RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue004.pdfCAD is likely to widen from 1.8% to 2.5% in 2019, according to consensus estimates. Our study of the

ISSUE: 004

29TH SEPTEMBER, 2018

RULE THE MARKET

From The Desk Of Research HeadCONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-14

Mutual Funds 15

Events 16

TeamVivek Ranjan Misra

Dr Ravi Singh

De Arul Kaarthick

Ankit Soni

Yash Bhotika

Konpal Pali

Munindra Upadhyay

Arun Kumar Mantri

Nikunj Todi

Osho Krishan

M.V.Narasinga Rao

Chirag M Solanki

Aditya Kistampally

Deepak Sakure

Bharat Sunnam (Currencies)

Arpit Chandna

Amit Kumar

Ravishankar Pandey

Anup B P

Vinod Jayakumar

Karvy Head Office

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- VIVEK RANJAN MISRAHead-Fundamental Research

The Indian economy is facing twin challenges: rupee depreciation and higher crude oil prices. Indian rupees depreciated by 11.7% YoY during 9MFY18 and by 5% MoM in September 2018. In this report, we examine the possible impact of rupee depreciation on Inflation and consequent direction of the monetary policy. But first, we will examine the impact of the US fed hike and outlook.

US FED Rate Decision

US Fed further tightened the monetary policy and raised interest rate by 25 bps to the range of 2.00% to 2.25%. The US central bank still foresees another rate hike in December and three more in next year. Though we believe this has been largely factored in 10-year Indian Govt bond yields, we still think Indian/emerging market investments may be impacted on the back of political/trade concerns.

The median forecast from the latest “dot plot” points to the Fed funds rate climbing to 2.375% by the end of 2018. This implies one more 25 basis point increase this year. The rate is projected to climb to 3.125% by the end of 2019, implying three rate hikes in 2019. The dot plot also implies a rate of 3.375% by end of 2020.

Federal Reserve officials on Wednesday dropped their long-standing description of the central bank’s monetary policy as “accommodative” in their statement.

Impact of Rupee depreciation

We believe the geneses for the turmoil in the currency markets have its origins in the wider emerging market space. Firstly as part of trade wars, USA imposed import tariffs on China, Europe, Mexico, Canada and Turkey. Secondly, economic imbalances in certain markets like Argentina, which had to increase interest rates and had to approach the IMF for a bailout. This has led the currencies of emerging markets to depreciate significantly. Lastly, strong US growth (US economy expected to grow at 2.9% in 2018), higher US rates and strong corporate earnings growth with S&P 500 earnings expected to grow at 16.6% in 2018 have increased the attraction of US assets, leading to a strengthening of the US Dollar.

Additionally, US sanctions on Iran which are expected to be implemented by November 2018 have contributed to the fears of a supply contraction and higher prices. India imports 11-12% oil from Iran and we think these political conflicts will sustain for a while.

We do believe India is better placed now to face these macro headwinds compared to Taper Tantrum of 2013. India, back then, had a significantly higher current account deficit which reached a level of 5.08% during Q4CY12. Even with higher oil prices, the current CAD is likely to widen from 1.8% to 2.5% in 2019, according to consensus estimates.

Our study of the relationship between Rupee and consumer price inflation suggests the current spell of INR depreciation may lead to inflation soar by 75 bps, in addition to the baseline scenario over a period of six months. If the Reserve Bank wants to maintain a constant real policy (nominal –CPI) rate, it would need to deliver 2 to 3 rate hikes of 25 bps each.

We expect another rate hike of 25bps on 4th October 2018, while not ruling out even a 50 bps increase.

EQUITY

Domestic Economy

• The government has hiked import duty on high-end consumer items including washing machines, air conditioner, footwear, diamonds, jet fuel as a part of its plan to get foreign funds flowing back to India and to reduce the current account deficit (CAD) as it seeks to stabilize the domestic currency.

• India is expected to grow at a healthy 7.3% in the fiscal year 2018, helped by improved domestic demand and a steady revival in industrial growth, the Asian Development Bank report.

Power

• PSpot power tariff climbs To 9-year high of Rs. 14.25 per unit.

• L&T’s power arm bags orders worth Rs. 1,400 cr. from NTPC.

Automobile

• Tata Power, HPCL join hands to set up EV charging stations.• Rs 15 lakh accident cover must for motor owners.• Utility vehicles major Mahindra & Mahindra (M&M) plans to drive in

multiple versions of its entry-level models KUV100 and TUV300, catering to different sets of customers.

BFSI

• Punjab National Bank board approves the proposal to raise Rs. 5,431 cr fund from government.

• Banks not too keen on funding Hybrid Annuity Model (HAM) projects as NPAs swell.

• The country’s largest insurer, LIC, said it would not allow embattled Infrastructure Leasing & Financial Services (IL&FS) to collapse, promising to offer all support to the lender.

• RBI relaxes reserve rules to ease liquidity, follows concerns over tight liquidity conditions and banks’ unwillingness to lend to NBFCs.

• RBI cancels Bandhan Bank’s permission for new branches, freezes chief’s pay.

Telecom

• Cabinet approves telecom policy to draw $100 bn investment, create 4 mn jobs. The government aims to provide 50 mbps broadband to all key development institutions and improve connectivity in uncovered areas under the new policy.

• Telecos to face challenges as SC order stops Aadhaar-based eKYC.

Oil & Gas

• Oil prices edge up amid uncertainty over fallout from Iran sanctions. The most-active Brent crude futures contract, for December, had risen 18 cents, or 0.22%, to $81.56 per barrel by 0126 GMT.

Metal & Mining:

• Hind Copper’s Malanjkhand underground mine to begin production next fiscal, The current mine expansion plan of the company has been enhanced from 12.4 MTPA to 20 MTPA..

Pharma

• The NSE announced the exclusion of Lupin from the Nifty index, while it will be replaced with JSW Steel on the benchmark 50-share index.

