RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue020.pdf · 2019. 1. 19. · • Axis Bank clarified on news relating to Hawala Scam stating accounts have

ISSUE: 020

19TH JANUARY, 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. 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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.

Market view

The current year is likely to shape up as a good year. In the first half, the equity market is likely to move

sideways due to the overhang of the General Elections. The second half appears more promising. Our

research indicates that, as previous four General Elections resulted in government serving full term,

markets rose by 12.5% (on an average) in the six months following these elections. If elections result in

the formation of a stable, reform oriented government, markets will move up.If elections result in the

formation of a stable, reform oriented government, markets will move up.

The banking sector is past its worst, asset quality of banks improved as the GNPA ratio decreased

from 11.5% in March 2018 to 10.8% in September 2018 and going forward NPA is likely to decline. Also,

the economy is resilient, with the growth driver changing from consumption to investment; this should

support corporate earnings growth and drive the next leg up for equities.

Events outside India have a significant impact on our markets. There is a significant debate in markets

whether the global economy is headed for a recession. Our analysis shows that economic data from

the US, Europe and Japan point to a slowdown; however, we are not at the cusp of a recession. Data

from China, the world’s second largest economy is more concerning; however, China has loosened

monetary and fiscal policy. China has plenty of tools to counter a slowdown.

CPI remains low at 2.19% for December 2018

CPI for December 2018 came in at 2.19% vs. 2.33% in the previous month supported by deflation in

food and beverages at -1.49%. However, core inflation still remains sticky at ~5.7%. Current lower food

and oil inflation is holding the lid on the headline inflation which may bounce back if the government

is successful in the implementation of Minimum Support Prices or a supply side disruption emerges,

which may be a matter of time. Based on this, further tightening looks off the table for the time being.

Furthermore, weak WPI at 3.8% indicates that headline inflation is likely to remain low in the near term.

We think that the sharper-than-expected drop in headline CPI during the last few months justifies the

case for holding off on rate hikes for now.

Growth slows down to 0.5% in November 2018

IIP reading for November 2018 came in at 0.5% after reporting 8.1% growth during October 2018.

Seasonality plays a role during October-November. November 2018 had fewer working days,

compared to November 2017 on account of Diwali. Similarly, as we wrote in the Economic Insights on

Dec 12, 2018, seasonality also played a role in October IIP growth of 8.1%. We believe that IIP growth will

normalize next month. The 3 month moving average of IIP growth is 4.4%. The cumulative growth for

the period April-November 2018 stands at 5.0%. Manufacturing sector de- grew by 0.4% in November

2018 where capital goods and intermediate goods shrunk by 3.4% and 4.5% respectively eventually

leading to this slowdown.

CONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-15

Events 16

TeamDr Ravi Singh

Syed Hasan Jafar

Viplav Dhandhukia

Amrita Preetam

Amit Samar

Chirag M Solanki

Chetan K Waghray

Vaishali Paruthi

Benjamin Francis

Vivek Ranjan Misra

Amit Kumar Tripathy

Ankit Soni

Konpal Pali

Yash Bhotika

Veeresh Hiremath

Siddhesh Ghare

Ravi Pandey

Ramesh Chenchala

Arpit Chandna

Ravikanth Pedapati

Bharath Sunnam

Anup B.P

Amit Kumar

Vinod Jaya Kumar

Karvy Head Office

Karvy Stock Broking Limited, Plot No.31, 6th Floor, Karvy Millennium Towers, Financial District, Nanakramguda, Hyderabad, 500 032, India.

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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 MISRA Head - Fundamental Research

EQUITY

Economy

• The government plans to create a business enterprise register that will have details of all kind of businesses being run in the country as it gears up to conduct a nationwide economic census in 2019-20.

• India Ratings estimated India’s GDP growth to touch 7.5% in financial year 2019-20 as against 7.2% during current fiscal i.e. 2018-19.

• The Finance Minister Arun Jaitley has hinted that the government will stick to presenting Interim Budget in an election year, but is not averse to announcing new schemes,unlike the convention.

Automobile

• Volkswagen India said it will deposit Rs. 1 bn of the total Rs. 1.71 bn fine by Friday, as ordered by the National Green Tribunal.

BFSI

• Federal Bank Ltd. posted a 28% year-on-year rise in net profit for the December quarter at Rs. 3.34 bn. Interest earned by the bank during the December quarter was Rs. 29.54 bn compared to Rs. 25.01 bn in the year-ago period, while the interest expended rose to Rs. 18.77 bn from Rs. 15.51 bn.

• Axis Bank clarified on news relating to Hawala Scam stating accounts have been opened after complying with KYC norms and the bank does not have any credit exposure to the said entity. The bank also stated that it was working closely with the authorities on this issue.

• The Bombay High Court adjourned the hearing in Kotak Mahindra Bank Ltd’s plea against the Reserve Bank of India on the issue of promoter stake reduction. The court will next hear the case on Mar 12.

Aviation

• The Ministry of Civil Aviation has proposed allowing 100% foreign direct investment under the automatic route for drone services in the country, to give an impetus to the domestic sunrise industry.

Metals

• Hindalco clarified that the company had stopped its mining operation at Durgamandi Mines since March 17 last year, as per the show-cause notice received from the Ministry of Environment Forest and Climate Change.

Pharma

• The government has banned 80 more fixed-dose combination drugs which include antibiotics, painkillers, medicines used for treating infections, etc.

• Cadila Healthcare Ltd. received final approval from the US Food and Drug Administration to market acetazolamide extended-release capsules.

Oil and gas

• The government has, for the second time, deferred the deadline for submission of bids in the auction of 25 oil and gas fields that hold resources worth an estimated RS. 1 tn.

• The Organization of the Petroleum Exporting Countries has trimmed 2019 demand estimate for its oil by 60,000 barrels per day to 30.8 mn bpd.

NEWS

INTERNATIONAL NEWS

• Vodafone is teaming up with IBM to offer businesses a way to link different cloud computing systems to support the next wave of digital advances, such as machine learning on super-fast fifth-generation telecoms networks.

• Fossil Group would sell its intellectual property related to a smart watch technology currently under development to Alphabet Inc’s Google for $40 million.

• Russia’s Novak said Russia will try to accelerate cuts in output but there are technical limitations. Russia will discuss OPEC+ cuts in the house with Falih.

• UK Prime Minister Theresa May survived a no-confidence motion in the House of Commons on Wednesday by a slim margin of 19 votes, scuppering plans of the opposition to call an early general election.

TRENDSHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 36386.61 35405 35896 36674 36961 Up

