Across China, copper scrap consumption stood at 188,900 tons in April down 7.85% from March and 59.77% or 112,900 of copper scrap consumed in April were imported. Copper’s premium at China’s Yangshan rose to $59 a tonne on Monday, a level unseen since mid-March suggesting an increase in demand. As per SHMET survey, higher TCs for zinc concentrate are buoying production at Chinese zinc smelters. Some are even running above designed capacity amid decent profit margins from high TCs. With an unexpected outage at Nyrstar, one of the world’s largest producers for primary lead, prices at LME rose on Monday’s session and are expected to maintain the trend for the Tuesday’s session but with less momentum. China’s car sales were down again for a 12th time in a series which indicates less demand for aluminium. Recent increased exports of aluminium, neutral manufacturing activities followed by expected downside revision of quarterly GDP indicates feeble demand on the whole. Also, the spending activity (CPI - 2.7% for May) released early on Wednesday’s session being better than April and in line with the expectations is giving little support to the prices in the near term.

COTTONICE cotton futures traded higher for most part of the week ending on June 14 due to adverse weather condition in Texas region where planting activities has been slower so far. Apart from that, prices discounted the data released by USDA in its monthly supply and demand estimation report on Tuesday and moved up by more than 1% during yesterday’s session. USDA kept supply and demand estimates almost unchanged compared to prior month with the exception of a 1-cent decline in the season-average upland farm price to 64 cents per pound. US cotton production during the year 2019-20 was estimated at 22 million bales of 480 lb each against the consumption of 3.10 million bales wherein exports and ending stocks were projected at 17 million bales and 6.40 million bales respectively. Cotton production is US during the year 2019-20 is estimated to be higher by 20% y/y wherein export is likely to increase by 15% y/y. Most active Dec delivery cotton futures traded at ICE closed the session at 66.52 cent/lb up by 0.93% from the previous close. Meanwhile, USDA’s crop progress report showed cotton planting in US has lagged behind the previous year’s acreages. About 75% of the area has been sown with cotton till 9th June against previous year’s coverage of 74% and 72% of five years average. In Texas, about 67% of cotton planting was finished till above mentioned period compared to 85% of prior year and 82% of five year average. At domestic front, MCX cotton futures traded mixed to higher due to growing concerns over delayed sowing in central region. Delayed monsoon rainfall and fear of slower progress of monsoon in central region supported prices at futures platform. Moreover, firmness in ICE cotton futures also helped prices to close the day on a positive note.

RUBBERGlobal TOCOM rubber futures traded on a negative note during the week ended on June 14, 2019 as profit booking in the market, fall in crude oil prices, and trade agreement between US & Mexico to avoid tariff war weighed on the rubber. Indian rubber market traded positive during the week due to supply crunch and low imports which pull the prices in the spot market. During the week, US government officially granted Chinese exporters for two more weeks to get their products into the US boundaries before increasing tariff on those items posted on last Friday. China had announced that it is levying duty on importing mixture rubber; Earlier the import duty for the same was nil which will be considered same as import of natural/synthetic rubber and is likely to attract 20% import duty which might prompt for higher imports of compound rubber in the immediate front. Chinese exports surged in May despite higher US tariff and fall in imports (the most in nearly three years) which is indicating weak domestic demand that could prompt China to step up stimulus measures. US president is likely to impose the new tariff on Chinese imports if he cannot progress on trade with Chinese Premier at G20 submit later on this month. Chinese and Indian car sales declined in the month of May raising concerns over demand for rubber from car manufacturers. According to China Passenger Car Association, retail sales of sedan, SUVs, minivans and multipurpose vehicles dropped by 12.5% MoM to 1.61 million units. As per data released by Society of Indian Automobile Manufacturers, passenger vehicle sales dropped by 20.6% YoY in May. On the economic front, US entered into a trade deal with Mexico and the earlier proposed 10% tariffs imposition starting from June were suspended.