NEWS

INTERNATIONAL NEWS

• US regulator sues Musk for fraud, seek to remove him from Tesla

• French government rules out selling Air France-KLM stake

• WTO cuts world merchandise trade forecasts for 2018 and 2019

• China’s industrial profit growth hits five-month low, points to cooler demand

• Uber to pay $148 million to settle data breach cover-up with US states

• US Fed raises interest rates, flags end of ‘accommodative’ policy

• China to further boost $3.8 trillion digital economy, create more jobs

TREND SHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 36227.14 35426 35827 36787 37346 Down

NIFTY 10930.45 10664 10797 11117 11303 Down

NIFTYBANK 25119.85 24178 24649 25620 26121 Down

YESBANK 183.65 122 153 227 270 Down

IBULHSGFIN 856.85 579 718 1064 1272 Down

RELIANCE 1,257.95 1165 1211 1288 1318 Up

HDFC 1,754.50 1624 1689 1833 1911 Down

MARUTI 7,347.95 6780 7064 7861 8374 Down

BAJFINANCE 2,168.00 1930 2049 2355 2541 Down

ICICIBANK 305.55 291 298 315 324 Down

AXISBANK 613.25 572 593 629 645 Down

HDFCBANK 2,006.05 1878 1942 2043 2079 Down

SBIN 265.50 254 260 273 280 Down

FORTHCOMING EVENTSCompany Name Ex Date

K.P. ENERGY LTD 3-Oct-18

GOA CARBON LTD. 5-Oct-18

ANG INDUSTRIES LIMITED 6-Oct-18

TATA ELXSI LTD. 8-Oct-18

BANDHAN BANK LTD 10-Oct-18

G.M.BREWERIES LTD. 11-Oct-18

3I INFOTECH LTD. 12-Oct-18

KARNATAKA BANK LTD. 12-Oct-18

TATA SPONGE IRON LTD. 12-Oct-18

HERO MOTOCORP LTD. 16-Oct-18

INFOSYS LTD. 16-Oct-18

MPHASIS LTD. 17-Oct-18

HDFC BANK LTD 20-Oct-18

ICICI LOMBARD GENERAL INSURANCE COMPANY LTD 20-Oct-18

CAN FIN HOMES LTD. 22-Oct-18

KANSAI NEROLAC PAINTS LTD. 22-Oct-18

LAKSHMI MACHINE WORKS LTD. 22-Oct-18

BAJAJ FINSERV LTD. 23-Oct-18

BAJAJ FINANCE LIMITED 23-Oct-18

KSTREET - 29TH SEPTEMBER 2018 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

-9.0

-8.0

-7.0

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

NIFTY IN

DEX

SENSEX

IND

EX

SPBSMIP IN

DEX

SPBSSIP IND

EX

NIFTYJR IN

DEX

NSEM

CA

P IND

EX

-14.0

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

NSEA

UTO

IND

EX

NSEBA

NK

IND

EX

NSESRV

IND

EX

NSEPH

RM IN

DEX

NSEIT IN

DEX

NSEM

ET IND

EX

NSEN

RG IN

DEX

NSEC

ON

IND

EX

NSEREA

L IND

EX

NSEFM

CG

IND

EX

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

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

-35.0

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

IH IS

UBBL IS

BIOS IS

CRIN

IS

ABFRL IS

DEW

H IS

IBVE IS

CBO

I IS

PNBH

OU

SI IS

IBREL IS

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

TCS IS

INFO

IS

RIL IS

AX

SB IS

HD

FCB IS

MM

IS

TTMT IS

EIM IS

YES IS

IHFL IS

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

9/21/2018

9/22/2018

9/23/2018

9/24/2018

9/25/2018

9/26/2018

9/27/2018

FII/FPI DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

Menon Bearings Ltd CMP Rs.83 Target Price Rs.135Upside 63%

Investment Rationale

• Considering the order book position, customer demand & traction

earnings are expected to grow at a CAGR of 16.5% during FY18-20E along

with a healthy EBITDA margin of 27% with >25% RoE.

• Menon enjoys a marquee list of clientele like TATA, VOLVO, Mahindra

& Piaggio and boasts about its manufacturing capabilities. Menon

undertakes designing, testing, validation & manufacturing of bearings,

bushes & thrust washers for a wide range of applications.

• Menon has recently invested towards enhancement of aluminum division

and the facility is expected to be ready by FY20E. With enhanced

capacities, Menon is in good place to de-risk its product mix. Considering

the strong clientele & new contracts, we are of the positive view about

Menon’s focus on increasing the aluminum segmental share from the

current levels of ~30%. We also expect the segment to witness a faster

growth ahead.

• Historically, Menon Bearings has been recording a healthy profitability &

return ratios (>25% each). We expect the trend to continue in future as well.

VALUE PARAMETERSFace Value (Rs.) 1.0

52 Week High/Low (Rs.) 127/70

M.Cap (Rs. Bn/US $mn) 450/63

EPS (Rs.) 3.8

P/E Ratio (times) (FY20E) 16.0

Dividend Yield (%) 1.5

Stock Exchange BSE, NSE

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

REVENUE 1449 1609 1968

EBITDA 364 425 533

EBITDA(%) 25.1 26.4 27.1

PAT 211 246 293

EPS (Rs.) 3.8 4.4 5.2

RoE (%) 27.3 26.4 25.7

PE (x) 26.1 18.9 16.0

P/E CHARTValuation

At CMP of Rs. 83, Menon Bearings is trading at 16x FY20E EPS. In view of the capacity enhancements, product mix de-risking and healthy profitability margins, we ascribe a multiple of 26.0x to FY20E EPS (5 year average of one year forward PE) and recommend a “BUY” rating for a target price of Rs. 135, representing an upside of 63%. We believe that on account of high average return on capital at 33.6% over last 3 years, the company has potential to be re-rated. Threat of counterfeit products which mainly cater to aftermarket segment (10% of Menon revenues) along with slowdown in industrial & automotive segments especially tractor & CV sales may pose risk to the call..

EQUITY


BEAT THE STREET - FUNDAMENTAL ANALYSIS

V-MartRetail Ltd.CMP Rs.2507Target Price Rs.3252Upside 30%

Investment Rationale

• Organized Retail accounts for only 5% of the Retail industry in India. Thus there is a huge opportunity for the organized retail to grow. The company is continuously adding 30-35 stores in a year with a focus on Tier-4 towns where competition is lower. We expect the company to generate top-line / bottom-line growth of 18.5% / 15.3% CAGR over FY18-FY20E.

• The company has been expanding its reach in the Tier-4 towns rapidly. From 3 stores in FY17, the count has reached to 21 till date. Demand for lower ASP products is high here, which may dilute realizations going ahead. Thus the company is introducing products at different price points so that the ASP is not affected. The company is planning to expand the geographical reach to Northeast India as well.

• The Company is eyeing on capturing the biggest market share in organized retail. As a strategy, it is operating in a cluster based philosophy in the states of UP, Bihar, Uttarakhand and Jharkhand where they are the leaders in the value segment. There is huge density of population in these states. Moreover, the recent announcement of higher MSP would indirectly help in the growth of the company as the source of income of the majority of the population in these states in Agriculture.