NIFTY 10906.95 10605 10756 10994 11082 Up

NIFTYBANK 27456.7 26987 27222 27651 27846 Up

YESBANK 198.60 170 184 211 224 Up

RELIANCE 1,184.35 1050 1117 1221 1257 Up

INFY 730.95 679 705 748 765 Up

SUNPHARMA 390.75 319 355 442 493 Down

TCS 1,900.65 1775 1838 1934 1967 Up

ICICIBANK 372.00 365 368 378 383 Up

AXISBANK 664.60 638 651 679 693 Up

HDFC 2,006.85 1927 1967 2030 2053 Up

ZEEL 440.30 409 424 466 492 Down

IBULHSGFIN 817.35 752 785 852 886 Down

FORTHCOMING EVENTSSecurity Name Company name Result Date

541729 HDFC AMC 21st JAN

535648 JUST DIAL 21st JAN

500247 KOTAK BANK 21st JAN

533519 L&TFH 21st JAN

500820 ASIAN PAINT 22nd JAN

517354 HAVELLS 22nd JAN

539268 SYNGENE 22nd JAN

511196 CANFINHOME 23rd JAN

539448 INDIGO 23rd JAN

500875 ITC 23rd JAN

500330 RAYMOND 23rd JAN

KSTREET - 19TH JANUARY 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

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

Nifty 50

SENSEX

BSE MidC

ap

BSE SmallC

ap

Nifty N

ext 50

NIFTY M

idcap 100

-3

-2

-1

0

1

2

3

4

5

6

NSEA

UTO

NSEBA

NK

NSESRV

NSEPH

RM

NSEIT

NSEM

ET

NSEN

RG

NSEC

ON

NSEREA

L

NSEFM

CG

-0.5

0

0.5

1

1.5

2

2.5

3

NA

SDA

Q

DO

W JO

NES

S&P50

0

NIK

KEI

HA

NG

SENG

SHA

NG

HA

I CO

MP

FTSE 100

CA

C 40

-30

-20

-10

0

10

20

30

VA

KRA

NG

EE LTD

CA

STROL IN

DIA

LTD

MIN

DTREE LTD

GU

JARA

T STATE

PETRON

ET LTD

APO

LLO H

OSPITA

LS EN

TERPRISE

EDELW

EISS FINA

NC

IAL

SERVIC

ES

IDBI BA

NK

LTD

TV18 BRO

AD

CA

ST LTD

DISH

TV IN

DIA

LTD

SUN

PHA

RMA

AD

VA

NC

ED

RESEARC

H

-15

-10

-5

0

5

10

RELIAN

CE IN

DU

STRIES LTD

YES BAN

K LTD

INFO

SYS LTD

AD

AN

I PORTS A

ND

SPEC

IAL EC

ON

WIPRO

LTD

STATE BA

NK

OF IN

DIA

LARSEN

& TO

UBRO

LTD

GA

IL IND

IA LTD

BHA

RTI AIRTEL LTD

SUN

PHA

RMA

CEU

TICA

L IN

DU

S

-800

-600

-400

-200

0

200

400

600

11-01-19

12-01-19

13-01-19

14-01-19

15-01-19

16-01-19

FII/FPI DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

Kalpataru Power Transmission Ltd. CMP Rs.377Target Price Rs.497Upside 32%

Investment Rationale

• KPTIL is a part of Kalpataru group that was established in 1969, with proven experience and expertise spanning over three decades, it has established its footprints in more than 50 countries, implementing brand projects with capabilities that offer comprehensive solutions covering the design, testing, manufacture, civil construction and construction of transmission lines, oil and gas infrastructure and railway projects.

• The company expects international transmission to see better growth than domestic transmission over the next few years with major order inflows from the Africa, which has an estimated opportunity size of US$ 345 bn.

• Company’s revenue has been growing at a rate of 10% from 2011-18 on the back of strong order book which has grown at 13%. The order book in last three financial years has seen tremendous growth of 34%. The current order book of Rs.124040 mn stands at 2.2x the revenues which provide a very strong revenue visibility of 18% CAGR during FY18-20E.

• The non T&D business (Oil & Gas and Railways) has shown a growth of 28% CAGR over FY13-18 with the order book growth of CAGR 51% during the same period. The non T&D business was just contributing around 6% of total revenues in FY14 which improved to 20% during FY18. We expect the non T&D business to contribute 25% in FY19 and around 28% in FY20.

• Subsidiaries Turnaround: At SSL (Shubham Logistics Ltd) the utilization levels have breached 80% showing a significant improvement. Due to effective utilization levels, company has turned PAT positive in H1FY19 wherein it ended FY18 and FY17 with losses of Rs. 415 mn and Rs. 753 mn respectively. Subsidiary JMC had a flat performance during FY14-17 majorly due to weak order booking. The order inflows have shown a pick up and revenues grew by 18% in FY18. JMC has received orders worth Rs. 33390 mn in FY18 with remarkable improvement across profitability parameters.

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 535/267

M.Cap (Rs. Bn/US $mn) 57900/813

EPS (Rs.) 21.3

P/E Ratio (times) (FY20E) 13.1

Dividend Yield (%) 1

Stock Exchange BSE

P/E CHART

Valuation

We value Kalpataru on SOTP basis with stand alone business at 13x to FY20E EPS, JMC by giving discount to market cap, SSL on book value, Boot projects on FCFE, and Indore real estate project on B/V. We arrive at a target price of Rs. 497 for a “BUY” rating representing an upside potential of 32%.

EQUITY

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

Net Income 57785 66982 77029

EBITDA 6313 7355 8460

EBITDA Margin(%) 10.9 11.0 11.0

Net profit 3220 3837 4492

EPS(Rs) 21.3 25.0 29.3

RoE(%) 11.6 12.3 12.7

PE(x) 23.0 15.3 13.1

59.3%

4.7%

23.0%

13.0%

Promoters

FIIs

DIIs

Other

50

65

80

95

110

125

Jan-

18

Feb-

18

Mar

-18

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

KPTIL Sensex


BEAT THE STREET - FUNDAMENTAL ANALYSIS

KEC International LimitedCMP Rs.274.45Target Price Rs.376Upside 37%

Investment Rationale

• KEC International Limited is the flagship company of RPG group having presence in India and overseas. It’s Power Transmission and Distribution business includes providing end-to-end solutions in power transmission and distribution. Its Cables service offerings include extra-high voltage (EHV) cabling solutions provided through Cable Selection and Cabling System and manufacturing of a range of power cables (high tension and EHV cables), control, telecommunication and instrumentation cables.

• KEC’s order book has surged from Rs. 71310 mn in FY15 to Rs. 103788 mn in FY18 representing a growth of 13% CAGR. Though in the declining phase of PGCIL orders, KEC is consistently maintaining a 25% of the order base from PGCIL and covering incremental large size ticket orders from State Electricity Boards (SEBs).

• The company’s revenue had a strong growth of 14.3% during FY10-18 on the back of strong order book which has grown at CAGR of 18% during FY10-18 whereas the order booking has shown a growth of 22% during FY15-18. The current order book of Rs. 201350 mn stands at 1.9x the revenues which provide a very strong revenue visibility of 16% CAGR during FY18-20E.

• Civil business order book has suddenly surged to Rs. 3460 mn in 2018 from Rs. 1890 mn in 2016 due to heavy order inflow of Rs.4930 mn from the construction sector. The revenues also have jumped from Rs.1038 mn to Rs. 2680 mn due to fast execution of projects. The management expects to double the revenues on the base of strong order book which looks easily achievable.

• The current order of railway division stands at 5 times its revenue which gives the indication of doubling the railway revenues in the coming years. The company in order to expand its product portfolio has forayed into civil construction business majorly focusing on industrial plants, residential buildings and commercial complexes. In the first year of its civil business, the revenues were Rs. 2880 mn and have reached cash breakeven level with a closing order book of Rs. 3496 mn.

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 443/240

M.Cap (Rs. Bn/US $mn) 70557/991

EPS (Rs.) 17.9

P/E Ratio (times) (FY20E) 10.9

Dividend Yield (%) 1%

Stock Exchange BSE

ValuationThe revenues are expected to grow at 16% CAGR during FY18-20E by execution of huge order book. The overseas T&D opportunities are strongly visible, also the non T&D business is gaining traction in the international markets. We value KEC for 15.0x on FY20E EPS for a target price of Rs. 376 representing an upside potential of 37%.

EQUITY

P/E CHART

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

Net Income 100964 116243 134952

EBITDA 10466 11956 14635

EBITDA Margin(%) 10.4 10.3 10.8

Net profit 4604 5038 6444

EPS(Rs) 17.9 19.6 25.1

RoE(%) 23.0 20.7 21.5

PE(x) 21.8 14.0 10.9

50

65

80

95

110

125

Jan

-18

Feb

-18

Mar

-18

Ap

r-18

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Se

p-1

8

Oct

-18

No

v-18

De

c-18

Jan

-19

KEC Sensex

51.2%

9.8%

20.6%

18.5%

Promoter

FIIs

DIIs

Other


EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

Adani Ports and Special Economic Zone Limited

ADANIPORTS has rallied from 166.17 levels in February 2016 to 733 levels in January 2018 and corrected from there to 294 levels, which is around 50% Fibonacci retracement

level of the said rally and bounced back to settle above 23.6% Fibonacci retracement levels indicating the end of the correction. Stock has formed a bullish head and shoulder

pattern during the process followed by a breakout in previous week with good volume. Adding to it, the parabolic SAR and Heiken candlesticks is signalling positive trend on

the daily 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 weekly chart 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, the stock has tested the mean and started to move towards upper bands indicating positive momentum. At the current levels,

the stock has given an excellent opportunity for medium to long term investors to accumulate the stock on dips around 399 levels for the potential upside targets of 481-494

levels over the next 6-9 months, keeping a stop loss below 345 levels.

