ISSUE: 063
16TH NOVEMBER, 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.
The key reason behind why Public Sector Banks lost to Private Banks at a faster pacePublic sector banks witnessed bouts of capital infusion over the last 5 years by the Centre. However, the PSBs are lagging behind the private banks in many key parameters even after multiple capital infusion bouts by the government. If we look back into history, there are many factors to which the PSBs lost to the private banks at a faster pace. In terms of total outstanding credit, the PSBs have to settle down to 46.5% in FY 19 which was 60% in FY14. Similarly, in terms of new lending, private banks excelled with 75% sidelining the PSBs. Of worst, PSBs lost the traction in deposit collection with the private banks collecting double the value in deposits if we see the last two years. We all know that the banking sector needs low-cost deposits to improve their credit off-take to run their concerns into profitability and the same applies to PSBs after witnessing a series of loss years. However, the process of the Finance Ministry evaluating the PSBs is a debatable point rather than setting them right on the track of profitability.
The Key Performance Indicators (KPIs) proposed recently to the PSBs can be categorized into three types. The first one includes gauging the total credit given to infrastructure, agriculture, housing, MSMEs, Start-Up India Stand Up India and another stimulus like welfare or charitable causes. However, it’s a proven fact that directing the credit based on quantitative targets may result in lending to the sub-prime borrowers keeping aside the due diligence in risk assessment. Even the recent example includes the MUDRA loans that had accumulated up to Rs. 16000 crore NPA by March 2019 on which the PSBs have strong bets. However, It would be unwise to commit to a second loan binge while the banks are still in the process of writing off the legacy NPAs. The second set of KPIs includes the PSBs taking responsibility for social outcomes of providing direct benefit transfers, women’s empowerment, financial inclusion of the weaker sections and CSR. This may hurt the financial health of the PSBs as these are the lending decisions taken by the government on social objectives on behalf of the PSBs. On the third set, the government is keen on direct lending to MSMEs by PSBs than NBFCs even though the latter was proved more efficient on loan recovery.
Contemplating the above, assigning region-wise targets to the PSBs may dampen the very idea of PSB reform by dictating the way of business doing to the banks instead of giving the progressive requirements of the evaluation. The government should have kept the KPI terms for NPA reduction, loan recoveries, return on capital and on loan growth, instead of terms for whom to lend which might have resulted in an efficient economy rather than an economy that needs stimulus.
CONTENTSEquity 1-6
Derivatives 7-8
Commodity 9-12
Currency 13-15
TeamDr. Ravi Singh
Syed Hasan Jafar
M V Narasinga Rao
Srinivas Krishnan Bobba
Amit Samar
Osho Krishan
Sundeep Sarda
Ranjit Deb Jana
Vivek Ranjan Misra
Sachin Mittal
Rahul Pandey
Sharath Jutur
Thomas V. Abraham
Veeresh Hiremath
Siddhesh Ghare
Arpit Chandna
Ravi Pandey
Bharat Sunnam
Ramesh Chenchala
Kushal Asthana
Vinod. J
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.
- DR. RAVI SINGHHead-Technical & Derivatives Research
EQUITY
Economy• Consumer spending declines for the first time in 4 decades in 2017-18, according to Business
Standard which cited a yet to be reported government survey. The survey in question was carried out during the period between July 2017 and June 2018. It found that spending in rural India went down by 8.8% for the period while the corresponding fall for urban India stood at 2% over a 6-year span.
• As part of its efforts to improve compliance, the government is set to lower penalties under the Companies Act while offering concessions to startups, smaller entities and farmer producer companies. The lower penalties—half of that levied on larger companies-—for startups, smaller entities, single-person companies and farmer producer organizations. The move will come as a big relief not just for India Inc but for other entities, which together make up for a majority of the companies registered in the country.
Agriculture• The Consumer Affairs Ministry has recommended removal of quantitative restrictions on import
of pulses to preempt any price rise because of low production, a senior official said. This year, the government has allowed 400,000 tonnes of tur dal import and the window closed on 15th Novemeber. The import window for urad and moong closed on October 31.
• On the directives of Chief Minister Capt. Amarinder Singh, the Punjab government has decided to pay
• Rs. 2,500 per acre as compensation to those small and marginal farmers, who have not burnt paddy straw. Farmers cultivating non-basmati paddy and owning land up to 5 acre would get Rs. 2500 per acre compensation for not burning the paddy residue. Further, the beneficiary of this compensation should be the farmer who owns up to 5 acres of land in his name, his wife and children under 18 years of age.
Banking & Finance• The government has so far mopped up Rs. 6 lakh crore or less than 50% of the total tax collection
target of Rs. 13.35 lakh crore for the current fiscal, a senior official said. Refunds due to the tax payers are done swiftly and refunds have gone up by 20% over previous year.
• Finance Secretary Rajiv Kumar on Monday said the government is in the process of approving Rs. 20,000-crore of lifeline to the fund-starved NBFCs under the partial credit guarantee scheme announced in the budget. This is part of the budget proposal where partial credit guarantee scheme worth Rs. 1 lakh crore under which public sector banks would buy high-rated pooled assets of financially sound NBFCs, including housing finance companies, amounting to Rs. 1 lakh crore this year under which government will provide a one-time six months partial credit guarantee to public sector banks for first loss of up to 10%.
• To safeguard the interest of workers in formal sector, particularly working class, the Centre is planning to introduce ‘One Nation, One Pay Day’ system, Labour Minister Santosh Gangwar said.
Auto • After electric buses, Chinese automaker BYD wants to sell electric cargo vehicles in India
• At a time when mainstream carmakers slow down on investments in the country, Chinese companies may save the blushes for the Indian auto industry which, till recently, was considered one of the fastest growing markets in the world. At least half-a-dozen Chinese vehicle makers are expected to pump in about $5 Bn over the next 3-5 years along with their vendor-partners to make inroads into the Indian market as their local market staggers.
• MG Motor India will bring in an affordable electric vehicle in three to four years as it looks to gain leadership in the country’s EV market space.
• Global wholesales of all Tata Motors’ commercial vehicles and Tata Daewoo range last month stood at 28,478 units, down 36% from 44,380 units a year ago, the company said in a statement. The company’s global sales of all passenger vehicles were at 60,630 units, down 7% from 65,217 units in October 2018.
Power & Oil• In an exchange filing, CESC said that in continuation of its intimation dated 12th October, 2018,
informing shareholders that the scheme was made effective from 1st October, 2017, except demerger of the generation undertaking of the company into Haldia Energy Ltd, a wholly-owned CESC subsidiary.
• CG Power to put its Worli Head Office up for sale. The company, which is dealing with muted cash flows and huge debt, will monetize assets like head office building ‘CG House’ and is also working with lenders to resolve its debt issues after nine of its fourteen lenders, constituting 88% of total outstanding credit facilities of the company by value, signed an Inter Creditor Agreement (ICA).
• India’s electricity demand fell 13% in October led by a sharp reduction in offtake from the industrialized states like Gujarat & Maharashtra, which may indicate a deepening economic slowdown although officials said this was just an aberration. Electricity demand during October this year was down to 98 billion units as against 113 billion units in the same month last year, data available with the Central Electricity Authority (CEA) said. This is the third consecutive month of low power demand which has slowed since August. However, government officials attributed it to late rains and favorable weather conditions.
Steel• The Supreme Court has set aside the NCLAT judgment in Essar Steel case paving the way for
distribution of claims as decided by the Committee of Creditors. Upholding the rights of lenders in the Essar Steel insolvency case, the Supreme Court has held that the ultimate discretion of distribution of claims lies with the Committee of Creditors.
• US initiates new anti dumping countervailing probe against Indian forged steel fittings. According to US department of Commerce, there are 45 subsidy programmes alleged for India, including allegations that the Government of India provides export subsidies, as well as subsidized financing, land, steel, and other raw materials.
NEWS
INTERNATIONAL NEWS
• Chinese technology giant Alibaba confirmed on 15th November its plans to list on the Hong Kong stock exchange, in an initial public listing aiming to raise up to $13.8 Bn.
• By the end of 2022, Mercedes-Benz Cars plans to save more than 1 Bn Euro in personnel costs. To this end, it is set to slash jobs. Daimler, which employs around 304,000 people worldwide, did not specify how many jobs would be slashed overall but said 10% of management positions would be affected.
• The Chinese Commerce Ministry’s remarks showed a sizeable distance still separates the Washington and Beijing dispute Trump’s announcement last month that they had reached a “phase one” deal. Beijing and Washington have been embroiled in an 18-month trade war which has weighed on the global economy, and two sides have slapped punitive tariffs on hundreds.