• The Company after its success in cluster-based model of operating stores is evaluating an omnichannel (offline and online retail) strategy to expand business and reach its customers. The company is also looking at an investment of Rs. 1000Mn in the next financial year to open new stores and setting up a new warehouse. Primarily operating in Tier II-IV cities, the company is planning an investment of Rs. 3000Mn to double its store count and treble its turnover to Rs. 35000Mn in the next five years.

VALUE PARAMETERSFace Value (Rs.) 10.0

52 Week High/Low (Rs.) 3299/1221

M.Cap (Rs. Bn/US $mn) 45.5/0.63

EPS (Rs.) 42.9

P/E Ratio (times) (FY20E) 44.6

Dividend Yield (%) 0.1

Stock Exchange NSE/BSE

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

REVENUE 12224 14597 17406

EBITDA 1328 1609 1867

EBITDA(%) 10.9 11.0 10.7

PAT 777 934 1075

EPS (Rs.) 42.9 51.5 59.2

ROE (%) 22.4 21.8 20.4

P/E CHART

Valuation

Being a zero debt with rich cash flows, we rate the stock as BUY, valuing it at 55xFY20E EPS with a target price of Rs. 3252 and a potential upside of 30%. However, uneven monsoons, changing customer preference, massive competition and rising e-commerce preference are the key risks to the call.

EQUITY


EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

HDFC Bank Limited

The stock is in uptrend and making higher highs and higher low on weekly charts pattern. The stock has outperformed Nifty Bank and closed the previous week with positive return of 1.82%, whereas, Nifty Bank has closed the week with negative return of 1.86%. The stock has seen profit taking from its life time high of 2220 levels which has dragged the stock to the low of around 1977 levels. Thereafter, the stock has bounced well from the said lower levels with supportive volume formation on daily chart. The bounce from the said lower levels has given “V” shape recovery on daily charts, which indicates strong hands are accumulating the stock at lower levels. On technical setup, the 14 period RSI is pointing northwards after giving positive cross over with signal line. The Parabolic SAR has freshly trigged buy in the stock on daily charts which boost our bullish view in the stock. On Bollinger bands weekly chart stock has tested the lower Bollinger band and bouncing from the same towards upper band with expanding, which indicates positive momentum in the stock. At the current levels, the stock has given an excellent opportunity for medium to long term investors to accumulate the stock around 1990 levels for the potential upside targets of 2390- 2450 levels over the next 8 to 9 months, keeping a stop loss below 1690 levels and dip towards 1840 will be an averaging opportunity for medium term investors.

Wipro Limited

WIPRO rallied from 204 levels in November 2016 to 294.3 levels in January 2018 and corrected from there to 253.5 levels, which is around 61.80% Fibonacci retracement level of the said rally and bounced back to move above the 2018 January highs, indicating the end of the correction. The stock has given breakout from the cup and handle chart pattern in the monthly line chart, indicating a fresh leg of rally from these levels. Adding to it, the Parabolic SAR and Heiken candlesticks are signaling a positive trend on the weekly charts reflecting the stock is well placed to move higher in the coming days. 14-periods RSI is trading above the 9-period averages in the weekly chart, indicating positive momentum. The stock is trading well above all of its major moving averages on the daily as well as weekly charts, indicating a strong positive momentum in the counter for all major time frames. On Bollinger bands, the weekly chart stock has tested the upper bands and the bands are expanding, indicating positive momentum. At the current levels, the stock has given an excellent opportunity for medium to long-term investors to accumulate the stock around 320 levels for the potential upside targets of 384-397 levels over the next 6-9 months, keeping a stop loss below 269 levels.

Stock HDFCBANK

CMP 2006.05

Action BUY

Entry 1990

Average 1840

Stop loss 1690

Target 2390

Target 2 2450

Time Frame 6-9 months

Stock WIPRO

CMP 324

Action BUY

Entry 320

Average 289

Stop loss 269

Target 384

Target 2 397

Time Frame 6-9 months


EQUITY

Sentiment

Stop Loss 870

Target 770

Lot Size 550

Margin 68800

21-DEMA 895

Open Interest Shares 6735850

Change in OI (Weekly) -204600

Cost of Carry (%) 7.73

SECTORAL SNIPPETS

NIFTY BANK (25,119.85) closed in red with 1.75% in line with the Benchmark index Nifty which closed in red with a loss of 1.8% on a weekly basis. Technically, the index is holding below all of its major moving averages in the daily chart. The index has ended in red for the fourth consecutive week. 14 day RSI is trading at 37.85 below its 9 period averages at 53.79, suggesting a negative momentum in the index. Other leading indicators, Heiken candlesticks & parabolic SAR suggest the negative trend in the index. On the weekly charts, the index has pierced the lower band in Bollinger bands while bands are expanding, indicating negative momentum. Among the index stocks, YESBANK was leading the losses with 18.72% fall. BANKBARODA, FEDERALBNK, ICICIBANK, IDFCBANK, INDUSINDBK, KOTAKBANK, PNB, RBLBANK closed in red while, AXISBANK & HDFCBANK were trying to hold the index from falling further. Going forward, the supports for the index are placed around 24,670 levels and below it at 24,460 zone, any breach below the level could aggravate selling pressure in the counter. while resistance is placed around 25,525 levels and above that around 25,650 levels suggesting the possibility of a huge supply at these levels.

NIFTY IT (15,838.05) ended the week on a flat note with a positive return of 0.07% outperforming the benchmark index NIFTY which closed with a negative return of -1.88%. NIFTY IT index continued trading well above its major moving averages on the weekly as well as monthly charts, indicating a strong positive momentum in the index led by index heavyweight TCS which gained nearly 3.94% followed by INFY which gained nearly 3.74% in this week. INFIBEAM remained a drag on the index losing as much as 68% during the week on the back of the news that the company has given interest-free and unsecured loans to its subsidiary (with negative net assets) with repayment over 8 years. The stocks which have outperformed the NIFTYIT index during the week were TCS, INFY, TECHM while INFIBEAM, NIITTECH, MINDTREE, OFSS, WIPRO, TATAELXSI underperformed the index. On the momentum oscillator front, however, the 14-period RSI is placed below the 9-period signal line on the daily as well as weekly charts, indicating loss of momentum in the index. Until the index crosses and sustains above the immediate resistance at 16,150 levels, it may likely face selling pressure which may drag the index towards its swing support at 15,725 levels below which the next swing support is placed at 15,600 levels.