Sobha Limited

SOBHA has rallied from 206.45 levels in November 2016 to 669 levels in January 2018 and corrected from there to 380 levels, which is around 50% Fibonacci retracement level

of the said rally and bounced back to settle above 38.2% Fibonacci retracement levels indicating the end of the correction. On the daily chart, the stock has given breakout

from a falling trend line indicating a fresh leg of rally from these levels. On the weekly charts, the stock is trading above all of its 21/50/100/200 period Exponential Moving

Averages indicating the positive momentum in the counter for all major time frames. Among other leading indicators parabolic SAR is trading below the current market price

and suggests a positive trend in the counter on daily charts as well as weekly charts. Another indicator Heiken candlestick also indicates bullish trend in the counter on daily

as well as weekly charts. Among the momentum indicators, MACD is trading above the signal line on daily charts indicating positive momentum in the stock on medium to

long term perspective. The stock has tested the upper band in Bollinger bands (20, 2) and the bands are expanding on weekly charts indicating a very strong momentum in

the counter.

Stock ADANIPORTS

CMP 399.3

Action BUY

Entry 390-395

Average 365

Stop loss 345

Target 481

Target 2 494

Time Frame 6-9 Months

Stock SOBHA

CMP 502.35

Action BUY

Entry 495-500

Average 440

Stop loss 420

Target 620

Target 2 660

Time Frame 6-9 Months


EQUITY

Sentiment

Stop Loss 1530

Target 1360

Lot Size 400

Margin 102600

21-DEMA 1468

Open Interest Shares 1560400

Change in OI 224000

Cost of Carry (%) 11.51

SECTORAL SNIPPETS

NIFTY REALTY (238.30) has ended the week on a flat note underperforming NIFTY 50 which also closed with a gain of around 1.00%. The breadth of the REALTY index was negative as 4 out of 10 stocks in the index ended on a positive note while 5 stocks ended on a negative note and one stock (HDIL) ended on a flat note. Stocks which gained last week were SOBHA, BRIGADE, PHOENIXLTD and GODREJPROP which gained around 8.59%,2.98%,2.18%,1.35% and 0.19% respectively while IBREALEST,PRESTIGE, UNITECH, DLF, and OBEROIRLTY lost around -3.14%,-2.88%,-2.55%, -0.96%, and -0.91% respectively while HDIL closed on a flat note. Technically, the said index is trading above its daily 20-day Simple moving average and above its 20- week simple moving average. The weekly 14-period RSI is trading above its 9 periods EMA indicating bullish bias while on daily charts it is trading below it indicating a choppy bias in the near term. Going ahead for the coming week, the index has support at 230 levels and below it at 220 levels, while resistance is pegged at 245 levels and above it at 248 levels.

NIFTY IT (14,892.95) The index has closed the week with a positive return of more than 4% and outperformed its benchmark index NIFTY which has closed the week with a positive return of nearly 1%. The major gainers from the IT index were INFY, WIPRO, TCS, MINDTREE and HCLTECH while on the flip side TATAELXI and OFSS closed in red. Adding to that, the index is making higher highs from last couple of trading sessions which placed the index above its major moving averages on daily chart, indicating positive momentum in the index is likely to continue in the coming week as well. On the technical indicator front, 14-period weekly RSI is pointing northwards and poised with bullish bias, indicating the index is likely to continue its outperformance in the coming week as well. The immediate support for the NIFTY IT is pegged around 14770-14750 followed by 14600 levels while on the higher side, the index may face resistance around 15050-15100 levels followed by 15200 levels. Going forward, we are expecting the index is likely to trade with positive bias in the coming week. Stock specific action is expected to be seen in the sector during the next week.

NIFTY PHARMA (8,689.60) ended the week with a negative return of around 2.4% underperforming the benchmark index NIFTY which gained around 1%. On the weekly chart, the NIFTY PHARMA index ended the week below all its major moving averages on the daily as well as weekly chart. The index has given a negative crossover to its short to medium term moving averages on the daily chart during the week. The NIFTY PHARMA index was dragged down by SUNPHARMA, which declined around 12% during the week amid reports of fresh whistleblower complaint against company as other index stocks ended the week either flat or marginally negative. The stocks which have outperformed the NIFTY PHARMA index during the week were BIOCON, LUPIN, DIVISLAB, AUROPHARMA, DRREDDY, PEL, CIPLA, CADILAHC and GLENMARK while SUNPHARMA underperformed the index. On the Momentum oscillator front, the 14-day RSI line is placed below the 9-day signal line on daily as well as weekly chart and poised with bearish bias, reflecting the index may trade with weakness in the coming trading sessions. Going ahead, the index is expected to trade with sideways to negative bias. The support for the NIFTY PHARMA index is pegged around 8500-8550 levels followed by 8300 levels. While on the higher side, the index may face resistance around 8770-8880 zone followed by 8900 levels.

BANK NIFTY (27,456.70) made an inside bar on weekly charts and closed on an absolutely flat note, marginally higher by 0.1% towards the end of the last week. The movement during the whole of last week remained indecisive as the banking index swiveled in a range of around 430 odd points. In the said duration, stocks like HDFCBANK, IDFCFIRSTB, AXISBANK, INDUSINDBK, KOTAKBANK, PNB & YESBANK gained. Whereas stocks like BANKBARODA, FEDERALBNK, ICICIBANK, RBLBANK and SBIN witnessed selling pressure. Technically, immediate supports for the BANK NIFTY on weekly time frame are intact and are pegged around 27150-27050 followed by 26900-26850 levels. Whereas on the upside, immediate resistances are pegged around 27650-27750 followed by 27900-27950 levels. We expect the stocks from the banking space to continue witnessing volatile movement with good possibility of a breakout above the first hurdle zone mentioned above. However, if the overall market doesn’t live up to such expectations, then expect a further sell off in this space as the overall sentiment will go from bad to worse. The index is likely to extend its move by 200-250 points in either direction, depending on the breakout above the resistances or breach below mentioned supports. Having said that, it must be noted that the BANK NIFTY has retraced just about 78.6% retracement of its entire down move from 28388.65 to 24240.05 and theory suggests that a possibility of a reversal from current levels cannot be ruled out.

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED: BUY HDFC (JAN FUTURE) | CMP: 2009.70 SECTOR: BFSI

HDFC in the week passed by closed with a gain of nearly 0.50%, whereas benchmark index NIFTY FINSE closed on a flat note clearly indicating the outperformance of the said stock. On the price chart, the stock has found support around 1970-1980 levels and appears to resume its uptrend where its 21-DEMA moving average is also placed. The momentum indicators like 14 periods RSI on the daily and weekly charts is trading above its signal line indicating a bullish bias in the near term. On the derivative front, the stock has seen short closure post expiry of the December 2018 series and some long addition was also witnessed in the last few trading session. Hence, we recommend Smart Traders to initiate long position near 1990 levels for the higher target of 2050 levels, keeping a stop loss below 1959 levels.

Sentiment

Stop Loss 1959

Target 2050

Lot Size 500

Margin 178000

21-DEMA 1975

Open Interest Shares 26617000

Change in OI -282000

Cost of Carry (%) 3.99

ACC LIMITED: SELL ACC (JAN FUTURE) | CMP: 1445.65 SECTOR: CEMENT

ACC has traded the week with a negative bias. The stock has closed the week with a negative return of more than 1% ending at 1439 levels. Technically, the stock is trading below its 21/50/100/200 DEMA on daily chart, exhibiting underlying weakness in the stock. On the technical indicator front, the 14-period RSI is trading below its 9-day signal line and poised with weak bias, indicating downtrend in the counter in near term. The parabolic SAR (Stop & Reverse) on daily chart is trading above the price on daily chart, indicating weakness is likely to continue in the stock. The derivatives data suggests that the stock has witnessed addition of short positions during last trading session, re-confirming our bearish view. From the above observation of price momentum, it seems the stock is likely to trade with negative bias in the coming trading sessions also. Therefore, we recommend Smart Traders to initiate short position in the counter around 1460 levels with a stop loss placed above 1530 levels for the lower target of 1360 levels.