TRENDSHEETSYMBOL CMP S2 S1 R1 R2 TREND
SENSEX 40356.60 39721 40039 40662 40968 Up
NIFTY 11895.40 11720 11807 11978 12062 Up
NIFTYBANK 31008.40 29984 30496 31363 31718 Up
YESBANK 68.70 62 65 74 79 Up
ICICIBANK 499.85 471 486 512 524 Up
SBIN 321.90 291 307 331 339 Up
RELIANCE 1470.85 1396 1433 1498 1524 Up
BHARTIARTL 393.05 332 363 411 429 Up
HDFCBANK 1277.90 1237 1257 1292 1306 Up
TCS 2174.45 2038 2106 2227 2279 Up
INDUSINDBK 1359.00 1272 1316 1432 1506 Up
MARUTI 7147.20 6908 7028 7313 7478 Up
INFY 703.90 676 690 715 727 Up
FORTHCOMING EVENTSCOMPANY NAME EVENT EX-DATE
Exide Industries Interim Dividend - Rs. - 1.50 18 Nov 2019
Gillette India Ltd. Final Dividend – Rs. 25.00 18 Nov 2019
Indiabulls Housing Finance Interim Dividend - Rs. 7.00 18 Nov 2019
CARE Ratings Interim Dividend – Rs. 9.00 19 Nov 2019
P&G Hygiene and Health Care Final Dividend – Rs. 48.00 19 Nov 2019
Siemens India Ltd. Q2 FY20 Results 19 Nov 2019
Minda Industries Ltd. AGM 19 Nov 2019
Bharat Forge Ltd. Interim Dividend – Rs. 1.50 21 Nov 2019
Dr. Lal Pathlabs Ltd. Interim Dividend - Rs. 6.00 20 Nov 2019
Nilkamal Interim Dividend - Rs. 5.00 21 Nov 2019
Amara Raja Batteries Ltd. Interim Dividend – Rs. 6.00 21 Nov 2019
CRISIL Interim Dividend – Rs. 7.00 21 Nov 2019
Info Edge (India) Ltd. Interim Dividend – Rs. – 2.50 21 Nov 2019
MRF Ltd. Interim Dividend – Rs. – 3.00 21 Nov 2019
Page Industries Ltd. Interim Dividend – Rs. – 52.00 21 Nov 2019
Tata Motors EGM 22 Nov 2019
KSTREET - 16TH NOVEMBER, 2019 1
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
-1.8
-1.6
-1.4
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
Nift
y
Sens
ex
BSE
Mid
cap
BSE
Smal
lcap
Nift
y N
ext
50
Nift
y M
idca
p 10
0
-7.0
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
Nift
y A
uto
Nift
y Ba
nk
Nift
y Se
rvic
es S
ecto
r
Nift
y Ph
arm
a
Nift
y IT
Nift
y M
etal
Nift
y En
ergy
Nift
y In
dia
Con
sum
ptio
n
Nift
y Re
alty
Nift
y FM
CG
-6.0
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
Nas
daq
Dow
Jon
es
S&P
500
Nik
kei
Han
g Se
ng
Shan
ghai
Com
p
FTSE
100
CA
C 4
0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
EDEL
WEI
SS F
INA
NC
IAL
SERV
ICES
AU
SM
ALL
FIN
AN
CE
BAN
K
LTD
IND
IABU
LLS
VEN
TURE
S LT
D
AM
ARA
RA
JA B
ATT
ERIE
S LT
D
CH
OLA
MA
ND
ALA
M
INV
ESTM
ENT
AN
D
NA
TIO
NA
L A
LUM
INIU
M C
O
LTD
RELI
AN
CE
POW
ER L
TD
AD
AN
I PO
WER
LTD
RELI
AN
CE
INFR
AST
RUC
TURE
LTD
RELI
AN
CE
CA
PITA
L LT
D
-14.0
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
BHA
RTI A
IRTE
L LT
D
ICIC
I BA
NK
LTD
YES
BAN
K L
TD
BAJA
J FI
NSE
RV L
TD
KO
TAK
MA
HIN
DRA
BA
NK
LT
D
AD
AN
I PO
RTS
AN
D
SPEC
IAL
ECO
N
UPL
LTD
HIN
DA
LCO
IN
DU
STRI
ES
LTD
VED
AN
TA L
TD
IND
IABU
LLS
HO
USI
NG
FI
NA
NC
E L
-1200.00
-1000.00
-800.00
-600.00
-400.00
-200.00
0.00
200.00
400.00
600.00
800.00
11-11-19 13-11-19 14-11-19 15-11-19
FII/FPI DII
KSTREET - 16TH NOVEMBER, 2019 2
RELATIVE PERFORMANCE
% OF SHARE HOLDING
in Rs.Mn ACTUAL ESTIMATE
YE Mar FY19 FY20E FY21
REVENUE 22921 26476 31168
EBITDA 3243 4030 4839
EBITDA(%) 14.1% 15.2% 15.5%
PAT 1754 2566 3166
EPS(Rs.) 7.1 10.3 12.8
RoE (%) 18.8% 21.2% 22.0%
PE (x) 54.5 52.7 42.7
BEAT THE STREET - FUNDAMENTAL ANALYSIS
Relaxo Footwears Ltd. CMP Rs.545Target Price Rs.638Upside 17%
VALUE PARAMETERSFace Value (Rs.) 1.0
52 Week High/Low (Rs.) 629/343.5
M.Cap (Rs. Bn/US $mn) 135.3/1.88
EPS (Rs.) 12.8
P/E Ratio (times) (FY20E) 42.7
Dividend Yield (%) 0.16%
Stock Exchange BSE, NSE
EQUITY
Investment Rationale
• With growth rates and return ratios better than the market leader (BATA),
we believe the company is in a strong position to further strengthen its
place as a dominant player in the footwear industry and close in on the
revenue scale and size of that of BATA.
• Q1 Result update: A combination of premiumization and lower cost has
aided the company to post a revenue growth of 14.4% to Rs. 6217.7 Mn,
and improve gross margins by 189 bps to 46.7% on YoY basis. The efforts
to penetrate into the urban market through brands such as Sparx, Flite and
Bahamas are paying off. PAT stood at Rs. 743 Mn, a growth of 78% as the
company adopted the new tax rate of 25.17%, and the full impact of the
same for H1 has been recognized in Q2FY20.
• Relaxo continues to be underpenetrated in the West and South of India
despite having 650 distributors and over 35000 retailers. Select products
are sold in this region and the company is looking to extend its product
offerings gradually in these areas.
• We largely retain our estimates but benign raw material prices and the
move towards the lower tax rates will significantly boost bottom line. This
results in EPS upgrade by ~15 for FY20E and ~9% for FY21E.
Valuation
We believe Relaxo will be the best performer in the listed footwear
space. We value the stock at P/E of 50x (5 year average +1sd) on
FY21E EPS of Rs. 12.8, and recommend “BUY”, with a target price of
Rs. 638. Risks to the call include slowdown having a deeper impact
on domestic consumption and rise in raw material prices.
50
60
70
80
90
100
110
120
130
140
150
Nov
-18
Dec
-18
Jan-
19
Feb-
19
Mar
-19
Apr
-19
May
-19
Jun-
19
Jul-
19
Aug
-19
Sep-
19
Oct
-19
Relaxo Footwears Ltd. Sensex
71.0
2.8
6.3
19.9
Promoters
FII
DII
Others
KSTREET - 16TH NOVEMBER, 2019 3
BEAT THE STREET - FUNDAMENTAL ANALYSIS
Shriram Transport Finance Company Ltd. CMP Rs.1128
Target Price Rs.1332Upside 18%
VALUE PARAMETERSFace Value (Rs.) 10.0
52 Week High/Low (Rs.) 1297/909
M.Cap (Rs. Bn/US $mn) 256.0/3.6
EPS (Rs.) 949
P/E Ratio (times) (FY20E) 1.2
Dividend Yield (%) 1.0%
Stock Exchange NSE/BSE
EQUITY
RELATIVE PERFORMANCE
Investment Rationale• Q2FY20 Highlights: AUM growth moderated to 3.6% on account of 13.8% decline
in new CV sales but supported by 6% growth in pre-owned CV. Interest income grew by 5% off-set by 11.2% growth in interest expense leading to flattish NIM. PAT grew by 25.5% on account of lower tax rate adopted by the company.