NIFTY AUTO (9590.25) closed the week on an extremely bearish note ending lower by more than 7.5% on a weekly basis. The index underperformed the benchmark Nifty by a huge margin and currently is hovering well below the major breakdown levels of 10,400-10,500 levels on the daily charts. The recent price action indicates that the index has now resistance around 10,000 followed by 10,400 levels on the higher side while no major support is pegged near the current price of the Index. At current juncture, the index is set to move lower and rise in the same should be utilized as an exit opportunity. We expect the index to witness further down move towards 9200-9300 in the coming trades as per the recent chart structure and short-term traders may avoid the sector for going long in the near-term. On the other hand, the stock specific activity may also be witnessed among the various stocks in the index. Among the auto stocks, BOSCHLTD is expected to outperform and is poised to continue its positive move in the coming week while two-wheeler stocks are expected to exhibit extreme weakness.

NIFTY REALITY (219.60) ended the week on a negative note by around 11.22%, underperforming NIFTY-50 which closed with a loss of around 1.88%. The breadth of the REALITY index was negative as 9 stocks out of 10 stocks in the index ended on a negative note. GODREJPROP was the only stock which has seen gain in the week passed by closing with a gain of around 2.8%, while IBREALEST, DLF, HDIL, PHOENIXLTD, UNITECH, PRESTIGE, SOBHA, OBEROIRLTY, and BRIGADE closed on a negative note with a cut of around 26.89%, 19.02%, 18.43%, 10.55%, 8.62%, 7.26%, 4.75%, 4.60%, and 4.38%, respectively. Technically, the said index is trading well below its daily & weekly 21-day exponential moving average, indicating a weakness in the index. The daily & weekly14-period RSI is trading below its 9 periods EMA, indicating a bearish bias. In the coming week, the index has support at 215 levels and below it at 210 levels, while resistance is pegged at 230 levels and above it at 238 levels. Going ahead the index is expected to trade on a negative note as long as the resistance around 230 zone holds and is expected to edge higher lower 210-215 levels.

AUROBINDO PHARMA LTD: BUY AUROPHARMA (OCT FUTURE) | CMP: 747.40 SECTOR: AUTO

AUROPHARMA ended on a negative note during the week, slipping more than 2%, whereas the sector index i.e. NIFTY PHARMA closed with cuts of 2.73% during the said time frame. The stock has marginally outperformed during the last week and the outperformance is likely to continue in the coming trading sessions as well. The stock has a strong support around 725 levels from where it has bounced back on a couple of occasions. The stock is trading above its 21/50/100/200- DEMA on the daily charts, indicating a positive momentum in the counter in the near term. The stock has been trading with decent volumes, suggesting accumulation in the counter around the current levels. Hence, we recommend Smart Trader to initiate Long position around the current levels with a stop loss placed below 720 for the target of 785 levels.

Sentiment

Stop Loss 720

Target 785

Lot Size 1000

Margin 111750

21-DEMA 740

Open Interest Shares 21961000

Change in OI (Weekly) -1665000

Cost of Carry (%) 5.35

CENTURY TEXTILE AND INDUSTRIES LTD : SELL CENTURYTEX (OCT FUTURE) | CMP: 826.25 SECTOR: CEMENT

CENTURYTEX ended on a negative note during the week, slipping more than 7% whereas the broader index i.e. NIFTY 50 has closed with cuts of close to 2% during the said time frame. The stock has significantly underperformed the broader markets during the last week and the underperformance is likely to continue in the coming trading sessions as well. The stock is trading below its 21/50/100/200- DEMA on the daily chart and weekly charts, suggesting weakness in the stock in all the major time frames. The 14-day RSI line has also given a negative crossover with the 9-day signal line and is pointing southwards, re-affirming our bearish biasness in the stock in the near term. The fall in the stock has also been accompanied by notable volumes. Hence, we recommend Smart Trader to initiate Short position around the current levels with a stop loss placed above 870 for the target of 770 levels.


Type: Put Ratio Spread in BANKNIFTY

First leg Buy one lot of BANKNIFTY 04 OCT 25100 PE @ 245-250

Second leg Sell two lots of BANKNIFTY 04 OCT 24800 PE @ 155-160

Max Profit 14,400 (If expires @ 24800)

Max Loss Unlimited beyond BEP'S

UBEP 25160

LBEP 24440

Stop loss 24500 (Spot levels) | Max profit: 2400 Above UBEP.

Rationale The Index is trading with negative bias on the daily charts and is trading below the major moving averages. We expect the index to trade in the wide range of 24600-25300 levels in the coming week.

WEEKLY VIEW OF THE MARKET

NIFTY (10930.45): During the last week, markets continued to spiral lower even as the Nifty ended the September series on a negative note, losing about 6% on an expiry basis and close to 2% on a weekly basis. In fact, this was the worst month in over a decade for traders on the street as stocks from BFSI space led the fall. Global markets too were tottering in the negative terrain for most of the week as the trade war has been taking a toll on almost all economies across the globe. Crude oil prices also shot up as the demand for the commodity increased significantly over the past few weeks. This has had a cascading effect on the USDINR which continued to spook equity markets. Apart from that, the FOMC’s rate hike has given foreign investors a safer haven to invest their money, which is having a clear impact on the emerging economies. Going into the next week, the Nifty is likely to take support around 10,800-10,750 below which 10,650-10,550 will act as the next meaningful supports, whereas on the upside, if the index manages to surpass the immediate supply zone around 11,100-11,150, then a relief rally towards the 11,300-11,400 levels cannot be ruled out. During the next week, we expect the index to trade in a range of 10,750-11,200 with a possibility of a strong move of 100-150 odd points in either direction, given the overall volatility. Later during the week on Friday, the RBI will be announcing the outcome of its bimonthly monetary policy; hence rate sensitive sector stocks will again remain in focus.

DERIVATIVE STRATEGIES

Type: Put Ladder in NIFTY

First leg Buy one lot of NIFTY 25 OCT 10900 PE @ 169

Second leg Sell one lot of NIFTY 25 OCT 10750 PE @ 120

Third leg Sell one lot of NIFTY 25 OCT10650 PE @ 94

Max Profit 14625

UBEP 10945

LBEP 10455

Strategy Inflow 3375

Max Loss Unlimited beyond LBEP

Stop loss BEPS

Rationale The Index is expected to trade with negative bias with down side capped around 10750-10700 levels.

DERIVATIVES

Type: Bull Call in INFY

First leg Buy one lot of INFY OCT 720 CE @ 31

Second leg Sell one lot of INFY OCT 750 CE @ 18

BEP 733

Max Profit 20400

Max Loss 15600

Stop loss 705 (Spot Levels)

RationaleINFY has outperformed Nifty 50 for the last week of the Sep month and it has even outperformed for the month also. The stock has gained more than 2.50% for the week and around 0.50% for the month, while Nifty has lost more than 1.50% for the week and lost more than 6.00% for the week. The stock is getting decent support from its previous partly filled gap up zone of 690-695 zones and on the higher side, it has resistance at all time highs zone where highest call writing is also seen. Hence bullish view for near term.