WEEKLY VIEW OF THE MARKET

NIFTY (10906.95): Nifty made a higher high and a higher low during the last week and managed to shut shop in green at 10906.95 or 1.04% higher for the week even as choppiness continued to prevail in the markets as global cues continued to dictate the trend. Among global concerns, the biggest problem at the moment is that an official from the US Federal Reserve has given the central bank a warning about the risks of the lengthening US government shutdown, saying there were signs that the month-long closure was beginning to hit economic growth. The Fed has been signaling for weeks it was recalibrating its outlook for the US economy because of slowing expansion in China and financial market turmoil. Coming back to the Indian markets, after witnessing a muted week, the Nifty swiveled in a broad range of about 240 odd points. Technically, Nifty is placed within a consolidation zone of 10600-10950. Though the Nifty index has been trading in a choppy manner for the past few sessions, chances of a pullback still remain if the sentiment picks up globally. Nifty has its immediate near term hurdle around 10950-10980, crossing which the Nifty can accelerate its up move towards 11000-11050 in the days to come. Having said that, the immediate supports for the Nifty index is likely to be seen around 10800-10750 levels. The next level of meaningful support is pegged around 10700-10650 levels. This week, we expect the Nifty to move in a range of 10700-11000 with a possibility of moving higher or lower by 100-150 odd points in either direction depending on the overall market sentiment.

DERIVATIVE STRATEGIES

DERIVATIVES

Type: Buy Call in TECHM

Recommendation Buy TECHM 31 Jan 720 CE @ 9-9.50

Max Profit Unlimited beyond BEP

BEP 729.50

Max Loss Unlimited

Stop loss 5 (Option levels)

Rationale The stock has been in the range from past few sessions as the overall IT index maintained strong momentum on the positive side. We expect the stock to gather momentum in the upcoming week and move higher towards 730-735 levels.

Type: Protective Call in GAIL

First leg Sell one lot of GAIL JAN FUT @ 323-323.50

Second leg Buy one lot of GAIL JAN 320 CE @ 8-8.50

BEP 314.50

Max Profit Unlimited beyond BEP

Max Loss 14,669

Rationale The stock has given major breakdown below 330 levels on the daily charts and is showing no signs of respite in good market conditions from past few sessions. The overall chart structure of the counter seems to be extremely weak for the near term. We expect the stock to trade with negative bias and drift lower towards 310 levels in the current expiry.

Type: Buy Put in NIFTY

First leg Buy one lot of NIFTY 31JAN 10800 PE @ 67

Max Profit Unlimited

BEP 10733

Max Loss 5025

Stop loss 30 (Option levels)

Rationale The index is finding resistance around 10900-10930 levels and is expected to remain weak in the near term hence a buy put is recommended.

Type: Put Ratio in BANK NIFTY

First leg Buy one lot of BANK NIFTY 24 JAN 27400 PE @ 135

Second leg Sell Two lots of BANK NIFTY 24 JAN 27000 PE @ 37

Max Profit 6780

UBEP 27339

LBEP 26939

Stg Outflow 1220

Stop loss LBEP

Max Loss Unlimited beyond LBEP

Rationale The index is expected to trade with negative bias with support placed around 27000 levels while resistance is placed around 27500 – 27800 levels.

7KSTREET - 19TH JANUARY 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

DCBBANK 185.55 3.80 5310000 27.43

MINDTREE 887 6.61 4053600 24.95

APOLLOHOSP 1366.3 5.69 829000 23.64

NIITTECH 1224.75 5.40 1857750 19.60

CUMMINSIND 844.35 0.11 1699600 19.49

KAJARIACER 535 1.74 3153800 19.04

BANKNIFTY OPTION OI CONCENTRATION (WEEKLY) CHANGE IN BANKNIFTY OPTION OI (WEEKLY)

TOP 6 SHORT CLOSURE


CESC 689 1.02 1349700 -24.35

IGL 280.45 3.58 3443000 -21.06

KPIT 216.15 2.56 4484250 -19.93

JETAIRWAYS 281.2 10.86 6204000 -16.77

BHEL 70.95 3.50 44220000 -13.83

PIDILITIND 1148.8 3.57 2347500 -13.47

TOP 6 SHORT BUILD UP


L&TFH 140.65 -0.60 30123000 34.63

FEDERALBNK 90.00 -5.66 60067000 28.44

PAGEIND 22969.70 -1.65 178075 24.68

SUNTV 525.20 -10.82 8616000 23.79

TV18BRDCST 34.05 -10.28 63011000 22.24

SUNPHARMA 390.75 -12.07 62840800 22.17

TOP 6 LONG CLOSURE


REPCOHOME 430.70 -0.82 933900 -24.53

CHOLAFIN 1176.15 -0.51 941000 -15.42

MCX 742.20 -1.60 2592800 -10.60

POWERGRID 193.60 -0.39 22212000 -9.19

CIPLA 509.40 -0.16 8421000 -6.53

MCDOWELL-N 584.30 -1.23 11693750 -5.83

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI


COMMODITIES

BULLIONBullion market had witnessed range bound trend during the week ended on 18th Jan 2019 tracking mixed fundamental factors. Investors stayed away from active trade participation during the week. During initial part of the week, market was taking support from the factors of bleak economic outlook and Fed’s intention to go slow on rising interest rates in the year 2019. Further, weaker than expected Chinese trade data for the month of December raised concern about consumption demand from the world’s largest consumer of gold. The Britain PM Theresa May was defeated on her Brexit voting, which led to investment in the yellow metal as safe investment. Next day, Britain PM won no confidence motion on her Brexit deal. Possible resolution of trade spat between US and China is likely to increase demand for the gold from the world’s top consumer. Bullion market took correction on last trading day of the week as investors booked profits on their long positions. Recovery in the global equity market dampened the demand for the gold.

ENERGY COMPLEXWCrude oil prices edged higher nearly 2% on the weekly basis supported by ongoing supply cuts from producer club OPEC & Russia and by a drop in U.S. drilling activity. According to Reuters, Russia has reduced its oil production to 11.38 million barrels per day (bpd) on average duriung Jan 1-10 from a record high of 11.45 million bpd last month. Separately, OPEC cut oil output sharply in December before a new accord to limit supply took effect suggesting that producers have made a strong start to averting a glut in 2019 as a slowing economy curbs demand. OPEC expects 2019 global oil demand to slow to 1.29 million bpd from 1.5 million in 2018, though it was more upbeat about the economic backdrop than last month and cited better sentiment in the oil market, where crude oil price is back above $60. The biggest drop in OPEC supply last month came from Saudi Arabia and amounted to 468,000 bpd. The kingdom told OPEC that it lowered supply to 10.64 million bpd in December and has said it plans to go even further in January by delivering a larger cut than required under the OPEC+ deal. The second largest decline was an involuntary cut by Libya, where unrest led to the shutdown of the country’s biggest oilfield. Iran registered the third largest decline in output, also involuntary, as US sanctions that started in November discouraged companies from buying its oil. Among natural gas, prices moved higher during the week following the inventory report. The price was up early on colder than normal weather which is forecast to cover most of the US for the next 8-14 days. There is also news that the polar vertex broke and will be sending extremely cold weather down through Canada and into the US for the next 30-days. This should increase heating demand in the US and buoy natural gas prices.

BASE METALSMetals started the week on a mixed note after investors awaited the Chinese trade data. Much to the expectations, China’s exports fell by the most in two years in December 2018 while imports also contracted, pointing to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand. Copper prices fell as unexpectedly soft trade data in top consumer China outweighed record imports of the metal’s concentrates last year. Also, China’s 2018 imports of unwrought copper rose 12.9% from a year earlier to a record annual high of 5.3 million tonnes. Later on Tuesday, prices started to recover and traded on a positive note as China signalled further stimulus measures to help boost economic growth and demand and President Donald Trump raised hopes of reaching a trade deal with Beijing. In case of Aluminium, Brazilian State Environmental Regulator had given permission for Alunorte smelter to commence its operation on a full scale, which earlier was operating on half capacity due to floods, i.e, at around 230 thousand metric tons per annum. In case of Zinc, China’s Zinc output had reduced by 4.6%, a 0.218 million tonnes fall to 4.53 million tonnes for 2018 since December 2017. On a daily basis, December output slipped by 4.4% to a monthly total of 393,000 tonnes as Zhuzhou Smelter Group, the country’s top producer, went ahead with a planned relocation within southern China’s Hunan province. The multi-year low nickel inventory levels gave a sign of undersupplied market and are giving support to the prices in short term with much uncertainty. On the macro front, China’s Central bank infused a record $83 billion into the country’s financial system on Wednesday, seeking to avoid a cash crunch that would put further pressure on the weakening economy. It is expected to free up $116 billion for new bank lending this year by reducing bank’s reserve ratio. A 50 basis point cut announced on Tuesday is a result of the expectations. Further such cuts are expected on Jan 25th and down the line along with fresh injections of money into the open market to support the economy.