• FY20 new CV sales outlook is neutral on account of expected pre-buying ahead of BS-VI implementation. We expect AUM to grow at a CAGR of 12% over FY19-21E supported by improved economic environment and uptick in rural consumption.
• Increased network expansion by adding 150-250 branches annually would support AUM growth in the medium term.
• Post adoption of 90 dpd NPA provision norms from March 2018, there has been steadiness in credit cost in the range of 2-2.5%. Fresh quarterly provision is coming in the range of Rs. 5-7 Bn and credit cost averaging around 2.4%.
• Stable asset quality and credit cost would result in NIM growth translating to PAT growth. PAT is expected to grow at a CAGR of 15.3% over FY19-21E due to a) Moderation in provisioning amount b) Reduction in corporate tax rate from 34%
to 25.2% leading to improvement in ROAs from 2.5% in FY19 to 2.7% in FY21E.
ValuationDue to weak CV sales in H1FY20, management has revised downward AUM growth guidance from 15% to high single digit for FY20 which we believe is achievable on account of high share of pre-owned vehicles in asset mix aided by potential pre-buying ahead of implementation of BS-VI (from April 2020 onwards) as vehicle prices are expected to increase 10-12% post BS-VI. . Going forward, we expect AUM to grow at a CAGR of 12% supported by expanding network expansion and improved economic environment.
At CMP of Rs 1128, STFC is attractively priced trading at 1.2x FY21E BV and we initiate coverage on STFC with “BUY” recommendation and a target price of Rs. 1332 per share, which represents an upside potential of 18%. Key risks are subdued economic growth, continued de-growth in new CV sales, lack of pre-buying ahead of BS-VI implementation and
deteriorating asset quality
% OF SHARE HOLDING
in Rs.Mn ACTUAL ESTIMATE
YE Mar FY19 FY20 FY21
REVENUE 9,685 11,334 14,528
EBITDA 610 1,191 2,308
EBITDA(%) 6.3 10.5 15.9
PAT 116 415 1,240
EPS (Rs.) 1.3 4.6 13.5
RoE (%) 1.7 6.1 16.7
PE (x) 127 35.4 11.8
26.3%
62.4%4.2%
6.3%
0.7%
0.1%
Promoter
FII & FPI
MF/Bank
Public
Other Corporate bodyNRI/OCBs
50
60
70
80
90
100
110
120
Nov
-18
Dec
-18
Jan-
19
Feb-
19
Mar
-19
Apr
-19
May
-19
Jun-
19
Jul-
19
Aug
-19
Sep-
19
Oct
-19
Nov
-19
STFC Sensex
KSTREET - 16TH NOVEMBER, 2019 4
EQUITY
BEAT THE STREET - TECHNICAL ANALYSIS
Axis Bank Ltd
AXISBANK: The stock is a trader friendly stock with strong future potential. The stock has seen profit taking from the high of around 828 levels posted in early June 2019. The fall in the stock with supportive volume formation on daily charts has placed the stock to the low of 622 levels. Thereafter, the stock has bounced well and given price breakout with cluster of moving averages on daily charts. The above said breakout has seen supportive volume formation on daily charts. The price action in the stock suggests that the stock is well placed to take its up move. The immediate support is placed around 680 and below that is 600 levels whereas resistance is placed at 740 and above that are 800 levels. On technical setup, the 14 period RSI is pointing northward given positive crossover with signal line and trading comfortable above signal line. The parabolic SAR is trading well below the price action on weekly chart which indicates up move in the stock will remain intact in near term. Hence, we suggest buy in the stock on minor dip of around 700 levels with a stop loss placed below 615 levels for the target of 800 and 820 levels.
Berger Paints India Ltd
BERGERPAINT: The stock is in uptrend and making higher highs and higher lows on weekly charts. The stock has bounced well after taking support at 285- 290 levels. The bounce in the stock has seen supportive volume formation on daily charts. The stock is trading above all its major moving averages on daily charts and has taker minor dip in the previous week which placed the stock near its support where the stock has seen increase in volume which is enhancing our confidence in the stock. The price action in the stock suggests that the stock is well placed to take its up move. The immediate support is placed around 465 and below that is 420 levels whereas resistance is placed at 500 and above that at 550 levels. On technical setup, the 14 period RSI is pointing northward given positive crossover with signal line and trading comfortable above signal line. The parabolic SAR is trading well below the price action on weekly chart which indicates up move in the stock will remain intact in near term. Hence, we suggest buy in the stock on minor dip of around 480 levels with a stop loss placed below 420 levels for upside target of 540-560 levels.
STOCK AXISBANK
CMP 716.90
ACTION BUY
ENTRY 700
AVERAGE 660
STOP LOSS 615
TARGET 1 800
TARGET 2 820
TIME FRAME 3-4 MONTHS
STOCK BERGEPAINT
CMP 487.30
ACTION BUY
ENTRY 480
AVERAGE 450
STOP LOSS 420
TARGET 1 540
TARGET 2 560
TIME FRAME 3-4 MONTHS
KSTREET - 16TH NOVEMBER, 2019 5
EQUITY
Sentiment
Initiation 2560
Stop Loss 2720
Target 2350
Lot Size 200
Margin 92000
21-DEMA 2640
Open Interest Shares 3511400
Change in OI (%) 5.94
Cost of Carry (%) 7.28
SECTORAL SNIPPETS
NIFTY AUTO (8153.90) has underperformed the Nifty 50 index on week to week basis and ended the week on a muted note with slight downside of around 0.20%. There has no major change from the previous week as the index has made a doji candle on weekly chart. The index has seen correction after consecutive rallying for four weeks and still settled above the major moving averages on daily chart suggesting inherent strength in the index. The plunge in the price was being backed by increase in average traded volumes on the last trading day indicating profit booking in majority of the heavyweight counters. On weekly chart, the index has retraced over 50% of the previous week. However, confirmation for weakness is yet to be witnessed. On charts, the immediate support for the index is pegged around 8050-8070 levels which is the recent breakout levels sustaining above which the index may witness another round of rally while on the contrary, the resistance is pegged around 8450-8500 levels which is the recent swing high, followed by 8700-8800 zone which is the next crucial resistance levels for the index. On oscillator front, the index has witnessed sharp rally from the mean of the Bollinger (20, 2) to the upper band and is currently hovering near the same, at the same time the band is getting narrower indicating a higher probability of index to continue the consolidation movement in near future. This is further being supported by the 14 period RSI which is placed around 51-56 levels post a positive crossover on weekly chart suggesting further upside room in the counter. Going forward for the coming week, it is advisable to trade cautiously in the counter as stock specific action could be seen post earning season. Even it is advisable to always hedge the position and not to carry heavy leveraged positions.
NIFTY BANK (31008.40) outperformed the Nifty with a gain of 0.84% during the week passed by while the broader index Nifty lost marginally by 0.11%. During the last month, the index moved with a renewed buying and bounced off the 27568 levels. Technically, the index is trading with a bullish bias forming higher highs and higher lows as seen on the daily charts. However, the index currently may witness resistance around its previous swing resistance around 31205 levels above which it may navigate towards all-time high levels at 31712 levels. On the flip side, the index may trade with a bearish bias if it breaches 30338 levels. PSU banks rallied 1-9 percent on November 15 after the Supreme Court delivered its verdict in the Essar Steel case. SC has set aside the NCLAT judgement, saying the ultimate discretion on distribution of funds is with Committee of Creditors (CoC) which is completely favourable to lenders. The Committee of Creditors (COC) consists of banks. On the other hand, HDFC Bank, the country’s largest private sector lender, has joined the Rs 7 lakh crore market capitalisation (M-cap) league, making it only the third Indian company to do so after Mukesh Ambani’s Reliance Industries and Tata Consultancy Services. It is the first bank to achieve the feat. On the stock-specific front, FEDERALBNK and SBIN closed in green with gains of 2.50% and 2.22% respectively during the week while INDUSINDBK lost by 4.62% respectively. As indicated by the derivatives data, BankNifty may face resistance at 31500 levels followed by 32000 levels. For the week ahead, support for the index can be pegged at 30500 levels followeds by 30000 level.