Type: Bear Put in SAIL

First leg Buy one lot of SAIL OCT 70 PE @ 4.85

Second leg Sell one lot of SAIL OCT 62.50 PE @ 1.55

BEP 66.70

Max Profit 50400

Max Loss 39600

Stop loss 74 (Spot levels)

RationaleThe stock has given break down from last few months trading range with huge volumes and derivative activity on the first day of the October series. Even the sectoral index has also given huge down move and break down from its last few days trading range. The open interest on the first trading day of October series has jumped by 710% and added around 10crore shares, depicting participants having bearish view on the stock. Hence bearish view for near term.

7KSTREET - 29TH SEPTEMBER 2018

DERIVATIVES

FII’S ACTIVITY IN INDEX FUTURES FII’S ACTIVITY IN STOCK FUTURES

TOP 6 LONG BUILD UP

Stock Name LTP % Price Change Open Int % OI Change

- - - - -

- - - - -

- - - - -

- - - - -

- - - - -

- - - - -

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

TOP 6 SHORT CLOSURE


INFY 730.05 3.51 25596000 -42.46

HDFCBANK 2006.05 1.82 12866500 -35.06

OIL 219.55 0.41 3103287 -24.04

ACC 1552.35 0.83 1303200 -21.29

RELIANCE 1257.95 3.32 42347000 -19.99

LUPIN 900.95 1.2 9380700 -19.79

TOP 6 SHORT BUILD UP


CUMMINSIND 673.1 -1.69 1164100 28.02

CANFINHOME 237.6 -18.78 4461250 18.26

IBULHSGFIN 856.85 -19.33 15300000 14.65

DABUR 426.9 -6.32 15150000 14.21

KPIT 213.4 -23.17 10242000 13.40

DLF 162.55 -18.54 28167500 7.80

TOP 6 LONG CLOSURE


INFIBEAM 58.45 -67.92 20640000 -59.66

JUSTDIAL 477.5 -8.74 2171400 -46.88

DHFL 274.95 -21.57 14580000 -42.49

ORIENTBANK 61.5 -10.48 12774000 -34.03

INFRATEL 262.95 -6.49 4340100 -31.65

RCOM 11.9 -9.5 95480000 -30.29

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI


COMMODITIES

BULLIONGold prices remained on a lower note for the entire week, wherein the prices hit a fresh six-week low on the last day of the week. The prices went lower in the wake of a firmer dollar, supported by the upbeat outlook of Federal Reserve’s resolve for steady interest rate hike. Gold prices are currently 1.6% lower in September and on track of its sixth straight monthly loss. Recently, US GDP data showed that the economic growth in the second quarter accelerated at its fastest pace as compared to the previous four years. Also, the other economic reports such as durable goods order and others indicated the same, supporting the positive outlook for dollar against its peer currencies. The near-term outlook for bullion counters is expected to be bearish as the dollar is expected to strengthen taking cues from China & US trade spat whereas also due to the hawkish outlook of the Fed. The Federal Reserve in its recent meeting said it plans four more increase by the end of next year and another in 2020. China’s net gold imports via main conduit Hong Kong fell to their lowest this year in August, as Beijing curbed import quotas for banks amid a trade tussle with the United States.

SPICESCardamom futures traded mostly negative during the week after rainfall in Idukki district, which was beneficial for the crop and may increase arrivals during the third round of harvesting activities. There were concerns that there may be damage to crop and plantation if heavy rainfall prevails like the last time. However, mostly normal rainfall eased the concerns. On the other hand, there are concerns that traders may opt for more quantity of illegal cheap imports from Guatemala to mix with domestic variety. For the week, cardamom futures prices to trade in a range of 1387-1430 with a negative bias. However, traders will be cautious as there is heavy rainfall forecasted until 2nd Oct in Idukki district. Turmeric futures noted good recovery from their recent fall from the multi-month low of Rs.6440/quintal hit during the prior week. Short covering as well as some fresh buying activities in the next month contracts supported good gains in turmeric futures prices. Key support and resistance levels for the upcoming week are 6600 and 6810 levels, respectively, while prices to trade mostly in a positive note on extended recovery. However, expectations of increased crop production backed by higher area and favorable weather conditions will cap the gains. Jeera futures continued to trade in a negative note testing 18,725 levels during the week. There are expectations of higher sowing area under crop in the upcoming sowing season due to higher prices and support of favorable weather conditions. There are supply concerns and overall good demand for Indian jeera in the international market will cap major loss in futures prices. Rupee at all time lower levels may also result in fresh export demand from the overseas market. Dhaniya futures extended loss for the second consecutive trading week and fell to 4830 levels. Expectations of an increase in arrivals at spot market amid limited demand weighed the prices down. Imports into the country are limited because of the lower prices of domestic stocks compared to foreign stocks. Market could shift its focus towards sowing prospects under dhaniya in the upcoming sowing season. As the farmers have not got good returns from the past two seasons cultivating dhaniya, they may shift to another remunerative crop thereby leading to fall in area.

OILS & OILSEEDSSoybean futures are expected to trade on a weaker note and may extend its losses due to surging arrival pressure at key trading centers. Higher production outlook for the upcoming season and slack demand at prevailing levels could pull down the prices in the upcoming week. Meanwhile, the government has released its production forecast for the year 2018-19 pegged total soybean production at 134.59 lakh tons against the 109.81 lakh tons of the prior year, higher by 23% YoY. Moreover, weakness in CBOT soybean prices resulting with expanding harvesting activities in the US could be other factors which may weigh on soybean prices. However, reports of crop damage in some part of Madhya Pradesh and Rajasthan caused by unseasonal rainfall in major soybean growing districts could cap the excessive losses.

Meanwhile, fresh buying could be seen near Rs.3100 per quintal level on the improved export outlook of soymeal from India. India may export more than 30 lakh tons of soymeal during the year 2018-19 as per the industry expectation. Similarly, RM Seed futures could trade sown on adequate availability of stocks across India. Apart from that, weakness in rival oilseed prices may impact market sentiments negatively in the upcoming days. Likewise, Soy ref oil futures could slip on higher production outlook for the upcoming season. Soybean oil import in India reported at 312,049 MT in August against the 352,325 MT of the prior month, lower by 11% MoM as per the data compiled by Solvent Extractor Association of India. Furthermore, CPO futures could trade down on improved supply outlook for Malaysia.