SOYBEAN NCDEX soybean futures traded higher on improved domestic demand against the shrinking supplies at key trading centres. Moreover, delayed and slower progress of monsoon rainfall also helped prices to trade on positive bias. Meanwhile, the Solvent Extractors Association of India’s monthly data on meal export from India showed fall in oil meal export during marketing year 2018-19 on yearly basis. The overall export of oil meals during the year Apr-May 2019 reported at 313134 tons compared to 487995 tons during the same period last year lower by 36% y/y. The export of oil meal during month of May was reported at 58549 tons compared to 263644 tons in May 2018 down by 78%. Soy meal export during month of May was reported at 18470 tons compared to 40829 tons in prior month. CBOT soybean extended its gains on Thursday on slower planting progress in major growing regions. USDA released its planting progress report on 10th June that showed 60% of soybean planting completed till Jun 9 compared to 92% of prior year for corresponding period and 88% of five years average. Meanwhile, USDA released its monthly supply and demand estimation report for month of June, 2019. The 2019/20 global soybean supply and use projections include lower production and stocks compared to last month. Global production is down 0.3 million tons to 355.4 million due to lower crops for Ukraine and Zambia. Beginning stocks for 2019/20 are reduced for Argentina and China offsetting higher stocks for the US. For Argentina, stocks are lowered by a 1.5-million-ton increase due to exports to 7.8 million for 2018/19 based on the recent pace of shipments. Beginning stocks are lowered for China due to a 1-million-ton decrease to imports to 85 million for 2018/19.


COMMODITIES

CRUDE OIL

TRENDSHEET

Commodities May-19 Jun-19 % Change 52 Week High% Change from 52

Week High52 Week Low

% Change from 52 Week Low

Comex Gold (S/oz) 1305.80 1343.40 2.9% 1344.00 -0.04% 1161.40 15.67%

Comex Silver (S.oz) 14.53 15.00 3.2% 17.29 -13.22% 13.91 7.84%

Nymex Crude Oil (S/bbl) 53.50 53.43 -0.1% 76.90 -30.52% 42.36 26.13%

Nymex Natural Gas ($/mmbtu) 2.45 2.32 -5.5% 4.93 -52.93% 2.31 0.65%

LME Copper 3 Month ($/t) 5830.00 5785.00 -0.8% 7340.00 -21.19% 5736.00 0.85%

LME Lead 3 Month ($/t) 1805.00 1890.00 4.7% 2549.00 -25.85% 1779.00 6.24%

LME Zinc 3 Month ($/t) 2524.00 2503.00 -0.8% 3216.00 -22.17% 2300.50 8.80%

LME Nickel 3 Month ($/t) 12017.00 11650.00 -3.1% 15755.00 -26.06% 10530.00 10.64%

LME Aluminium 3 Month ($/t) 1794.50 1765.00 -1.6% 2336.50 -24.46% 1765.00 0.00%

CBOT Soybean (cents/bushel) 877.75 862.75 -1.7% 998.25 -13.57% 780.50 10.54%

CBOT Soy Oil (cents/lb) 27.59 27.59 0.0% 31.01 -11.03% 26.03 5.99%

CBOT Soy Meal ($/t) 321.30 313.10 -2.6% 365.80 -14.41% 280.70 11.54%

LIFFE Sugar (S/t) 330.60 338.40 2.4% 390.70 -13.39% 300.50 12.61%

ICE Coffee (cents/lb) 104.60 100.80 -3.6% 125.50 -19.68% 86.35 16.73%

ICE Cotton (cents/lb) 68.08 67.19 -1.3% 96.50 -30.37% 64.50 4.17%

ICE Sugar (cents/lb) 12.10 12.49 3.2% 14.24 -12.29% 9.83 27.06%

CBOT Corn (cents/bushel) 427.00 419.25 -1.8% 438.00 -4.28% 329.75 27.14%

CBOT Wheat (cents/bushel) 503.00 505.75 0.5% 593.00 -14.71% 416.25 21.50%

TECHNICAL RECOMMENDATIONS

SOYBEAN

RM SEED

Crude oil July contract delivery futures at the NYMEX platform are hovering around $52.3/Barrel as on June 14, 2019. Prices have started rebounding after testing the physiological levels of $50/Barrel in the current week. Prices are witnessing cluster support levels around $51.50-50.00 levels which are the Fibonacci 61.8% and the weekly lower Bollinger band supports. Indicator daily and weekly has approached the oversold territory. Prices have deviated more than 12% from the weekly 8, 13 EMA resistance levels. While combining above technical factors, we are expecting pullbacks and also we recommend building long positions.Strategy:Crude Oil July NYMEX: Buy at $52-51.80 TP 55.00 SL 50.00Crude Oil July MCX: Buy at Rs. 3630-3600 TP 3900 SL 3900