NIFTYFINSE (14021) has outperformed to the Nifty 50 index on week to week basis and ended the week at its all time high levels with gains of over 1%. The price movement was being backed by increase in average traded volumes indicating strength in its surge. The major heavyweights from the index like HDFC twins and Bajaj twins have been the major contributor followed by rally in both the private and public sectors banks. On technical front, the index is in the cycle of higher highs and higher lows and has witnessed breakout on a strong note suggesting the strength in the current trend. On daily chart the index is placed above all its major moving averages and is expected to surge higher in the coming future. The immediate support is placed around the breakout levels of 13800-13850 levels followed by 13500 levels and any correction towards the same may be utilized as buying opportunity in the counter. While on the contrary the resistance can be seen around 14200 as per the price extension followed by 14450-14500 levels. On indicators front, the 14 period RSI is placed around 58-64 levels suggesting further upside room in the index. Even the index is being hovering near to the upper band of the Bollinger band (20, 2) from past few trading sessions indicating the intensity in the surge of prices. Going forward for the coming week, it is advisable to trade cautiously in the counter as stock specific action could be seen post earning season and majority of the stocks are trading at their life time highs and some profits booking might be seen in near term. Even it is advisable to always hedge the position and not to carry heavy leveraged positions.
NIFTYIT(15310.6) underperformed the Nifty with a loss of 0.47% during the week passed by while the broader index Nifty lost marginally by 0.11%. During the week, the index traded choppily and moved in the range of 15192 to 15471 levels. Technically, the index is trading with a bearish bias forming lower lows and lower highs as seen on the daily charts. On the news front, INFY is under pressure of late as reports of whistleblower complaints spooked investors. The board of software major Infosys was sent a second whistleblower letter, which accused CEO Salil Parekh of “eroding the company’s value systems” by incurring high and unnecessary travel costs. This is the second whistleblower letter that has become public, the first of which levelled more serious charges against Infosys’ top management, including fudging of accounts, and which set off a share price plunge and a series of internal and external probes. On the stock-specific front, TCS closed in green with gains of 1.95% during the week while INFIBEAM and TECHM lost by 4.51% and 2.57% respectively. Technically, the index may face resistance at 15640 levels followed by 15800 levels. For the week ahead, support for the index can be pegged at 15200 levels followed by 14850 levels.
KOTAK MAHINDRA BANK LTD: BUY KOTAKBANK (NOV FUTURE) | CMP: 1621.80 SECTOR: BANKING
KOTAKBANK is in structurally uptrend and making higher highs on daily charts. After posting all time high of around 1684 levels, the stock has taken the dip around 1541 levels. Thereafter, the stock has bounced well and bounce in the stock has seen supportive volume formation on daily charts. The historical price action in the stock reflects that any meaningful dip in the stock may attract market participants which help the stock to maintain its uptrend. Currently, the stock is trading above all its major moving averages on daily charts. On technical setup, the 14 period RSI is pointing northward given positive crossover with signal line and trading comfortable above signal line. The parabolic SAR is trading well below the price action which indicates up move in the stock will remain intact in near term. The immediate support is placed around 1600 and below that is 1570 levels whereas immediate resistance is placed at 1650 and above that at 1690 levels for near terms. Hence, we suggest Smart Traders to buy the stock for the target of 1720 levels with a stop loss placed at 1537 levels.
Sentiment
Initiation 1610
Stop Loss 1537
Target 1720
Lot Size 400
Margin 115000
21-DEMA 1592
Open Interest Shares 8310400
Change in OI (%) -4.45
Cost of Carry (%) -1.64
HERO MOTOCORP LTD: SELL HEROMOTOCO (NOV FUTURE) | CMP: 2549.80 SECTOR: AUTO
HEROMOTOCO has given price breakdown around 2580 levels and closed well below the same. The stock is trading under pressure after making swing high of 2720 levels and closed the week with a negative return of around 3.92%. The fall in the stock has seen supportive volume formation on daily charts which indicates weakness in the stock will remain intact in near term. Currently, the stock is trading near all its major moving average on daily charts. On technical setup, the 14 period RSI is pointing southward after given negative crossover with RSI line and trading comfortable below the same. The parabolic SAR has recently triggered sell signal on daily charts that reflect down trend in the stock will remain intact in near term. The recent development in the stock suggests that the stock is well placed to take its down move. Hence, we suggest sell in the stock around 2560 levels for the down side target of 2350 levels with a stop loss placed above 2720 levels.
KSTREET - 16TH NOVEMBER, 2019 6
WEEKLY VIEW OF THE MARKET
NIFTY (11895): Nifty has concluded the truncated and volatile week on a muted note with a cut of 10 basis points to shut shop at 11895. Up move on Thursday and Friday helped Nifty to regain its lost ground. On the global front, news flow on trade wars has moved the global asset classes while on the domestic front, growth and inflation numbers have impacted the market movements. Going forward, on the global front, US-China trade talks and US FOMC minutes shall steer the asset prices while on the domestic front, there are no major cues lined up. Hence, there is high probability that we shall move in line with global markets. Inflows from Institutional players and rupee movement shall also help in deciding the markets trajectory. Technically, Nifty after a 1000 points rally is trading in the broad range of 11800 to 12030 and the breakout of the same shall trigger next major short term move. For now, all technical indicators are still poised for the up move and does not hint any major trend reversal. Supports for the index may be assumed at 11800 levels followed by 11650-11700 levels while resistance may be assumed at 12050-12100 zone and above it at 12300 levels. Going forward, we expect Nifty to continue to stay in the range of 11700 to 12100 with positive bias.
DERIVATIVE STRATEGIES
DERIVATIVES
TYPE: LONG CALL SPREAD IN NIFTY
FIRST LEG BUY one lot of NIFTY 21 NOV 11900 CE @ 81
SECOND LEG SELL one lot of NIFTY 21 NOV 12000 CE @ 37
MAX PROFIT 4,200.00
STG OUTFLOW 3,300.00
BEP 11,944.00
MAX LOSS 3,300.00
RATIONALE INDEX expected to trade with Bullish bias in the near term.
TYPE: LONG CALL SPREAD IN BANKNIFTY
FIRST LEG BUY one lot of BANKNIFTY 21 NOV 31000 CE @ 310
SECOND LEG SELL one lot of BANKNIFTY 21 NOV 31500 CE @ 102
MAX PROFIT 5,840.00
STG OUTFLOW 4,160.00
BEP 31,208.00
MAX LOSS 4,160.00
RATIONALE INDEX expected to trade with Bullish bias in the near term.
TYPE: LONG PUT SPREAD IN AUROPHARMA
FIRST LEG BUY one lot of AUROPHARMA 28 NOV 410 PE @ 14
SECOND LEG SELL one lot of AUROPHARMA 28 NOV 380 PE @ 5
MAX PROFIT 21,000.00
STG OUTFLOW 9,000.00
BEP 401.00
MAX LOSS 9,000.00
RATIONALE The Stock is expected to trade with Bearish bias in the near term.
TYPE: LONG CALL SPREAD IN SBIN
FIRST LEG BUY one lot of SBIN 28 NOV 320 CE @ 11.60
SECOND LEG SELL one lot of SBIN 28 NOV 350 CE @ 2.20
MAX PROFIT 61,800.00
STG OUTFLOW 28,200.00
BEP 329.40
MAX LOSS 28,200.00
RATIONALE The Stock is expected to trade with Bullish bias in the near term.