However, improved export of palm oil from Malaysia could cap excessive losses. Shipments of palm oil from Malaysia in the Sept. 1-25 period rose 64.2% from a month earlier as per data from cargo surveyor Intertek Testing Services.

BASE METALSBase Metal prices took on its surge during the last trading session of the previous week when China imposed taxes on $60 billion worth U.S imports. LME Copper which was trading at low levels made a highest in the last six weeks and was set to achieve its biggest weekly advance in fifteen weeks as investors were of the view that trade tariffs would have little impact on the demand for the metals. The rally in the metal prices was softened when new trading for the week kick-started as demand from the Shangai markets was not seen given their mid-Autumn holiday. Also, by the completion of the sixth FOMC meeting dollar strengthened as the actual Fed-rates was in line with the forecasts, thus boosting the prices to the earlier rally made in metals. Baring selected metals like Nickel and Zinc, the rest of the metals were in line with the expectations. Aluminium which remained fundamentally strong for price rise in the near-term lost its support when Beijing allowed its 28 Northern Provinces to decide upon production cuts depending on their smoke emission levels. Separately, inventory levels at LME warehouses falling below 1 million tons gave support to the prices in the past two trading sessions of this week. With intensified trade war among the global players, US and China followed by the closure of China markets for the next week on account National Day directs traders to trade cautiously in the metals segment as most of the positions are covered in Friday’s session of the current weekend.

ENERGY COMPLEXCrude oil prices rose as the US markets tightened just weeks ahead of Washington’s plan to impose new sanctions against Iran. Crude oil was mostly lower at the beginning of the week, pulling back after US President Donald Trump urged OPEC to increase production at its meeting in Algeria, and slowing bullish momentum that had previously propelled the market toward four-year highs. OPEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia denied the chances of any immediate additional increase in crude output, effectively rebuffing U.S. President Donald Trump’s calls for action to cool the market. Although, Iran softens its stance on potential increases in OPEC oil output, saying it was the group’s responsibility to balance the market if production from Iran or any other member declined. Tehran had previously said no OPEC member was allowed to grab market share from rivals, such as Venezuela or Libya, whose production had declined due to unrest or a lack of investment. It is expected that among OPEC, Saudi Arabia will be adding some extra oil to the market in coming months to fill in Iranian supply shortfall.

Meanwhile, in the US, the gasoline prices have gained whereas it should ideally be down following peak summer demand season but have not fallen as fast as expected. U.S. energy companies cut oil rigs for a second week in three as new drilling has stalled in the nation’s largest oil field, where production was forecast to grow at the slowest pace in nearly two years due to pipeline constraints. As per Baker Hughes Rig count, drillers cut one oil rig in the week to Sept. 21, bringing the total count down to 866. Natural gas went higher in the week supported by strong physical prices, signs of early heating & some cooling demand and below-average stockpiles. According to NOAA, the weather is expected to be warmer than normal over the next 8-14 days, which could lift cooling demand. As per EIA, Working gas in storage was 2,768 Bcf as of Friday, September 21, 2018, according to EIA estimates. This represents a net increase of 46 Bcf from the previous week. Stocks were 690 Bcf less than last year at this time and 621 Bcf below the five-year average of 3,389 Bcf. At 2,768 Bcf, total working gas is below the five-year historical range.

OTHER COMMODITIESDomestic cotton futures are expected to trade down on commencement of harvesting activities in major cotton-growing states. Muted Industrial buying at prevailing levels and weakness in ICE cotton futures is likely to weigh on prices in upcoming days. Meanwhile, USDA weekly export sales data released on Thursday showed weekly export sales for the week ending 20th Sep dropped 28 percent from the prior week reported at 70,300 RB, lower by 33% from the prior 4-week average. According to the sowing data released by the Ministry of Agriculture, Government of Rajasthan, the farmers have planted 18.59 lakh hectare Moong as on 24 August 2018 against 16.00 lakh planted in the same period a year ago and Bajra acreage stood at 41.11 lakh hectare as on 24 August 2018 against 44.00 lakh hectare planted in the same period last year despite that on other hand guar acreage stood at 34.18 Lakh hectare as on 24TH September 2018 against 35.00 lakh hectare planted in the same period last year as acreages surged by 20% .


LEAD MCX

Lead MCX Futures has formed a symmetrical triangle pattern on the daily charts. Last few sessions have been bearish for the metal that has taken support at demand zone around 143-143.40 levels. This demand zone (buying area) also coincides with the lower slope line in the pattern where the prices have taken support and have turned around into the triangle pattern. The prices could face a resistance around 149.30-149.50 levels that forms a supply zone( sellers area).A fibonacci retracement drawn from the previous wave is holding the prices between 23.6% retracement at 145.70 and 38.2% retracement at 150 levels. A break above the triangle pattern at 149.50 levels could see targets of 153.50 at 50% retracement. Relative Strength Index (RSI) momentum indicator that gauges the markets overbought and oversold areas is trending at 49.07 leves suggesting the prices are set to go up.

NATURAL GAS MCX

As on 21st September 2018, LME 3M Zinc forwards is trading around $2453/mt. Technically, prices have broken 8 & 13 EMA levels around 2400. In addition to this, prices have broken falling trend line resistance levels almost at same levels. In the weekly price, chart Engulfing candlestick pattern is in progress, Based on the above technical clues we are expecting prices to move higher up to $2500 supports are seen around 2400/2380. MCX September futures are expected to move in the range of 175-184 in the coming week.

CHANA NCDEX

As on 28th September 2018, Chana November contract delivery futures at the NCDEX platform have settled at Rs. 4115/quintal up by +1%. Technically, prices are trading above the 8&13EMA resistance levels; prices have broken horizontal trendline resistance around 4080 levels. The momentum indicator RSI-14 is at 0.670 neutral. Thus overall commodity is expected to move higher up to 4220/4320 levels in the coming week with supports at 3950 levels. The overall trend is positive. One may buy on dips.