Soybean July contract delivery futures at the NCDEX platform are hovering around Rs. 3715/quintal as on June 14, 2019. Prices have started falling after making a high of Rs. 3915/quintal in the month of January 2019. Since then prices are moving within a falling trend channel support (3550) and resistance (3820). Since last couple of months, prices are not sustaining below the Fibonacci 38.2% support levels of 3550 levels and also it is almost matching with the weekly lower Bollinger band support levels.Strategy:Soybean July NCDEX: Buy at 3680-3670 TP 3800/3900 SL 3550

RM Seed July contract delivery futures at the NCDEX platform are hovering around Rs. 3940/quintal as on June 14, 2019. Prices have started falling after taking support around Rs. 3715-3720 levels in the previous month. At present, prices are trading between the monthly 8,13EMA levels (3890-3960), trading above the weekly and daily EMA levels. Indicators are at neutral zone. Overall commodity is expected to move higher and we recommend building long positions from lower levels.Strategy:RM Seed July NCDEX: Buy at 3900-3880 TP 4060 SL 3780


COMMODITIES

MCX CRUDE- PRICE, VOLUME & OPEN INTEREST MCX NATURAL GAS – PRICE, VOLUME & OPEN INTEREST

CALENDAR SPREAD NYMEX - CRUDE OIL CALENDAR SPREAD NYMEX – NATURAL GAS

NEWS DIGEST

• Guar seed prices fell by Rs. 11 to Rs. 4,255 per 10 quintal in futures trade on Friday amid off-loading of exposure by investors in sync with a weak trend in the physical markets. Similarly, the rates for August contracts moved down by Rs. 10.5 or 0.24% to Rs. 4,318 per 10.

• Zinc prices eased 0.05% to Rs. 203.70 per kg in futures trade on Friday as speculators cut down positions, taking weak cues from the spot market. On Multi Commodity Exchange, zinc for delivery in current month declined by Rs. 10 or 0.05% to Rs. 203.70 per kg in a business turnover of 4,666 lots.

• The outlook for crude oil demand growth in 2019 has dimmed due to worsening prospects for world trade, the International Energy Agency (IEA) said on Friday, although stimulus packages and developing countries should boost growth going into 2020. The Paris-based IEA which coordinates the energy policies of industrial nations revised down its 2019 demand growth estimate by 100,000 barrels to 1.2 million barrels per day (bpd) but said it would climb to 1.4 million bpd for 2020.

• Gold prices climbed in futures trade on Friday in the light of positive global trend while a softer rupee and weakness in riskier equities strengthened the demand of the safe-haven metal. In international markets, gold prices rose, moving closer to their 14-month high hit last week, as trade and political turmoil along with US interest rate cut expectations propped up the precious metal.

WEEKLY COMMENTARY

• Gold caught some aggressive bids on Wednesday and built on the previous session’s goodish rebound from over one-week lows. Fears of a further escalation in the US-China trade tensions provided a strong boost to the precious metal’s relative safe-haven status and turned out to be one of the key factors behind a follow-through up-move on Wednesday. The US President Donald Trump said on Tuesday that he would further raise tariffs on Chinese imports if he cannot make progress in talks with his Chinese counterpart at the G20 summit later this month.

• Malaysian palm oil futures rose for a second straight session on Friday tracking firmer US commodity markets overnight. However, the vegetable oil was marginally down for the week, in what could be its second consecutive weekly drop. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.85pc at 2,025 ringgit ($485.96) per tonne. Soybeans advanced in Chicago as weather worries threatened to curb production.

• Castor futures have dropped by 5.6% in past one week and it is extending losses for the third consecutive week on expectation that the exports of castor derivatives – meal and oil – may slowdown in coming months due to higher prices coupled with the expectation of improvement of production in the next season.

• Cotton futures too have come under pressure and have dropped by 0.9% last week as sowing is progressing in northern India. Increasing imports and lower exports in last couple of months is also keeping the prices under control. International prices have come down by 15% from 79 to 65 cents in the past one month due to US and China trade war. In tandem, prices in the Indian market have also reduced marginally by 2%.