COTTONMCX Cotton futures edged higher during last week ended on 18th Jan as gains were supported by reduced daily arrivals at key trading centres. Daily arrivals of cotton were reported in range of 1.2 -1.3 lakh bales wherein spot prices ruled in range of Rs. 42300 - 42500 per candy at Rajkot market. Apart from that, prices were buoyed by improved demand prospects as millers increased buying activities due to improved price competitiveness of Indian fiber. The narrowing gap between the Indian and global cotton prices sparked good buying at the domestic front. Similarly, ICE cotton futures traded on a positive note on Wednesday on optimism about a potential trade deal between the US and China. Cotton Association of India has reduced the

production estimates further due to limited scope of 3rd and 4th picking of cotton in central and southern regions as farmers have uprooted their cotton plants in about 70-80% cotton area due to moisture deficiency on account of fewer rains. The CAI has estimated cotton crop for 2018-19 season at 335 lakh bales of 170 kgs each which is lower by 5.25 lakh bales than its previous estimate of 340.25 lakh bales made during last month. The CAI has also projected yearly Balance Sheet for the cotton season 2018-19 wherein total cotton supply till end of the cotton season i.e. upto 30th September 2019 has been estimated at 385 lakh bales of 170 kgs each consisting of the opening stock of 23 lakh bales at the beginning of the season. Cotton crop for the season estimated at 335 lakh bales and imports estimated by the CAI at 27 lakh bales, which are higher by 12 lakh bales compared to the previous year’s import estimated at 15 lakh bales. The CAI has estimated domestic consumption of 320 lakh bales which is lower by 4 lakh bales compared to the consumption figure estimated during the last month.

OILS & OILSEEDSSoybean futures rallied more than 5% tracking firm cues from global market. CBOT soybean prices ruled higher for most part of the week in optimism of renewed buying of US soybean from China. Moreover, lower yield prospects in Brazil resulting from adverse weather condition for soybean crops also added positivity to prices. Similarly, Domestic soybean futures breached the Rs. 3600 levels on reduced supply amid reports of increased meal export from India. Solvent Extractor Association of India (SEA) released its meal export data for the month of Dec that showed soy meal export from India at 240530 MT during month of Dec against the 168,865 MT of prior year for corresponding month, higher by 42% y/y and 29% m/m. Vietnam was the major buyer of Indian soy meal and bought about 45909 MT wherein Thailand imported about 20025 MT of soymeal during month of Dec. Average FOB prices of soymeal during month of Dec was reported at 375 US$ per MT. Similarly, mustard seeds futures at NCDEX platform traded sideways to higher following firmness in rival oil seed prices. The area under mustard seed cultivation has touched 66.43 lakh hectares as against 64.99 lakh hac till 4th Jan, higher by 2.21% y/y. At the same time, Malaysian palm oil futures traded on a positive note following rally in crude oil prices. Malaysian Palm Oil Board (MPOB) showed end-stocks rising 6.9% from the previous month to 3.21 million tonnes. Inventory levels are at their highest in at least 19 years. Veg oil prices could remain sideways to higher in upcoming week and could track volatility in Indian curreny.

SPICESCardamom futures extended gains for the second week in a row as prices traded mostly on a positive note during the week. Prices that had broke out from their range of 1450-1560 during the last week to hit almost two year high continued their gains to make 8-year high of Rs.1660 per kg. Drop in production during after heavy monsoon rainfall in Kerala resulted in very limited stocks at the production centres amid good domestic demand. Further, even if exports to major buyer Saudi Arabia is absent, regular exports to other countries is keeping the prices higher as Guatemala cardamom crop size is not enough to cater to complete demand. Hence, active futures traded in the range of Rs.1599-1660 per kg before closing the week at Rs.1657.9 per kg, higher by 3.79% W/W. Arrivals at the spot market almost remained similar to that of last week at 371 MTs until Friday; auctions in Tamil Nadu were slightly dull due to Pongal holiday. Turmeric futures traded in a range with negative bias during the week as the spot markets were closed for Sankranthi and Pongal celebration in the major growing states, dull trade was witnessed for first two days. There was increase in the trading activities after the festival and prices traded mostly traded negative due to lack of cues from the spot markets as these remained closed for almost entire week. Expectations of increase in arrivals at the spot markets in the coming days with better moisture content weighed down the prices. Overall crop yield is estimated to be lower than earlier projections due to yield concerns in growing states on account of extreme drought. Hence, active futures traded in the range of Rs. 6436-6670 per quintal and fell to 6-week low of Rs. 6436 per quintal before closing with small weekly loss of 0.64% from last week. Jeera futures traded in a range with positive bias during the week; prices traded lower on expectations of beginning of fresh arrivals in the coming days weighed prices. However, major loss was capped tracking lower than last year acreage in Gujarat. Despite the recent progress in the sowing activities, area is lower by 9% YoY as per latest data in Gujarat, the largest producer. Hence, active futures traded in the range of Rs.16900-17270 per quintal before closing the week at Rs.17110 per quintal, up by 0.38% W/W. Dhaniya futures traded mostly in a negative note during the week and fell for second week in a row. Lack of active buying at the spot market amid sufficient availability of stocks weighed down the prices. Expectations of lower area under dhaniya during the upcoming sowing season capped major fall as this will lead to a decline in crop size. Progress is very slow in the major growing states; as per latest data, sowing in Gujarat has been completed in only 29630 hec of land which was 69878 hac last year during the corresponding period; area is lower by 58% Y/Y while it has covered just 32% of the normal area. Hence, active futures traded in the range of Rs. 6435-6747 per quintal and fell to 3-week low of Rs.6435 per quintal before closing with loss of 1.23% from last week.


COPPER

COMMODITIES

TRENDSHEET

Commodities 11-Jan 18-Jan % Change 52 Week High% Change from 52

Week High52 Week Low

% Change from 52 Week Low

MCX Gold (Rs/10 gms) 31928.00 32082.00 0.5% 32390.00 -0.95% 29268.00 9.61%

MCX Silver (Rs/Kg) 39336.00 39232.00 -0.3% 41698.00 -5.91% 34981.00 12.15%

MCX Crude Oil (Rs/bbl) 3632.00 3811.00 4.9% 5669.00 -32.77% 2993.00 27.33%

MCX Natural Gas (Rs/mmBtu) 217.00 236.70 9.1% 358.70 -34.01% 162.50 45.66%

MCX Copper (Rs/kg) 415.90 430.10 3.4% 493.25 -12.80% 397.40 8.23%

MCX Lead (Rs/kg) 140.05 142.00 1.4% 172.50 -17.68% 133.15 6.65%

MCX Zinc (Rs/kg) 176.25 185.20 5.1% 232.70 -20.41% 163.80 13.06%

MCX Nickel (Rs/kg) 805.30 838.50 4.1% 1095.20 -23.44% 735.00 14.08%

MCX Aluminium (Rs/kg) 128.80 133.00 3.3% 178.85 -25.64% 124.75 6.61%

NCDEX Soybean (Rs/Quintal) 3570.00 3738.00 4.7% 3895.00 -4.03% 3149.00 18.70%

NCDEX Refined Soy Oil (Rs/10 kg) 763.55 762.70 -0.1% 796.35 -4.23% 713.60 6.88%

NCDEX RM Seed (Rs/Quintal) 3873.00 3860.00 -0.3% 4262.00 -9.43% 3727.00 3.57%

MCX CPO (Rs/10 kg) 545.70 551.80 1.1% 673.00 -18.01% 483.40 14.15%

NCDEX Castor Seed (Rs/Quintal) 5176.00 5100.00 -1.5% 6300.00 -19.05% 3831.00 33.12%