COMMODITIES

TREND SHEET

Commodities 21-Sep 28-Sep % Change 52 Week High% Change from 52

Week High52 Week Low

% Change from 52 Week Low

MCX Gold (Rs/10 gms) 30582.00 30347.00 -0.8% 31620.00 -4.03% 28055.00 8.17%

MCX Silver (Rs/Kg) 37590.00 38202.00 1.6% 41698.00 -8.38% 36000.00 6.12%

MCX Crude Oil (Rs/bbl) 5146.00 5242.00 1.9% 5307.00 -1.22% 3218.00 62.90%

MCX Natural Gas (Rs/mmBtu) 215.20 217.40 1.0% 230.50 -5.68% 162.50 33.78%

MCX Copper (Rs/kg) 458.15 451.00 -1.6% 493.25 -8.57% 402.55 12.04%

MCX Lead (Rs/kg) 147.75 144.80 -2.0% 172.50 -16.06% 137.25 5.50%

MCX Zinc (Rs/kg) 182.30 186.70 2.4% 232.70 -19.77% 163.80 13.98%

MCX Nickel (Rs/kg) 954.40 906.30 -5.0% 1095.20 -17.25% 666.40 36.00%

MCX Aluminium (Rs/kg) 149.05 146.05 -2.0% 178.85 -18.34% 128.30 13.83%

NCDEX Soybean (Rs/Quintal) 3358.00 3246.00 -3.3% 3895.00 -16.66% 2754.00 17.86%

NCDEX Refined Soy Oil (Rs/10 kg) 734.10 743.50 1.3% 796.35 -6.64% 654.20 13.65%

NCDEX RM Seed (Rs/Quintal) 4226.00 4179.00 -1.1% 4262.00 -1.95% 3662.00 14.12%

MCX CPO (Rs/10 kg) 588.70 593.30 0.8% 673.00 -11.84% 529.50 12.05%

NCDEX Castor Seed (Rs/Quintal) 4758.00 4662.00 -2.0% 4790.00 -2.67% 3831.00 21.69%

NCDEX Turmeric (Rs/Quintal) 6520.00 6718.00 3.0% 8066.00 -16.71% 6316.00 6.36%

NCDEX Jeera (Rs/Quintal) 19410.00 18770.00 -3.3% 22360.00 -16.06% 14010.00 33.98%

NCDEX Dhaniya (Rs/Quintal) 5094.00 4848.00 -4.8% 6021.00 -19.48% 4186.00 15.81%

MCX Cardamom (Rs/kg) 1415.90 1419.00 0.2% 1458.30 -2.69% 818.50 73.37%

NCDEX Wheat (Rs/Quintal) 2034.00 2044.00 0.5% 2060.00 -0.78% 1575.00 29.78%

NCDEX Guar Seed (Rs/Quintal) 4306.00 4302.00 -0.1% 4737.00 -9.18% 3465.00 24.16%

NCDEX Guar Gum (Rs/Quintal) 9302.00 9234.00 -0.7% 10468.00 -11.79% 7200.00 28.25%

MCX Cotton (Rs/Bale) 22310.00 21860.00 -2.0% 24280.00 -9.97% 18180.00 20.24%

NCDEX Cocud (Rs/Quintal) 1693.50 1657.50 -2.1% 1878.50 -11.76% 1166.00 42.15%

NCDEX Kapas (Rs/20 kg) 868.00 868.00 0.0% 1010.00 -14.06% 854.00 1.64%

MCX Mentha Oil (Rs/kg) 1705.50 1654.60 -3.0% 1991.90 -16.93% 1106.00 49.60%

TECHNICAL RECOMMENDATIONS


COMMODITIES

MCX CRUDE MCX NATURAL GAS

CALENDER SPREAD NYMEX - CRUDE OIL CALENDER SPREAD NYMEX - NATURAL GAS

NEWS DIGEST

• As per World Steel Association, Global Crude Steel production for August month rose year-on-year basis, thus directing at the increased demand for the steel-related metal Zinc

• As per Reuters, Asian gasoil exports for September have been pegged at about 4.7 million metric tons (mt) to date, with full month volumes expected to contract from the previous month’s 8.5-8.6 million mt.

• India is committed to buying Iranian oil and continuing the two nations’ economic cooperation, the Iranian foreign minister said after a meeting with his Indian counterpart and ahead of U.S. sanctions aimed at halting Tehran’s oil exports.

• Cash zinc traded at a premium of USD 14 per ton to the three-month price, indicating nearby tight supply. Refined zinc does remain in deficit this year, despite the ramp-up of a number of mines.

• The Cabinet may approve India’s Agriculture Export Policy in the next few days, Commerce and Industry Minister Suresh Prabhu said on Friday.”We have already come out with Agriculture Export Policy, which should be approved by the Cabinet in the next few days because inter-ministerial consultation, which takes some time, is already in an advanced stage and once we do that there can be huge opportunities,” Prabhu said while addressing a Ficci event.

• Prime Minister Narendra Modi said last month a new agriculture export policy would be unveiled soon to boost farm income as the government is on track to achieve the target of doubling farmers’ income by 2022.

WEEKLY COMMENTARY

• China and the United States plunged deeper into a trade war last week after Beijing added USD 60 billion of U.S. products to its import tariff list in retaliation for President Donald Trump’s planned levies on $200 billion worth of Chinese goods.

• With the US president Donald Trump already indicating that he shall now also focus on trade tariffs on Japan, markets are concerned about negative impact from the global trade spat. Especially, there is a growing fear that rubber demand would drop if the United States adopts import tariffs on Japanese cars.

• Japan is hoping to avert steep tariffs on its car exports and fend off U.S. demands for a bilateral free trade agreement at the second round of trade talks with the United States, likely to take place later this month. Japan’s biggest automakers and components suppliers also worry they would be hit hard if Washington follows through on proposals to hike tariffs on autos and auto parts to 25 percent.

• Over the past week, OECD has revised its global growth forecasts downside, factoring in the rising risks due to the ongoing trade tensions across the world. World GDP growth for 2018 has been revised down from 3.8% to 3.7% while growth for 2019 has been revised down from 3.9% to 3.7%.

• Oil prices rose by more than 3.5% percent this week as investors focused on the prospect of tighter markets due to U.S. sanctions against major crude exporter Iran, which are set to be implemented in November.

• WBMS estimates that imports of refined copper into China were about 300 KT in July bringing the year to date figure to 2.2 million tons. Chinese estimated demand for January to July 2018 was 7063 KT which was 5.4% above the previous year’s total and represented just under 52 percent of the global total. EU28 production fell by 1.2 percent and demand was 2080 KT, 3.9 percent above the January to July 2017 total.

• World refined zinc production during January to July 2018 from both primary and secondary sources was 6662.4 KT which was 2.1 percent higher than in the comparable months of 2017. Chinese demand was estimated at 116 KT below the comparable period in 2017. For the USA, apparent demand has decreased by 10 KT for January to July 2018 compared to the same months of 2017.

• According to the first advance estimates of production of major kharif crops released by the Agriculture Ministry, Kharif foodgrains output in 2018-19 would be at a record 141.59 million tons (mt), marginally higher than the targeted 141.2 mt which in the previous year was 140.73 mt.