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

31-May 2-Jun 4-Jun 6-Jun 8-Jun 10-Jun 12-Jun 14-Jun

$/B

BL

-0.01

-0.005

0

0.005

0.01

0.015

29-May 31-May 2-Jun 4-Jun 6-Jun 8-Jun 10-Jun 12-Jun

$/M

MB

tu

3500

3600

3700

3800

3900

4000

4100

0

50000

100000

150000

200000

250000

300000

350000

400000

30-May 31-May 3-Jun 4-Jun 5-Jun 6-Jun 7-Jun 10-Jun 11-Jun 12-Jun 13-Jun

Volume Open Interest Price (INR/Bbl)

150

155

160

165

170

175

180

0

10000

20000

30000

40000

50000

60000

30-May 3-Jun 5-Jun 7-Jun 11-Jun 13-Jun

Open Interest Volume Price (INR/MMBTU)


COMMODITIES

PRICES OF METALS IN LME/ COMEX/ NYMEX (IN US $)

Commodity Exchange Contract 07-Jun 14-Jun % change

Aluminium LME 3M 1760.50 1786.00 1.45%

Copper LME 3M 5792.50 5863.50 1.23%

Lead LME 3M 1840.50 1892.50 2.83%

Nickel LME 3M 11620.00 11845.00 1.94%

Zinc LME 3M 2485.00 2476.00 -0.36%

Gold CME Aug 1344.90 1346.00 0.08%

Silver CME July 14.28 14.28 0.00%

WTI Crude oil CME June 54.04 52.20 -3.40%

Natural Gas CME June 2.34 2.33 -0.47%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 07-Jun 14-Jun % change

Soybean CBOT July 869.25 901.50 3.71%

Soy oil CBOT July 27.32 28.02 2.56%

CPO BMD Aug 2027.00 2027.00 0.00%

Cotton ICE July 66.12 66.86 1.12%

FUTURE PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONS)

Commodity Previous week This week Change % Change

Copper 211350 252425 41075 19.43%

Zinc 101300 100625 -675 -0.67%

Aluminium 1105750 1064625 -41125 -3.72%

Lead 67300 67950 650 0.97%

Nickel 163896 163122 -774 -0.47%

SHANGHAI WAREHOUSE STOCKS (IN TONS)*


Copper 145626 139556 -6070 -4.17%

Zinc 60704 79945 19241 31.70%

Aluminium 476617 451050 -25567 -5.36%

*Until Wednesday, (Chinese market was closed last week)

GLOBAL STOCK POSITION (IN TONS)

COMEX WAREHOUSE STOCKS (IN TONS)


Copper 31825 31648 -177 -0.56%

Silver - White metal still holds the shine

Global silver market was under pressure in the month of May extending the losses since the start of current year 2019. Although the prices are showing some recovering as the trade war concerns are getting vigorous and US has recently opened a new trade war front with Mexico. The percentage change in prices as per May’s last trading session at COMEX was 3% lower wherein the rupee grew stronger resulting in limited fall by 2% at MCX. US President Trump had proposed to impart 5% import duty on Mexico until the border issue is resolved by Mexican government. Once implemented the import duty will increase by 5% every month till October, topping out at 25%. The current trade tiff between US & Mexico would impair trade as US is Mexico’s top export partner and had around $344.9 Bn worth of exports in 2018.

The silver prices made a high of $14.99 at COMEX during May and closed at the lower levels of $14.567. Taking the cues from International market, silver’s prices at MCX made a high of Rs. 37762 and closed down at Rs. 36449. The prices at MCX futures since the start of this year are already down by 10%. The major highlight during the month was US–China trade talks which brought positive hopes among the global markets. Initially, US raised tariffs to 25% on $200 Bn in Chinese imports but USTR was understood to have said the rate would remain at 10% if the goods left ports by May 10 and would enter the US by June. Thus, continued concern regarding escalating trade war and recession fears with US bond yields falling at 20 month low negatively impacted silver prices which are a precious as well as an industrial metal. US 10 Yr bond yields are mostly trading below US 3M bond yields following remarks from St. Louis Federal Reserve President James Bullard who said a US rate cut may be “warranted soon” because of global trade tensions and weak US inflation. In the past times as well it has been seen that lower bond yields have brought downtrend in risky assets and investors generally tend to shift towards safe heaven instruments like – Gold and Silver. Also the stoking manufacturing PMIs of May month from the global countries pushed the global markets in lower state of health. The PMI numbers from China came at 50.2 which were above the expectation of 50 but remained unchanged from prior month. Similarly, UK manufacturing PMI fell to 49.4 which in prior month were 53.1. Similarly, Spain, France & Germany also witnessed a setback in their PMIs.