-4000
6000
1170
0
1175
0
1180
0
1185
0
1190
0
1195
0
120
00
120
50
1210
0
1215
0
1220
0
-6000
-4000
-2000
0
2000
4000
6000
8000
3050
0.0
0
3060
0.0
0
3070
0.0
0
3080
0.0
0
3090
0.0
0
310
00
.00
3110
0.0
0
3120
0.0
0
3130
0.0
0
3140
0.0
0
3150
0.0
0
3160
0.0
0
3170
0.0
0
3180
0.0
0
3190
0.0
0
320
00
.00
-15000
-5000
5000
15000
25000
300
310
320
330
340
350
360
370
380
390
400
410
420
430
440
-40000
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
60000
300
305
310
315
320
325
330
335
340
345
350
355
360
7KSTREET - 16TH NOVEMBER, 2019
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
CENTURYTEX 416.05 6.28 5112250 89.50
ASHOKLEY 79.5 3.85 4828900 76.19
INFRATEL 227.15 4.05 2647400 59.65
BHARTIARTL 393.05 6.47 71046000 32.25
BALKRISIND 862.95 1.43 43776000 26.00
SBIN 321.9 1.87 8697600 23.08
BANKNIFTY OPTION OI CONCENTRATION CHANGE IN BANKNIFTY OPTION OI
TOP 6 SHORT CLOSURE
Stock Name LTP % Price Change Open Int % OI Change
BANKINDIA 69.35 4.36 19710000 -17.17
TATACHEM 639.15 1.20 2180700 -12.43
CUMMINSIND 563.6 1.20 1725700 -12.24
LUPIN 742.25 3.27 7796600 -9.92
BATAINDIA 1731.4 1.98 2318800 -8.19
EXIDEIND 190.2 1.96 10463100 -5.48
TOP 6 SHORT BUILD UP
Stock Name LTP % Price Change Open Int % OI Change
SIEMENS 1575.8 -4.41 2000350 28.11
IDEA 3.65 -2.67 700070000 22.86
SAIL 36.4 -5.94 89085300 18.68
RBLBANK 317.9 -1.85 13446300 18.10
APOLLOHOSP 1397.25 -1.51 1962500 17.94
NATIONALUM 42.15 -9.35 54564600 17.27
TOP 5 LONG CLOSURE
Stock Name LTP % Price Change Open Int % OI Change
UBL 1247.95 -0.59 1789200 -17.39
HEXAWARE 336 -0.83 1608000 -12.85
CASTROLIND 144.9 -0.86 4675000 -8.76
TATAELXSI 792.45 -2.29 1140000 -7.27
PIDILITIND 1316.65 -2.77 3541500 -6.31
TATASTEEL 394.5 -0.87 23793583 -6.00
NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI
0
10
30500 30600 30700 30800 30900 31000 31100 31200 31300 31400 31500
x 10
00
00
CALL PUT
30500 30600 30700 30800 30900 31000 31100 31200 31300 31400 31500
x 10
00
00
CALL PUT
0
10
20
30
11600 11700 11800 11900 12000 12100 12200 12300
x 10
00
00
CALL PUT
11600 11700 11800 11900 12000 12100 12200 12300
x 10
00
00
CALL PUT
-700
-600
-500
-400
-300
-200
-100
0
180
185
190
195
200
205
210
215
11/Nov 12/Nov 13/Nov 14/Nov 15/Nov
Tho
usan
ds
Index Fut. OI Index Fut. Net Buy
-600
-400
-200
0
200
400
600
1520
1530
1540
1550
1560
1570
1580
11/Nov 12/Nov 13/Nov 14/Nov 15/Nov
Tho
usan
ds
Stock Fut. OI Stock Fut. Net Buy
8KSTREET - 16TH NOVEMBER, 2019
COMMODITIES
BULLIONDuring the week ended on 15th November, precious metals market had witnessed a mixed trend wherein it started the week on a weaker note on follow-through selling. Positive development over the penultimate weekend regarding trade deal between the US and China pushed the other asset classes such as equity, bond and currencies thereby putting pressure on the safe haven i.e. gold. As a result, gold prices dropped to 3-month lows during the week. However, the market took a u-turn from Wednesday onwards on account of short covering. Further, market was supported by no concrete steps towards the US-China trade deal. Since there was delay in signing the trade deal, US President Donald Trump threatened to impose tariff on Chinese goods if the trade deal does not breakthrough. During the week, major economic releases CPI and PPI for the month of October came at 0.4% vs. 0.1% and 0.4% vs. -0.3% respectively. While presenting his testimony before the Joint Economic Committee of US Congress, the Fed chairman Jerome Powell said that the US central bank would hold on to further rate cut and also signaled that he would go for cut if the economy weakens. Chinese industrial production for the month of October recorded growth of 4.7% YoY against previous month’s growth of 5.8%.
METALSMetals traded on a mixed to negative note for the week ended on 15th November given the varying trade talks and a huge fall was capped after the rupee got depreciated considerably. As per China Passenger Car Association, retail sales of passenger vehicles in China was down in October by 6% from a year earlier to 1.87 million units. Individually, the retail sales of sedans, multi-purpose vehicles, sport utility vehicles and minivans stood at 1.81 million units in September. Sales of NEVs in China were down by 45.4% from a year ago to 66,000 units in October, as per the Industry sources. The overall auto market in China showed a weaker performance even in October. The passenger car sales amounted to 16.63 million units in the first 10 months of 2019, down 8.3% from the same period last year. At the South China Metals Summit, 2019 taking place at Shanghai, a private study group has estimated the fall in imports of copper scrap for the later half of the 2019 as Chinese government has imposed sanctions on imports. Alumina output at China stood at 5.86 million tons in October, with metallurgical-grade materials accounting for 5.61 million tons, as per a private group study. During the first 10 months of 2019, alumina output amounted to 57.6 million tons, down 0.95% from the same period a year earlier. Daily average production of metallurgical-grade alumina inched up 0.63% from a month ago to 181,000 tons. Copper production at China in October 2019 was up by 3.1% and 8.66% on a yearly basis making the prices to trade weaker. Of the 10 month period of 2019, production of copper cathode across China amounted to 7.34 million tonnes which is up 1.57% from 2018. Global refined production in China has increased in October due to the increased smelting activity which shall be a negative factor for the prices.
COTTONCotton traded mixed to higher tracking seasonal demand from China and Bangladesh. Emerging export enquires from China in line with improved price parity due to weakness in Indian currency helped prices to trade on positive bias. Moreover, gain in the prices were supported by the gathering pace of domestic buying from millers at prevailing rate. Frimness in ICE cotton futures also boosted positive sentiments in the market. ICE cotton futures traded on positive bias following supportive demand and supply estimates released by USDA in its monthly supply and demand estimation report for month of Nov. USDA trimmed the estimates of global production by 3 million bales from previous estimates to 121.94 million bales of 480 lb each due to reductions in output primarily in the US, Pakistan,
India and China. There are also smaller declines in the production estimates for Turkey and Turkmenistan. World trade is forecast to be 1.1 million bales higher from previous month with higher imports by Turkey, Pakistan and India more than offsetting a 200,000-bale decline in Indonesia. Higher exports are projected from Brazil, Malaysia, Benin, Greece, India and several smaller countries. World cotton export is estimated at 44.03 miilion bales against the previous month. With little change from the previous month in beginning stocks or consumption, world 2019/20 cotton ending stocks are projected nearly 3.0 million bales lower this month at 80.8 million bales, almost unchanged from previous year. However, the gains were capped on improvement in cotton crop harvesting in the US. According to USDA, 62% of the cotton crop has been harvested in the week to 10th November 2019 against 59% harvested in the same period a year ago. ICE cotton futures could move up further on renewed optimism over the ease of trade dispute between US and China.
SOYBEANSoybean futures traded down for most part of the week ended on 15th November due to improved supply across India. Soybean daily arrivals crossed the 8 lakh bags mark during the week due to better prices realization for farmers and stockiest. Prices remained under pressure due to increased supply amid limited buying in physical market. Tumbling demand of soymeal in international market due to widening spread of prices between domestic prices and international prices of meal also weighed on prices. Moreover, firmness in CBOT soybean futures traded range bound as prices recovered the early losses on optimism over ease of trade dispute between US and China. Buying of soybean by China has been ramped up in recent weeks as the two sides have moved closer to a deal. China bought more than 1.5 million metric tons in the final week of September and have continued to purchase the legume through October. The US agreed not to raise existing duties on $250 Bn of Chinese goods from 25% to 30% on 15th October. However, improved harvesting activities in US capped the major gains in prices. As per the crop progress report released by US about 85% of crop was harvested till 10th November against the 87% of prior year for corresponsing period. Meanwhile , USDA updated the supply and demand estimate for US trimmed the production slightly due to lower yield. The US soybean outlook is for slightly lower production, reduced crush, and higher ending stocks. Soybean production is forecast at 3.55 billion bushels, down less than 1 million on fractionally lower yields and unchanged harvested area. With reduced crush, soybean ending stocks are projected at 475 million bushels, up 15 million.
GUAROn NCDEX guar complex, futures witnessed sharp recovery during the week ended on 15th December 2019 tracking firm trend in the market tracking bullish fundamental outlook such as low arrivals recorded during the week. Stockiest and millers were buying at lower level due to improved demand in the market. Spot market also witnessed low arrivals during the week in major belts of Rajasthan. Sudden change in monsoon with hailstorm and heavy rainfall was observed in western Rajasthan during the week which is a positive update for the market. Guar gum prices were traded higher during the week as the industries exploring the new market such as Russia, South Africa and West Asia to export guar gum, after the volatility was seen in oil prices. In view of weaker production, millers and stockiest have improved buying activities which may keep guar prices higher in the near term. As per the data from the agriculture and processed food products export development authority, India guar gum export from Apr-June 2019 is 148812 MT, a fall by 16% YoY. Rajasthan government has released its first advanced estimates that showed total guar production for the year 2019-20 at 17.16 lakh tons, whereas the Gujarat first advance estimation showed 10.56 lakh tonnes of guar production in the year 2019-20.