NCDEX Turmeric (Rs/Quintal) 6604.00 6562.00 -0.6% 7702.00 -14.80% 5978.00 9.77%

NCDEX Jeera (Rs/Quintal) 17315.00 18020.00 4.1% 21050.00 -14.39% 14010.00 28.62%

NCDEX Dhaniya (Rs/Quintal) 5970.00 5825.00 -2.4% 6892.00 -15.48% 4186.00 39.15%

MCX Cardamom (Rs/kg) 1571.30 1657.90 5.5% 1660.00 -0.13% 818.50 102.55%

NCDEX Wheat (Rs/Quintal) 1995.00 2025.00 1.5% 2162.00 -6.34% 1614.00 25.46%

NCDEX Guar Seed (Rs/Quintal) 4149.00 4290.00 3.4% 4869.50 -11.90% 3494.50 22.76%

NCDEX Guar Gum (Rs/Quintal) 8118.00 8667.00 6.8% 10510.00 -17.54% 7200.00 20.38%

MCX Cotton (Rs/Bale) 20680.00 20960.00 1.4% 24280.00 -13.67% 19400.00 8.04%

NCDEX Cocud (Rs/Quintal) 1887.00 1970.00 4.4% 2043.00 -3.57% 1166.00 68.95%

NCDEX Kapas (Rs/20 kg) 868.00 868.00 0.0% 938.50 -7.51% 854.00 1.64%

MCX Mentha Oil (Rs/kg) 1613.10 1587.00 -1.6% 1846.10 -14.03% 1106.00 43.49%

TECHNICAL RECOMMENDATIONS

CMP Weekly EMA RSI Direction

LME $6350/Mt 8 $602047 Down (Sell)

MCX Rs 428/Kg 13 $6080

ZINC

GOLD

Exchange Entry Target SL

LME $6080-6100 $5950 & 5850 $6200

MCX Rs 431-432 Rs 420&414 Rs 440


COMEX $2580/Mt 8 $253056 Down (Sell)

MCX Rs 184/Kg 13 $2530


COMEX $2585-2590 $2500 $2650

MCX Rs 185-186 Rs 190 Rs 178


LME $1284/Ounce 8 $126069 Up (Buy)

MCX Rs 32200/10g 13 $1270


LME $1290-1292 $1270 $1300

MCX Rs 32300-35000 Rs 31800 Rs 32560


COMMODITIES

NEWS DIGEST

• Gold took on some lustre in the global market amid dollar’s weakness whereas crude oil slipped 1% on rising US supply. Gold prices rose on Thursday on growing expectations that the US Federal Reserve will pause its rate tightening cycle this year.

• Cotton futures (January) on MCX are expected to take support near Rs. 20,700 and may trade with an upside bias. Guar seed futures (February) may plunge towards Rs. 4,200-4,180 while guar gum futures (February) will possibly plunge towards Rs. 8,200. Chana futures (March) are likely to witness correction towards Rs. 4,250.

• Soybean futures (February) are looking bullish and can test Rs. 3,650-3,680. Mustard futures (January) are likely to move sideways at Rs. 3,890-3,930. CPO futures (January) are expected to move with a downside bias and may witness profit booking facing resistance near Rs. 543 levels. Soy oil futures (January) are expected to test the second resistance near Rs. 751, taking positive cues from the weaker rupee, which is making imports costlier.

• Oil crops were among the most affected segments last week mainly due to higher supplies and bright prospects of rabi oilseeds. The largest mustard growing state of Rajasthan reported 12.6% higher sowing in 2018-19 season and weather conditions too has remained favourable so far in the producing belt.

• Among spices, fall in coriander was due to release of stocks at higher price levels, whereas jeera and turmeric declined ahead of the upcoming harvest season. Coriander prices have witnessed substantial gains in the first half of the month on concerns over lower acreage. In Gujarat, the second largest coriander growing state, sowing was just 30% of the normal by December 17. That makes it 58% lower compared to the same period last year. Thus, coriander prices are bound to go up on concerns over lower acreage.

WEEKLY COMMENTARY

• Gold demand turned fragile this week in India as local prices jumped to their highest level in 2-1/2-years, while traders in major buying centers in Asia pinned hopes on purchases ahead of the approaching Lunar New Year. Local gold prices in India, world’s second largest gold consumer, touched the highest since July 2016 this week.

• A Farmer Producer Organization (FPO) representing over 1,600 farmers from Somnath-Gir district, Gujarat has made a cotton deposit for the first time on Multi Commodity Exchange of India Ltd (MCXNSE -1.12 %), thus reaffirming their confidence in the hedging tools made available by the exchange, which is indeed a very encouraging development for the market and agricultural commodity ecosystem.

• US oil prices inched higher on Friday after a report from the Organization of the Petroleum Exporting Countries showed its production fell sharply last month, easing fears about prolonged oversupply. US West Texas Intermediate (WTI) crude futures were at $52.40 per barrel up 32 cents, or 0.6%, from their last settlement. WTI futures closed down 0.4 per cent on Thursday.

• Palladium held near $1,400 an ounce on Friday after surging to record levels in the previous session on tight supplies and robust demand, while gold stood firm amid a partial US government shutdown.

MCX CRUDE MCX NATURAL GAS

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

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COMMODITIES

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

Commodity Exchange Contract 11-Jan 18-Jan % change

Aluminium LME 3M 1833.50 1852.00 1.01%

Copper LME 3M 5957.50 5995.50 0.64%

Lead LME 3M 1998.00 1970.50 -1.38%

Nickel LME 3M 11460.00 11585.00 1.09%

Zinc LME 3M 2497.00 2538.00 1.64%

Gold CME FEB 1287.90 1291.60 0.29%

Silver CME MAR 15.64 15.56 -0.54%

WTI Crude oil CME FEB 51.70 52.21 0.99%

Natural Gas CME FEB 3.16 3.42 8.17%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 11-Jan 18-Jan % change

Soybean CBOT JAN 923.75 933.75 1.08%

Soy oil CBOT JAN 27.88 27.88 0.00%

CPO BMD MAR 2173.00 2223.00 2.30%

Cotton ICE MAR 72.51 74.31 2.48%

SPOT PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONS)

Commodity Previous week This week Change % Change

Copper 133700 135100 1400 1.05%

Zinc 126800 121650 -5150 -4.06%

Aluminium 1284725 1303475 18750 1.46%

Lead 104525 93025 -11500 -11.00%

Nickel 201096 201228 132 0.07%

SHANGHAI WAREHOUSE STOCKS (IN TONS)*


Copper 108890 97979 -10911 -10.02%

Zinc 27898 26942 -956 -3.43%

Aluminium 672326 692558 20232 3.01%

*Until Wednesday

WEEKLY STOCK POSITION IN LME (IN TONS)

Progress of area coverage under Rabi crops as on 18.01.2019

COMEX WAREHOUSE STOCKS (IN TONS)


Copper 104493 98252 -6241 -5.97%

CropArea Sown Covered Difference

over 2018-19 over 2017-18

Yr-on-yr Change

Normal Rabi Area2017-18 Contract

Wheat 296.05 303.87 -7.82 -2.57% 306.29

Rice 17.93 22.84 -4.91 -21.50% 41.59

Pulses 149.01 157.8 -8.79 -5.57% 140.84

Gram 95.4 105.95 -10.55 -9.96% 89.45

Lentil 15.74 16.85 -1.11 -6.59% 13.94

Fieldpea 10.22 10.31 -0.09 -0.87% 9.33

Kulthi 4.26 5.27 -1.01 -19.17% 2.09

Urdbean 7.59 6.75 0.84 12.44% 8.13

Moongbean 5.19 4.98 0.21 4.22% 9.62

Lathyrus 3.61 3.26 0.35 10.74% 4.58

Other Pulses 5.83 5.84 -0.01 -0.17% 3.69

Coarse Cereals 46.66 54.18 -7.52 -13.88% 64.53

Jowar 24.6 30.27 -5.67 -18.73% 37.4

Bajra 0.11 0.2 -0.09 -45.00% 3.66

Ragi 0.59 0.66 -0.07 -10.61% 0.32

Maize 14.13 15.62 -1.49 -9.54% 16.51

Barley 7.23 7.43 -0.2 -2.69% 6.64

Oilseeds 78.45 79.2 -0.75 -0.95% 80.6

Rapeseed & Mustard 68.66 66.77 1.89 2.83% 61.25

Groundnut 4.08 5.25 -1.17 -22.29% 7.85

Safflower 0.44 0.78 -0.34 -43.59% 1.62

Sunflower 1.05 1.61 -0.56 -34.78% 3.78

Sesamum 0.54 0.48 0.06 12.50% 3.04

Linseed 3.37 3.97 -0.6 -15.11% 2.93

Other Oilseeds 0.31 0.34 -0.03 -8.82% 0.15

Total Crops 581.5 610.5 -29 -4.75% 633.85

Source: Ministry of Agriculture.