Separately, Gold-Silver ratio is also trading at multi year high of 89 resulted by recovering gold prices and hence it could be implied that silver is undervalued relative to gold. Thus, silver prices have a bright way ahead in upcoming month and the positive momentum would continue.

-19.20%

-15.49%

-8.96%

-8.22%

-8.01%

-7.47%

-4.70%

-2.79%

-2.78%

-2.47%

-2.31%

-2.05%

-2.04%

-1.47%

0.60%

1.08%

2.06%

2.38%

2.68%

3.26%

3.97%

5.48%

8.23%

10.76%

24.77%

-25.00%-20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Mentha Oil

Crude Oil

Copper

Lead

Zinc

Aluminum

Natural Gas

Barley

CPO

Cotton

Nickel

Guar Gum

Silver

Guar Seed

Soybean

Gold

Soy Oil

Dhaniya

Jeera

Castor Seed

Wheat

RM Seed

Turmeric

Cotton Seed Oil Cake

Cardamom


COMMODITIES

USD/INR

USDINR is trading at 69.89. During the week, it made a high of 69.93 and low of 69.38. The RSI is at 48.18. Moving average of 32 is at 70.41 and 55 is at 70.43. The trend is looking positive for the week. Hence, we recommend buying at 69.70-69.60 TP 70.40 SL 69.20

EUR/INR

EURINR is trading at 78.60. During the week, it made a high of 78.78 and low of 78.26. The RSI is trading at 46.94. Moving average of 32 is at 78.60 and 55 is at 80.32. The trend is looking sideways for the week. Hence, we recommend selling at 79.00-79.20 TP 78.00 SL 79.50.

GBP/INR

GBPINR is trading at 88.22. During the week, it made a high of 88.49 and low of 87.90. The RSI is trading at 39.60. Moving average of 32 is at 90.64 and 55 is at 91.17. The trend is looking negative for the week. Hence, we recommend selling at 88.60-88.70 TP 87.50 SL 89.00.

JPY/INR

JPYINR is trading at 64.49. During the week, it made a high of 64.52 and low of 63.79. The RSI is at 57.90. Moving average of 32 is at 63.41 and 55 is at 63.25. The trend is looking positive for the week. Hence, we recommend buying at 63.30-63.10 TP 64.50 SL 62.87.

TECHNICAL RECOMMENDATIONMARKET STANCE

Rupee closed sharply weaker at 69.80 after hitting day high of 69.85 and day low of 69.51. Today, the pair broke the trading range held for the past few sessions favoring dollar. Sensex was down 289 points at 39,452 while Nifty was down 90 points at 11,823. Equities extended losses sharply in late trade amid source-based news that India may impose retaliatory tariffs on 29 US products. India’s May WPI inflation came at 2.45% against 3.07% MoM which is at the lowest level since July 2017. Food inflation at 5.1%, primary articles inflation at 6.16% and fuel & power inflation at 0.98% MoM. Now that we are done with the general elections, the market will focus on Union budget, monsoon progression, companies’ performance, crude oil, global news and events. The Union Budget for 2019-20 will provide the roadmap for banking reforms including consolidation of the state-owned lenders. Budget is scheduled to be presented on July 5 by Finance Minister Nirmala Sitharaman on the backdrop of India’s economy hitting five-year low growth of 6.8% in 2018-19. The ongoing crisis in the NBFC sector and muted global cues are denting rupee sentiment. Investors to remain focused on fresh triggers in the upcoming union budget for further direction. Repo rate was cut by 25 basis points to 5.75% by the RBI in the recently concluded meet. Stance of monetary policy changed from neutral to accommodative. This means that RBI is open to cutting interest rates further. Summing it up USD/INR will be driven by the Union budget, crude oil prices and FIIs flows. In all likelihood there may be some significant outflows from the FIIs in the near term considering our macro economy concerns. Rupee may test 70 levels in the coming week.

NEWS FLOWS OF LAST WEEK

• US and Mexico struck a migration deal late last week to avert a tariff war.