TRENDSHEET
Commodities 8-Nov 15-Nov % Change 52 Week High% Change from 52
Week High52 Week Low
% Change from 52 Week Low
Comex Gold (S/oz) 1461.30 1471.80 0.7% 1553.20 -5.24% 1211.50 21.5%
Comex Silver (S.oz) 16.78 16.84 0.3% 19.54 -13.82% 13.99 20.4%
Nymex Crude Oil (S/bbl) 57.24 57.15 -0.2% 66.60 -14.19% 42.36 34.9%
Nymex Natural Gas ($/mmbtu) 2.79 2.65 -5.1% 4.86 -45.58% 2.03 30.5%
LME Copper 3 Month ($/t) 5924.00 5812.00 -1.9% 6565.00 -11.47% 5559.50 4.5%
LME Lead 3 Month ($/t) 2107.00 2017.00 -4.3% 2264.50 -10.93% 1779.00 13.4%
LME Zinc 3 Month ($/t) 2482.00 2380.00 -4.1% 2948.00 -19.27% 2203.50 8.0%
LME Nickel 3 Month ($/t) 16190.00 15150.00 -6.4% 18450.00 -17.89% 10530.00 43.9%
LME Aluminium 3 Month ($/t) 1807.50 1741.00 -3.7% 1983.00 -12.20% 1706.00 2.1%
CBOT Soybean (cents/bushel) 919.50 920.50 0.1% 945.50 -2.64% 780.50 17.9%
CBOT Soy Oil (cents/lb) 31.50 30.63 -2.8% 31.96 -4.16% 26.03 17.7%
CBOT Soy Meal ($/t) 304.90 306.30 0.5% 328.10 -6.64% 280.70 9.1%
ICE Coffee (cents/lb) 109.45 107.00 -2.2% 113.70 -5.89% 86.35 23.9%
ICE Cotton (cents/lb) 64.72 64.80 0.1% 80.93 -19.93% 56.19 15.3%
ICE Sugar (cents/lb) 12.57 12.79 1.8% 13.50 -5.26% 10.68 19.8%
CBOT Corn (cents/bushel) 377.25 372.75 -1.2% 464.25 -19.71% 335.50 11.1%
CBOT Wheat (cents/bushel) 510.25 505.25 -1.0% 558.00 -9.45% 416.25 21.4%
MCX Cardamom (Rs/kg) 2506.9 2483.7 -0.9% 4265.30 -41.77% 1410.10 76.14%
NCDEX Wheat (Rs/Quintal) 2131.0 2171.0 1.9% 2173.00 -0.09% 1770.00 22.66%
NCDEX Guar Seed (Rs/Quintal) 4104.0 4285.0 4.4% 4869.50 -12.00% 3731.00 14.85%
NCDEX Guar Gum (Rs/Quintal) 7751.0 7872.0 1.6% 10317.00 -23.70% 7002.00 12.43%
MCX Cotton (Rs/Bale) 19390.0 19140.0 -1.3% 22610.00 -15.35% 18910.00 1.22%
NCDEX Cocud (Rs/Quintal) 2294.5 2231.0 -2.8% 3698.00 -39.67% 1807.00 23.46%
MCX Mentha Oil (Rs/kg) 1224.3 1275.5 4.2% 1825.00 -30.11% 1176.00 8.46%
9KSTREET - 16TH NOVEMBER, 2019
COMMODITIES
TECHNICAL RECOMMENDATIONS
COMEX GOLD DECEMBER FUTURES
LME COPPER 3M FORWARDS
LME ZINC 3M FORWARDS
10KSTREET - 16TH NOVEMBER, 2019
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
• Gold prices fell on Friday as a White House official’s comments rekindled hopes of a US-China trade deal and boosted appetite for riskier assets but bullion was still on course for a weekly gain. Gold prices have gained more than 14% this year as the trade spat between the world’s biggest economies roiled financial markets, stoking fears of a global economic slowdown and prompting major central banks to reduce interest rates.
• Copper and other base metals prices headed for weekly falls on Friday as concerns that weakening global economic growth is curtailing demand outweighed comments by a US official that a trade deal with China was close. China’s October refined copper output rose 17.9% year-on-year to a record high of 868,000 tonnes. Production of lead, zinc and alumina also rose.
• Crude oil prices fluctuated on Friday as investors weighed concerns about rising supplies next year and signs of progress towards ending the US-Chinese trade row. Oil prices fell and global equity markets slid on Friday, halting a week-long rally on hopes that an end to the US-China trade war was near, as investors parsed statements from Beijing and Washington on where they stand on rolling back tariffs.
• Malaysian palm oil futures dropped nearly 1% on Friday and were headed for their biggest weekly fall since late August, tracking losses in rival oils on the Chicago Board of Trade and the Dalian Commodity Exchange.
• ICE cotton futures were mostly unchanged on Thursday as market participants closely tracked the status of US-China trade negotiations ahead of a weekly exports sales report from the US Department of Agriculture.
0
0.02
0.04
0.06
0.08
0.1
0.12
31-Oct 2-Nov 4-Nov 6-Nov 8-Nov 10-Nov 12-Nov 14-Nov
$/M
MB
tu
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
4-Nov 6-Nov 8-Nov 10-Nov 12-Nov 14-Nov
$/B
BL
175
180
185
190
195
200
205
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
4-Nov 6-Nov 8-Nov 12-Nov 14-Nov
Open Interest Volume Price (INR/MMBTU)
3500
3600
3700
3800
3900
4000
4100
4200
0
50000
100000
150000
200000
250000
300000
350000
400000
4-Nov 5-Nov 6-Nov 7-Nov 8-Nov 11-Nov 12-Nov 13-Nov 14-Nov
Volume Open Interest Price (INR/Bbl)
11KSTREET - 16TH NOVEMBER, 2019
COMMODITIES
FUTURE PRICES (% CHANGE)
LME WAREHOUSE STOCKS (IN TONS)
Commodity Previous week This week Change % Change
Copper 234200 224775 -9425 -4.02%
Zinc 50100 52550 2450 4.89%
Aluminium 940500 1065175 124675 13.26%
Lead 68950 66850 -2100 -3.05%
Nickel 65064 64566 -498 -0.77%
SHANGHAI WAREHOUSE STOCKS (IN TONS)*
Commodity Previous week This week Change % Change
Copper 148687 135513 -13174 -8.86%
Zinc 63797 57121 -6676 -10.46%
Aluminium 276659 281635 4976 1.80%
*Until Wednesday, (Chinese market was closed last week)
GLOBAL STOCK POSITION (IN TONS)
COMEX WAREHOUSE STOCKS (IN TONS)
Commodity Previous week This week Change % Change
Copper 37902 39518 1616 4.26%
PRICES OF METALS IN LME/ COMEX/ NYMEX (IN US $)
Commodity Exchange Contract 08-Nov 15-Nov % change
Aluminium LME 3M 1807.50 1747.00 -3.35%
Copper LME 3M 5923.00 5801.00 -2.06%
Lead LME 3M 2111.00 2023.00 -4.17%
Nickel LME 3M 16180.00 15120.00 -6.55%
Zinc LME 3M 2494.00 2388.00 -4.25%
Gold CME Dec 1459.80 1472.00 0.84%
Silver CME Dec 16.76 17.00 1.43%
WTI Crude oil CME Dec 57.44 56.90 -0.94%
Natural Gas CME Dec 2.79 2.64 -5.27%
INTERNATIONAL COMMODITY PRICES
Commodity Exchange Contract 08-Nov 15-Nov % change
Soybean CBOT Dec 942.75 929.50 -1.41%
Soy oil CBOT Dec 31.49 30.80 -2.19%
CPO BMD Jan 2579.00 2568.00 -0.43%
Cotton ICE Dec 64.51 64.26 -0.39%
IMPORT OF VEGETABLE OIL IN INDIA (EDIBLE & NON-EDIBLE)NOV.’18 – OCT. ’19 ( QUANTITY IN MT)
MONTH 2018-19 2017-18 %
Edible Non-Edible Total Edible Non-Edible Total Change
Nov.’18 10,73,353 60,540 11,33,893 12,25,315 23,495 12,48,810 (-) 9%
Dec.’18 11,45,794 65,370 12,11,164 10,58,289 30,494 10,88,783 (+) 11%
Jan.’19 12,10,603 64,656 12,75,259 12,46,847 44,294 12,91,141 (-) 1.2%
Feb.’19 11,82,062 60,471 12,42,533 11,24,999 32,045 11,57,044 (+) 7.4%
Mar.’19 13,93,255 53,302 14,46,557 11,22,685 23,366 11,46,051 (+) 26.%
Apr.’19 11,98,763 33,520 12,32,283 13,68,616 17,850 13,86,466 (-) 11%
May ‘19 11,80,786 41,203 12,21,989 12,46,462 39,778 12,86,240 (-) 5%
June’19 10,71,279 34,014 11,05,293 10,07,563 34,440 10,42,003 (+) 6%
July ’19 13,47,882 64,119 14,12,001 10,53,713 65,825 11,19,538 (+) 26%
Aug.’19 15,23,261 63,253 15,86,514 14,65,594 47,003 15,12,597 (+) 5%