-2.43%

-1.62%

-1.47%

-0.64%

-0.34%

-0.27%

-0.11%

1.43%

0.50%

1.35%

1.12%

1.50%

1.82%

3.30%

3.41%

4.15%

4.85%

3.40%

4.07%

5.13%

4.40%

4.71%

5.51%

6.76%

9.22%

-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%

Dhaniya

Mentha Oil

Castor Seed

Turmeric

RM Seed

Silver

Soy Oil

Lead

Gold

Cotton

CPO

Wheat

Barley

Aluminum

Copper

Nickel

Crude Oil

Guar Seed

Jeera

Zinc

Cotton Seed Oil Cake

Soybean

Cardamom

Guar Gum

Natural Gas


USD/INR

USDINR is currently trading at 71.14. During the week, it made a high of 71.39 and low of 70.45. The RSI is at 54.06. Moving average of 13 is at 70.87 and 55 is at 69.19. The trend is looking positive for the week. Hence, recommend buying at 70.80-70.70 TP 72.00 SL 70.40

EUR/INR

EURINR is currently trading at 81.14. During the week, it made a high of 81.59 and low of 80.55. The RSI is trading at 50.00. Moving average of 13 is at 81.13 and 55 is at 80.21. The trend is looking positive for the week. Hence, recommend buying at 80.80-80.70 TP 82.00 SL 80.40.

GBP/INR

GBPINR is currently trading at 92.16. During the week, it made a high of 92.43 and low of 90.36. The RSI is trading at 53.08.05. Moving average of 13 is at 90.92 and 55 is at 90.53. The trend is looking positive for the week. Hence, recommend buying at 91.70-91.60 TP 92.30 SL 91.30.

JPY/INR

JPYINR is currently trading at 65.00. During the week, it made a high of 65.67 and low of 64.82. The RSI is at 64.65. Moving average of 13 is at 63.83 and 55 is at 62.28. The trend is looking bullish for the week. Hence, recommend buying at 64.50-64.40 TP 66.00 SL 64.00.

TECHNICAL RECOMMENDATIONMARKET STANCE

As anticipated by majority of the market participants, Fed turned data dependent over its balance sheet tightening program in 2019. This has been evident by the comments from Fed members during the week. Minutes of Federal Reserve December meeting pointed that almost all of the council members hinted for a prolong rate hike pause by Federal Reserve. Fed Chair Jerome Powell said that the “Fed has ability to be patient given inflation data”. He also mentioned that Fed has no particular plan to raise rates a specific number of times. Adding to this, positive air from US-Sino trade war negotiations also built pressure on Dollar index which remained weaker throughout week, just to recover during the final trading sessions of the week. The European Central Bank December meeting minutes noted that the Governing Council’s decision to wind up its lavish asset purchase program was unanimous. But a new policy named targeted longer-term refinancing operation (TLTRO) was brought forward by some governing council members (which would provide banks with new multi-year loans). If implemented, this would introduce additional monetary stimulus and help banks meet their multi-year funding requirements. This move would again mitigate the benefits of winding up asset purchase program for Euro. In UK, Prime Minister Theresa May continued to suffer setbacks in parliament on amendments to her Brexit deal. Certainly May does not have any plan-B if her initial deal fails to get approval. The uncertainty over Brexit deal is not giving any legs to pound rally despite weaker dollar. Most of the emerging market currencies added marginal gains during the week followed by weaker dollar, but rupee remained an outlier from the pack tracking strong crude oil prices.

NEWS FLOWS OF LAST WEEK

• Fed Vice Chair Richard Clarida said any headwinds to the US economy should be offset by policy. It will not hesitate to make adjustments to asset-offloading strategy.

• Fed policymakers, according to the minutes of December meeting, indicate they may be open to tweak a longstanding plan to shrink the central bank’s balance sheet, including by shedding housing-backed bonds earlier than anticipated or keeping a bigger-than-expected portfolio of assets.

• The US dollar’s rally is halted, according to a poll by Reuters, the fall in expectations of a rate hike have diminished the greenback’s edge over its peers.

• UK PM Theresa May said to be weighing whether to accept a plan drafted by pro-EU politicians who want to make it harder to leave the bloc with no divorce agreement in place.

• The UK parliament returns from Christmas holidays and PM Theresa May might again push back a final vote on her Brexit deal, less than three months before the UK is due to exit the EU.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 69.42 70.64 69.23 70.48