• Group of 20 finance leaders said that trade and geopolitical tensions have “intensified” raising risks to improving global growth.

• US nonfarm payrolls increased by 75,000 jobs last month, much lower than the 185,000 additions estimated.

• President Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with Chinese President Xi Jinping at the G20 summit.

• Euro took a hit after Trump said he was considering sanctions over Russia’s Nord Stream 2 natural gas pipeline project and warned Germany against being dependent on Russia for energy.

• India’s CPI (YoY) for May stood at 3.05% against 3.01% forecasted.

• Investor focus turned to next week’s Federal Reserve meeting for cues on a possible interest rate cut in light of rising risks to trade and global growth.

• FOMC will use the June meeting to a hint of a rate cut, maybe as early as in July.

• RBI to infuse Rs. 12,500 crore into the financial system through bond purchases on June 20.

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 69.47 69.85 69.35 69.80

EURINR 78.58 78.65 78.36 78.60

GBPINR 88.36 88.37 88.04 88.22

JPYINR 64.04 64.53 63.93 64.51


CURRENCY

ECONOMIC GAUGE FOR THE NEXT WEEK

Date Local Time Country Indicator Name Period Poll Actual Prior Unit

13 Jun 17:00 India Trade Balance-RBI Q1 2019 -49.5 Billion USD

13 Jun 17:00 India C/A Bal. $ Q1 2019 -16.9 Billion USD

13 Jun 17:00 India Balance Payments $ Q1 2019 -4.3 Billion USD

13 Jun 17:00 India Current Account/GDP (Q) Q1 2019 -2.5 Percent

10 Jun India Trade Deficit Govt -USD May 2019 15.84 15.36 15.33 Billion USD

10 Jun India Imports - USD May 2019 45.35 41.4 Billion USD

10 Jun India Exports - USD May 2019 29.99 26.07 Billion USD

19 Jun 20:00 United States EIA Weekly Crude Stocks W 14 Jun 2.206 Million Barrel

19 Jun 20:00 United States EIA Weekly Dist. Stocks W 14 Jun -1 Million Barrel

19 Jun 20:00 United States EIA Weekly Gasoline Stk W 14 Jun 0.764 Million Barrel

20 Jun 18:00 United States Current Account Q1 2019 -124.2 -134.4 USD

20 Jun 18:00 United States Initial Jobless Claims W 15 Jun 220 222 Thousand Person

20 Jun 18:00 United States Jobless Claims 4-Wk Avg W 15 Jun 217.8 Thousand Person

KARVY IN MEDIA COVERAGE


EVENTS



EVENTS


• BUSINESS STANDARD

• ECONOMIC TIMES

• BUSINESSLINE

• INDIA TODAY

• DAINIK JAGRAN

• RASHTRIYA SAHARA

• PTI

• ANI

• INVESTMENTGURU INDIA

• INDO-ASIA NEWS

• WEBINDIA

• PUNJAB NEWS EXPRESS

• HINDUSTAN TIMES

• BT NEWS

• BUSINESSNEWS THIS WEEK

• BUSINESS FORTNIGHT

• NEWSPRESS RELEASE

• SAMACHAR LIVE

• THE FINAPOLIS

• PRABHAT KHABAR

• BULLETIN TODAY

• DIGITAL TERMINAL

• FINANCIAL EXPRESS

• INTERNATIONAL BUSINESS TIMES

• AARYAVRAT KRANTI

• BUSINESS TODAY

• SUPERFINE NEWS LTD

• TIMES NOW

AND ALSO IN


EVENTS

www.karvyonline.com

1800 419 8283

[email protected]

Reg. Office

Karvy Millennium, Plot No.31, Financial District,

Gachibowli, Hyderabad-500 032.

Investor Grievance Cell Email: igksblsb@karvy. com, SEBI Regd No: INZ000172733, NSE (CM/FNO/CDS) Membership No. 07701 ,

BSE (CM/FNO/CDS) Membership No.: 917, MSE (CM/FNO/CDS) Membership No.: 31, NSDL and CDSL DP SEBI Regd No.: IN-DP-175-2015, PMS SEBI Regd No.: INP000001512.

Date post:	18-Apr-2020
Category:	Documents
Upload:	others
View:	2 times
Download:	0 times

RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue041.pdf ·...

Documents