Sept.’19 12,54,443 49,533 13,03,976 14,22,003 69,171 14,91,174 (-) 13%
Oct., 19 13,31,926 46,178 13,78,104 11,74,446 81,987 12,56,433 (+) 10%
Total 1,49,13,407 6,36,159 1,55,49,566 1,45,16,532 5,09,748 1,50,26,280 (+) 3.5%
12KSTREET - 16TH NOVEMBER, 2019
-5.6%
-4.8%
-3.9%
-3.4%
-2.4%
-1.9%
-1.2%
-1.1%
-1.1%
-1.0%
-0.4%
-0.2%
0.1%
0.5%
0.5%
0.6%
0.7%
0.9%
1.3%
1.5%
1.6%
1.8%
3.2%
5.1%
11.0%
-8.0% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Natural Gas
Nickel
Turmeric
Aluminum
Cotton Seed Oil Cake
Soybean
Soy Oil
Lead
Copper
Zinc
Dhaniya
Crude Oil
Barley
Cotton
Castor Seed
RM Seed
Gold
Silver
Jeera
CPO
Wheat
Mentha Oil
Guar Seed
Guar Gum
Cardamom
USD/INR
USDINR traded positive during the week, it made a high of 72.24 and low of 71.31. The RSI is at 62.20. Moving average of 50 is at 70.28. The trend is looking positive for the week. Hence, recommend buying at 71.60 TP 72.60-72.80 SL 71.10
EUR/INR
EURINR traded positive during the week, it made a high of 79.49 and low of 78.59. The RSI is trading at 53.90. Moving average of 50 is at 78.86. The trend is looking sideways for the week. Hence, recommend buying at 79.00 TP 80.50 SL 78.50.
GBP/INR
GBPINR traded positive during the week, it made a high of 92.76 and low of 91.20. The RSI is trading at 62.97. Moving average of 50 is at 89.44. The trend is looking positive for the week. Hence, recommend buying at 92.10 TP 93.00 SL 91.50.
JPY/INR
JPYINR traded positive during the week, it made a high of 66.44 and low of 65.37. The RSI is at 56.34. Moving average of 50 is at 64.35. The trend is looking positive for the week. Hence, recommend buying at 65.70 TP 67.00 SL 65.20.
TECHNICAL RECOMMENDATIONMARKET STANCE
Finally, the USDINR pair has broken out of the thin trading range and with no surprise it broke the upside resistance at 70.80 and moved above 72.00 during the week to settle at 71.79. Benchmark Equity Indices although sighed off from peaks but were still holding higher. Nifty ended the week at 11895.45 while Sensex closed at 40356.69. Prolonged discussion over US-China trade deal as the signs of near term relief to the trade issue looks minimal has pushed the Asian currencies lower. The dollar index moved higher during the week before it gave up all its weekly gains after touching 98.50. Euro gained after the reports published that the economic sentiment in Euro zone has substantially increased. German Zew Economic Sentiment (Nov) improved to -2.1 from -22.8 in October. But the gains were limited as the dollar gained support from safe haven demand. Preliminary German GDP numbers also improved pushing the euro higher against the dollar. German GDP QoQ for Q3 improved to 0.1% from -0.2% a quarter earlier. Fed Chair Jerome Powell said the risk of the US economy facing a dramatic bust is remote, partly because the record long expansion is notable for 11th straight year. Albeit Powell agreed that the dynamic forward looking indicators showed some signs of weakness but “the US economy is the star economy these days”.
NEWS FLOWS OF LAST WEEK
• India’s retail inflation surged to 4.62% in October, breaching Reserve Bank of India’s medium-term target of 4%.
• India’s Industrial production contracted 4.3% in September, mainly due to poor performance in the manufacturing sector.
• President Donald Trump said over the weekend that trade talks with China were moving along “very nicely”, though uncertainty remained over whether a deal would be signed this year.
• The report came after US President Donald Trump said a trade deal with China was “close” but offered no details and warned that he would raise tariffs “substantially” on Chinese goods if there was no deal.
• Moody’s affirmed UK’s Aa2 long-term issuer and senior unsecured ratings but cut the country’s sovereign credit outlook to ‘negative’.
• India’s Forex Reserves increased to USD 447.81 Bn for the week ended on Nov 8 from USD 446.10 Bn.
CURRENCY
CURRENCY TABLE
Currency Pair Open High Low Close
USDINR 70.57 71.33 70.55 71.27
EURINR 78.97 79.04 78.29 78.63
GBPINR 91.58 91.62 90.77 91.26
JPYINR 65.45 65.52 64.83 65.19
13KSTREET - 16TH NOVEMBER, 2019
ECONOMIC GAUGE FOR THE NEXT WEEK
Local Start Date Local Time Country Relevance Indicator Name Period Reuters Poll Prior Unit
18 Nov 2019 20:30 United States Medium NAHB Housing Market Indx Nov 72 71 Index
18 Nov 2019 21:30 United States Not Rated Export Wheat Inspected 14 Nov, w/e 528.875k Tonne
18 Nov 2019 21:30 United States Not Rated Export Corn Inspected 14 Nov, w/e 560.105k Tonne
18 Nov 2019 21:30 United States Not Rated Exp Soybean Inspected 14 Nov, w/e 1,331.631k Tonne
19 Nov 2019 2:30 United States Low Net L-T Flows,Exswaps Sep -41.1B USD
19 Nov 2019 2:30 United States Low Foreign Buying, T-Bonds Sep -30.5B USD
19 Nov 2019 2:30 United States Low Overall Net Capital Flows Sep 70.5B USD
19 Nov 2019 2:30 United States Low Net L-T Flows,Incl.Swaps Sep -65.4B USD
19 Nov 2019 14:30 Euro Zone Low Current Account NSA,EUR Sep 25.7B EUR
19 Nov 2019 14:30 Euro Zone Low Current Account SA, EUR Sep 26.639B EUR
19 Nov 2019 15:30 Euro Zone Not Rated Construction Output MM Sep -0.46% Percent
19 Nov 2019 19:00 United States Medium Building Permits: Number Oct 1.387M 1.391M Number of
19 Nov 2019 19:00 United States Low Build Permits: Change MM Oct -2.4% Percent
19 Nov 2019 19:00 United States High Housing Starts Number Oct 1.320M 1.256M Number of
19 Nov 2019 19:00 United States Low House Starts MM: Change Oct -9.4% Percent
19 Nov 2019 19:25 United States Low Redbook MM 16 Nov, w/e 0.1% Percent
19 Nov 2019 19:25 United States Low Redbook YY 16 Nov, w/e 5.0% Percent
20 Nov 2019 3:00 United States Not Rated API weekly crude stocks 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly gasoline stk 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly dist. stocks 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly heating oil 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly crude imports 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly product imports 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API weekly crude runs 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 3:00 United States Not Rated API Cushing number 11 Nov, w/e #N/P #N/P Number of
20 Nov 2019 7:00 China (Mainland) Not Rated Loan Prime Rate 1Y Nov 4.20% Percent
20 Nov 2019 7:00 China (Mainland) Not Rated Loan Prime Rate 5Y Nov 4.85% Percent
20 Nov 2019 17:00 India Low M3 Money Supply 8 Nov, w/e 10.6% Percent