EURINR 79.29 81.61 79.10 81.23

GBPINR 88.48 90.50 88.25 90.17

JPYINR 64.02 65.44 64.00 65.07

DXY 97.43 97.46 96.17 96.95


ECONOMIC GAUGE FOR THE NEXT WEEK

Local Start Date Local Time Country Indicator Name Reuters Poll Unit Prior Unit

21 Jan 2019 07:30 China (Mainland) Urban investment (YTD) YY 6.0% Percent 5.9% Percent

21 Jan 2019 07:30 China (Mainland) Industrial Output YY 5.3% Percent 5.4% Percent

21 Jan 2019 07:30 China (Mainland) Retail Sales YY 8.2% Percent 8.1% Percent

21 Jan 2019 07:30 China (Mainland) GDP YY 6.4% Percent 6.5% Percent

21 Jan 2019 07:30 China (Mainland) GDP QQ SA 1.5% Percent 1.6% Percent

21 Jan 2019 07:30 China (Mainland) GDP YTD YY Percent 6.7% Percent

21 Jan 2019 07:30 China (Mainland) Industrial Production YTD YY Percent 6.3% Percent

21 Jan 2019 07:30 China (Mainland) Retail Sales YTD YY Percent 4.09% Percent

21 Jan 2019 13:30 Taiwan Export Orders YY -3.20% Percent -2.10% Number of

21 Jan 2019 18:30 Russia PPI MM -1.5% Percent 0.7% Percent

21 Jan 2019 18:30 Russia PPI YY 13.8% Percent 16.8% USD

21 Jan 2019 19:00 United States Corn Export Sales New Tonne 2,065.90k Percent

21 Jan 2019 19:00 United States Corn Export Sales Net Tonne 1,974.400k Percent

21 Jan 2019 19:00 United States Corn Exp Sale Next Yr Net Tonne 542.60k Percent

21 Jan 2019 19:00 United States Corn Exp Sales Net Total Tonne 2,517.00k Percent

21 Jan 2019 19:00 United States Soybean Export Sales New Tonne 2,862.400k Percent

21 Jan 2019 19:00 United States Soybean Export Sales Net Tonne 2,835.600k Percent

21 Jan 2019 19:00 United States Soybean Exp Sale Next Yr Net Tonne 127.80k Percent

21 Jan 2019 19:00 United States Soybean Exp Sale Net Total Tonne 2,963.40k Percent

21 Jan 2019 19:00 United States Soybeanmeal Exp Sale Net Tonne 300.00k Percent

21 Jan 2019 19:00 United States Soymeal Exp Sls Next Yr Net Tonne 0.00k Number of

21 Jan 2019 19:00 United States Soybn Meal Exp Sls Net Total Tonne 300.00k Percent

21 Jan 2019 19:00 United States Soybeanoil Exp Sales Net Tonne 35.70k Percent

21 Jan 2019 19:00 United States Soybn Oil Exp Sls Nxt Yr Net Tonne 0.10k Percent

21 Jan 2019 19:00 United States Soybn Oil Exp Sls Net Total Tonne 35.80k Ton

21 Jan 2019 19:00 United States Wheat Export Sales New Tonne 330.800k Ton

21 Jan 2019 19:00 United States Wheat Export Sales Net Tonne 313.600k Ton

21 Jan 2019 19:00 United States Wheat Exp Sale Next Yr Net Tonne 0.00k Bushel (56lb)

21 Jan 2019 19:00 United States Wheat Exp Sale Net Total Tonne 313.60k Bushel (56lb)

21 Jan 2019 19:00 United States Beef Export Sales New Tonne 12.500k Bushel (56lb)

21 Jan 2019 19:00 United States Beef Export Sales Net Tonne 10.200k Number of

21 Jan 2019 19:00 United States Up Cotton Exp Sales New Number of 154.400k Bushel (56lb)

21 Jan 2019 19:00 United States Up Cotton Exp Sales Net Number of 142.400k Bushel (56lb)

21 Jan 2019 19:00 United States US Pork Export Sales New Tonne 35.200k Bushel (56lb)

21 Jan 2019 19:00 United States US Pork Export Sales Net Tonne 31.600k Bushel (56lb)

22 Jan 2019 13:30 Taiwan Jobless Rate Percent 3.69% Bushel (56lb)

22 Jan 2019 20:30 United States Existing Home Sales 5.25M Number of 5.32M Bushel (56lb)

22 Jan 2019 20:30 United States Exist. Home Sales % Chg -1.3% Percent 1.9% 480 Pound Bale

22 Jan 2019 21:30 United States Export Wheat Inspected Tonne 545.804k 480 Pound Bale

22 Jan 2019 21:30 United States Export Corn Inspected Tonne 1,013.682k Pound

22 Jan 2019 21:30 United States Exp Soybean Inspected Tonne 1,085.251k Pound

23 Jan 2019 01:30 United States Cold Pork Belly Stocks Pound 36.859M Pound

23 Jan 2019 01:30 United States Cold Storage-Beef Stocks Pound 514.720M Bushel (56lb)

23 Jan 2019 01:30 United States Cold Storage- FCOJ Stock Pound 0.529B Bushel (56lb)

23 Jan 2019 03:00 United States API weekly crude stocks #N/P Number of #N/P Ton

23 Jan 2019 03:00 United States API weekly gasoline stk #N/P Number of #N/P Bushel (56lb)

23 Jan 2019 03:00 United States API weekly dist. stocks #N/P Number of #N/P Bushel (56lb)

23 Jan 2019 03:00 United States API weekly heating oil #N/P Number of #N/P Bushel (56lb)

23 Jan 2019 03:00 United States API weekly crude imports #N/P Number of #N/P Ton

23 Jan 2019 03:00 United States API weekly product imports #N/P Number of #N/P Bushel (56lb)

23 Jan 2019 03:00 United States API weekly crude runs #N/P Number of #N/P Ton

23 Jan 2019 03:00 United States API Cushing number #N/P Number of #N/P Bushel (56lb)

CURRENCY


CURRENCY

23 Jan 2019 13:30 Taiwan Industrial Output YY Percent 2.09% Percent

23 Jan 2019 17:30 United States MBA Mortgage Applications Percent 13.5% Percent

23 Jan 2019 17:30 United States Mortgage Market Index Index 411.8 USD

23 Jan 2019 17:30 United States MBA Purchase Index Index 278.5 Percent

23 Jan 2019 17:30 United States Mortgage Refinance Index Index 1,172.4 Percent

23 Jan 2019 17:30 United States MBA 30-Yr Mortgage Rate Percent 4.74% CNY

23 Jan 2019 18:30 Russia Industrial Output 2.6% Percent 2.4% Percent

23 Jan 2019 19:25 United States Redbook MM Percent -1.7% USD

23 Jan 2019 19:25 United States Redbook YY Percent 6.7% EUR

23 Jan 2019 19:30 United States Monthly Home Price MM Percent 0.3% Index

23 Jan 2019 19:30 United States Monthly Home Price YY Percent 5.7% Percent

23 Jan 2019 19:30 United States Monthly Home Price Index Index 267.9 Percent

23 Jan 2019 20:30 United States Rich Fed Comp. Index Index -8 Percent

23 Jan 2019 20:30 United States Rich Fed, Services Index Index 10 Percent

23 Jan 2019 20:30 United States Rich Fed Mfg Shipments Index -25 Percent

23 Jan 2019 Russia Budget Fulfillment Percent 3.7% Percent

24 Jan 2019 13:50 Taiwan Money Supply Percent 3.09% Percent

24 Jan 2019 13:50 Taiwan Broad Money TWD 4,39,59,023M Percent

24 Jan 2019 18:30 Russia Cbank Wkly Reserves USD 472.6B Bushel (56lb)

24 Jan 2019 19:00 United States Initial Jobless Claims 220k Person 213k Pound

24 Jan 2019 19:00 United States Jobless Claims 4-Wk Avg Person 220.75k Number of

24 Jan 2019 19:00 United States Continued Jobless Claims Person 1.737M Number of

24 Jan 2019 20:15 United States Markit Comp Flash PMI Index (diffusion) 54.4 Number of

24 Jan 2019 20:15 United States Markit Mfg PMI Flash 53.5 Index (diffusion) 53.8 Number of

24 Jan 2019 20:15 United States Markit Svcs PMI Flash 54.2 Index (diffusion) 54.4 Number of

24 Jan 2019 20:30 United States Leading Index Chg MM 0.0% Percent 0.2% Number of

24 Jan 2019 21:00 United States EIA- Nat Gas, Change Bcf Cubic foot -81B Number of

24 Jan 2019 21:00 United States Nat Gas-EIA Implied Flow Cubic foot -81B Number of

24 Jan 2019 21:30 United States EIA Weekly Crude Stocks Barrel -2.683M Percent

24 Jan 2019 21:30 United States EIA Weekly Dist. Stocks Barrel 2.967M Percent

24 Jan 2019 21:30 United States EIA Weekly Gasoline Stk Barrel 7.503M Percent

24 Jan 2019 21:30 United States EIA Weekly Crude Imports Barrel -1.220M Percent

24 Jan 2019 21:30 United States EIA Weekly Rfg Stocks Barrel 0.004M Percent

24 Jan 2019 21:30 United States EIA Weekly Heatoil Stock Barrel 0.346M Percent

24 Jan 2019 21:30 United States EIA Weekly Prods Imports Barrel/Day 0.310M Percent

24 Jan 2019 21:30 United States EIA Weekly Dist Output Barrel/Day -0.151M Percent

24 Jan 2019 21:30 United States EIA Weekly Crude Runs Barrel/Day -0.343M Percent

24 Jan 2019 21:30 United States EIA Weekly Refining Util Percent -1.5% Percent

24 Jan 2019 21:30 United States EIA Wkly Crude Cushing Barrel -0.743M Percent

24 Jan 2019 21:30 United States EIA Weekly Gasoline O/P Barrel/Day 0.192M Index

24 Jan 2019 21:30 United States KC Fed Manufacturing Index -18 Index

24 Jan 2019 21:30 United States KC Fed Composite Index Index (diffusion) 3 Percent

25 Jan 2019 00:00 United States EIA Ethanol Ref Stk Barrel 23,351k Percent

25 Jan 2019 00:00 United States EIA Ethanol Fuel Total Barrel per day 1,051k Percent

25 Jan 2019 17:00 India FX Reserves, USD USD 397.35B Percent

25 Jan 2019 18:30 United States Build Permits R Numb Number of Percent

25 Jan 2019 18:30 United States Build Permits R Chg MM Percent Percent

25 Jan 2019 18:30 Russia Retail Sales YY 2.8% Percent 3.0% Percent

25 Jan 2019 18:30 Russia Unemployment Rate 4.8% Percent 4.8% Percent

25 Jan 2019 18:30 Russia Real Wages YY 4.1% Percent 4.6% Index

25 Jan 2019 19:00 United States Durable Goods 1.5% Percent Index

25 Jan 2019 19:00 United States Durables Ex-Transport 0.2% Percent Index

25 Jan 2019 19:00 United States Durables Ex-Defense MM Percent Percent

25 Jan 2019 19:00 United States Nondefe Cap Ex-Air Percent Percent

25 Jan 2019 20:30 United States New Home Sales-Units 0.567M Number of Percent

25 Jan 2019 20:30 United States New Home Sales Chg MM 0.7% Percent Percent


Press Release of Investment Strategy Report-2019

Documents

RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue020.pdf · 2019. 1. 19. · • Axis Bank clarified on news relating to Hawala Scam stating accounts have