20 Nov 2019 17:30 United States Low MBA Mortgage Applications 15 Nov, w/e 9.6% Percent
20 Nov 2019 17:30 United States Low Mortgage Market Index 15 Nov, w/e 568.4 Index
20 Nov 2019 17:30 United States Low MBA Purchase Index 15 Nov, w/e 253.4 Index
20 Nov 2019 17:30 United States Low Mortgage Refinance Index 15 Nov, w/e 2,374.6 Index
20 Nov 2019 17:30 United States Low MBA 30-Yr Mortgage Rate 15 Nov, w/e 4.03% Percent
20 Nov 2019 21:00 United States Not Rated EIA Weekly Crude Stocks 11 Nov, w/e 2.219M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Dist. Stocks 11 Nov, w/e -2.477M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Gasoline Stk 11 Nov, w/e 1.861M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Crude Imports 11 Nov, w/e -0.589M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Rfg Stocks 11 Nov, w/e 0.009M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Heatoil Stock 11 Nov, w/e -0.407M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Prods Imports 11 Nov, w/e 0.030M Barrel/Day
20 Nov 2019 21:00 United States Not Rated EIA Weekly Dist Output 11 Nov, w/e 0.164M Barrel/Day
20 Nov 2019 21:00 United States Not Rated EIA Weekly Crude Runs 11 Nov, w/e 0.155M Barrel/Day
20 Nov 2019 21:00 United States Not Rated EIA Weekly Refining Util 11 Nov, w/e 1.8% Percent
20 Nov 2019 21:00 United States Not Rated EIA Wkly Crude Cushing 11 Nov, w/e -1.229M Barrel
20 Nov 2019 21:00 United States Not Rated EIA Weekly Gasoline O/P 11 Nov, w/e 0.137M Barrel/Day
20 Nov 2019 23:00 United States Not Rated EIA Ethanol Ref Stk 11 Nov, w/e 20,985k Barrel
20 Nov 2019 23:00 United States Not Rated EIA Ethanol Fuel Total 11 Nov, w/e 1,030k Barrel/Day
21 Nov 2019 19:00 United States Not Rated Corn Export Sales New 11 Nov, w/e 599.80k Tonne
21 Nov 2019 19:00 United States Not Rated Corn Export Sales Net 11 Nov, w/e 581.600k Tonne
21 Nov 2019 19:00 United States Not Rated Corn Exp Sale Next Yr Net 11 Nov, w/e 0.00k Tonne
21 Nov 2019 19:00 United States Not Rated Corn Exp Sales Net Total 11 Nov, w/e 581.60k Tonne
21 Nov 2019 19:00 United States Not Rated Soybean Export Sales New 11 Nov, w/e 1,395.200k Tonne
21 Nov 2019 19:00 United States Not Rated Soybean Export Sales Net 11 Nov, w/e 1,253.000k Tonne
21 Nov 2019 19:00 United States Not Rated Soybean Exp Sale Next Yr Net 11 Nov, w/e 3.00k Tonne
21 Nov 2019 19:00 United States Not Rated Soybean Exp Sale Net Total 11 Nov, w/e 1,256.00k Tonne
21 Nov 2019 19:00 United States Not Rated Soybeanmeal Exp Sale Net 11 Nov, w/e 345.30k Tonne
21 Nov 2019 19:00 United States Not Rated Soymeal Exp Sls Next Yr Net 11 Nov, w/e 0.50k Tonne
21 Nov 2019 19:00 United States Not Rated Soybn Meal Exp Sls Net Total 11 Nov, w/e 345.80k Tonne
CURRENCY
14KSTREET - 16TH NOVEMBER, 2019
21 Nov 2019 19:00 United States Not Rated Soybeanoil Exp Sales Net 11 Nov, w/e 30.60k Tonne
21 Nov 2019 19:00 United States Not Rated Soybn Oil Exp Sls Nxt Yr Net 11 Nov, w/e 0.00k Tonne
21 Nov 2019 19:00 United States Not Rated Soybn Oil Exp Sls Net Total 11 Nov, w/e 30.60k Tonne
21 Nov 2019 19:00 United States Not Rated Wheat Export Sales New 11 Nov, w/e 259.300k Tonne
21 Nov 2019 19:00 United States Not Rated Wheat Export Sales Net 11 Nov, w/e 238.600k Tonne
21 Nov 2019 19:00 United States Not Rated Wheat Exp Sale Next Yr Net 11 Nov, w/e 0.00k Tonne
21 Nov 2019 19:00 United States Not Rated Wheat Exp Sale Net Total 11 Nov, w/e 238.60k Tonne
21 Nov 2019 19:00 United States Not Rated Beef Export Sales New 11 Nov, w/e 27.100k Tonne
21 Nov 2019 19:00 United States Not Rated Beef Export Sales Net 11 Nov, w/e 25.300k Tonne
21 Nov 2019 19:00 United States Not Rated Up Cotton Exp Sales New 11 Nov, w/e 346.600k Number of
21 Nov 2019 19:00 United States Not Rated Up Cotton Exp Sales Net 11 Nov, w/e 345.100k Number of
21 Nov 2019 19:00 United States Not Rated US Pork Export Sales New 11 Nov, w/e 22.400k Tonne
21 Nov 2019 19:00 United States Not Rated US Pork Export Sales Net 11 Nov, w/e 19.900k Tonne
21 Nov 2019 19:00 United States High Initial Jobless Claims 16 Nov, w/e 215k 225k Person
21 Nov 2019 19:00 United States Low Jobless Claims 4-Wk Avg 16 Nov, w/e 217.00k Person
21 Nov 2019 19:00 United States Medium Continued Jobless Claims 9 Nov, w/e 1.683M Person
21 Nov 2019 19:00 United States High Philly Fed Business Indx Nov 7.0 5.6 Index
21 Nov 2019 19:00 United States Low Philly Fed 6M Index Nov 33.80 Index
21 Nov 2019 19:00 United States Low Philly Fed Capex Index Nov 36.40 Index
21 Nov 2019 19:00 United States Low Philly Fed Employment Nov 32.90 Index
21 Nov 2019 19:00 United States Low Philly Fed Prices Paid Nov 16.80 Index
21 Nov 2019 19:00 United States Low Philly Fed New Orders Nov 26.20 Index
21 Nov 2019 20:30 United States High Existing Home Sales Oct 5.50M 5.38M Number of
21 Nov 2019 20:30 United States Medium Exist. Home Sales % Chg Oct 2.2% -2.2% Percent
21 Nov 2019 20:30 United States Low Leading Index Chg MM Oct -0.1% -0.1% Percent
21 Nov 2019 20:30 Euro Zone High Consumer Confid. Flash Nov -7.2 -7.6 Net balance
21 Nov 2019 21:00 United States Not Rated EIA- Nat Gas, Change Bcf 15 Nov, w/e 3B Cubic foot
21 Nov 2019 21:00 United States Not Rated Nat Gas-EIA Implied Flow 15 Nov, w/e 3B Cubic foot
22 Nov 2019 14:30 Euro Zone High Markit Mfg Flash PMI Nov 46.4 45.9 Index (diffusion)
22 Nov 2019 14:30 Euro Zone High Markit Serv Flash PMI Nov 52.5 52.2 Index (diffusion)
22 Nov 2019 14:30 Euro Zone High Markit Comp Flash PMI Nov 50.9 50.6 Index (diffusion)
22 Nov 2019 17:00 India Low Bank Loan Growth 4 Nov, w/e Percent
22 Nov 2019 17:00 India Low Deposit Growth 4 Nov, w/e Percent
22 Nov 2019 17:00 India Low FX Reserves, USD 11 Nov, w/e 447.81B USD
22 Nov 2019 20:15 United States High Markit Comp Flash PMI Nov 50.9 Index (diffusion)
22 Nov 2019 20:15 United States High Markit Mfg PMI Flash Nov 51.5 51.3 Index (diffusion)
22 Nov 2019 20:15 United States High Markit Svcs PMI Flash Nov 51.2 50.6 Index (diffusion)
22 Nov 2019 20:30 United States High U Mich Sentiment Final Nov 95.9 95.7 Index
22 Nov 2019 20:30 United States Low U Mich Conditions Final Nov 110.9 Index
22 Nov 2019 20:30 United States Low U Mich Expectations Final Nov 85.9 Index
22 Nov 2019 20:30 United States Low U Mich 1Yr Inf Final Nov 2.5% Percent
22 Nov 2019 20:30 United States Low U Mich 5-Yr Inf Final Nov 2.4% Percent
22 Nov 2019 21:30 United States Low KC Fed Manufacturing Nov 8 Index
22 Nov 2019 21:30 United States Low KC Fed Composite Index Nov -3 Index (diffusion)
CURRENCY
15KSTREET - 16TH NOVEMBER, 2019