• Maize production is projected at 21.47 mt, up 1.2 mt, compared to the same period in 2017-18. Pulses production too is estimated to fall marginally to 9.22 mt from 9.34 mt in the previous kharif season, mainly because of lesser urad and arhar production.

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COMMODITIES

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

Commodity Exchange Contract 21-Sep 28-Sep % change

Aluminium LME 3M 2081.00 2025.00 -2.69%

Copper LME 3M 6337.50 6179.00 -2.50%

Lead LME 3M 2040.50 2003.00 -1.84%

Nickel LME 3M 13275.00 12550.00 -5.46%

Zinc LME 3M 2509.00 2516.00 0.28%

Gold CME DEC 1203.30 1186.40 -1.40%

Silver CME DEC 14.31 14.28 -0.24%

WTI Crude oil CME OCT 70.71 72.19 2.09%

Natural Gas CME OCT 2.98 3.06 2.62%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 21-Sep 28-Sep % change

Soybean CBOT NOV 876.25 881.25 0.57%

Soy oil CBOT DEC 28.49 29.12 2.21%

CPO BMD DEC 2139.00 2170.00 1.45%

Cotton ICE DEC 78.99 77.78 -1.53%

SPOT PRICES (% CHANGE) South-West Monsoon To End in Red

South West monsoon season that lasts for four months from June until September every year has neared its end for the year 2018. Rainfall during the first three months was near to normal; however rainfall in September is sharply lower than normal. With just a few days left for the ending of the south-west monsoon, cumulative rainfall in the country as a whole stands at 798 mm, lower by 9% of the LPA of 879.6 mm in the corresponding period. Each meteorological region has received rainfall with negative departure from the normal rainfall with East and North East India region recording the highest departure of -25% from LPA. Central India and North West India have received rainfall mostly in the normal range with a small departure from normal of -6% and -2% of LPA respectively. Out of the 36 sub-meteorological regions, 23 regions have received normal rainfall while 12 regions fall in the deficit zone; only 1 region has received excess rainfall till date in the country. This means that 64% of the meteorological region of the country has received normal rainfall during the season while 33% of the region has noted deficit rainfall. As the monsoon is in its final days, it is most likely that the south-west monsoon will end with a larger deficiency than last year deficit of 95% of the LPA.

Kharif sowing activities which coincides with the south-west monsoon in the country has progressed at a decent pace and the overall acreage so far is almost similar to last year area. Overall area under kharif crops as on 20th Sept stands at 1057.81 lakh hec, similar to last year area of 1051.36 lakh hec. Under rice, cultivation is complete in 385.85 lakh hec with a gain of 2.4% YOY or 9.55 lakh hec; the higher area is reported from the states of Telangana, Karnataka and Madhya Pradesh etc. Area under the essential food crops such as pulses has declined marginally by 1.1% YOY at 137.93 lakh hec. Tur (45.83 lakh hec) area is almost similar as previous year while contrasting trend is seen in Urad (-9% YOY) and Moong (7.4% YOY) with a cultivation area of 40.37 lakh hec and 34.36 lakh hec respectively.

Coming to the coarse cereals, area has declined by 3.9% YOY and stands at 176.16 lakh hec. Sowing is complete in 17.83 lakh hec under Jowar and is marginally lower by 0.9% YOY while it is almost same as previous year under maize (79.23 lakh hec & -0.1% YOY). Area has fallen sharply in Bajra (65.49 lakh hec) and Ragi (8.51 lakh hec) by -7.2% YOY and -18.4% YOY respectively. In the oilseeds basket, mixed trend is seen in various oilseeds with net area being on the positive side with a gain of 3.1% YOY at 178.27 lakh hec. Sharp fall in area is noted in Sunflower (1.12 lakh hec) and Nigerseed (1.69 lakh hec) where area has fallen by -18.2% YOY and -15.1% YOY respectively. In soybean, area has increased by 6.3% YOY to 112.61 lakh hec while area under Castorseed has seen a rise of 5.1% YOY at 8.59 lakh hec. Cotton area is declined marginally by -0.9% YOY to 120.64 lakh hec, on the other hand, jute and mesta is grown in 7.02 lakh hec, down by -1% Y/ Y. Area under sugar has increased by 4.2% YOY with a sowing area of 51.94 lakh hec.

LME WAREHOUSE STOCKS (IN TONNES)

Commodity Previous week This week Change % Change

Copper 214350 202400 -11950 -5.57%

Zinc 206375 203475 -2900 -1.41%

Aluminium 1013050 990550 -22500 -2.22%

Lead 116600 116075 -525 -0.45%

Nickel 229722 228564 -1158 -0.50%

SHANGHAI WAREHOUSE STOCKS (IN TONNES)*


Copper 111029 111995 966 0.87%

Zinc 33819 29204 -4615 -13.65%

Aluminium 842630 832256 -10374 -1.23%

*Until Wednesday

COMEX WAREHOUSE STOCKS (IN TONNES)


Copper 177394 174442 -2952 -1.66%

WEEKLY STOCK POSITION IN LME (IN TONNES)


USD/INR

This is the daily charts of USDINR FUT pair. The pair has been trading in a broader range of 73.05 on the higher side and 72.32 on the lower side for the week

The pair traded sidewise for the week and unable to sustain above 73.30 levels with Relative Strength having Divergence with Prices with MACD give a crossover but above zero line, for the week expects some sidewise trend with demand at lower levels BUY USDINR FUT 72.60-72.65 TGT 72.95 SL 72.45

EUR/INR

This is the daily chart of EURINR. The pair traded in a broader range of 86.14 on the higher side and 84.40 on the lower side.

The pair traded lower and formed a bearish shooting star in weekly time frame while in daily violated the upward sloping trend line with MACD giving a negative crossover and Relative strength index stands at 57, still its trade above the 20DMA & 50DMA but with prices having shooting star, fade the rallies SELL EURINR 84.60-84.80 TGT 83.95 SL 85.05

GBP/INR

GBPINR Traded in a range of 96.40 on the higher side and 94.62 on the lower side and traded lower,

Pair violated the upward sloping trend line and is having a shooting star type of pattern in weekly, with Relative strength index placed at 62 and MACD about to give a negative crossover for the week trades can fade the rallies. SELL GBPINR 95.25-95.40 TGT 94.60 SL 95.62

JPY/INR

JPYINR FUT trade in a broader range of 64.97 on the higher side and 64.21 on the lower side, the pair trades near the 20DMA @ 64.28 while 50DMA placed at 63.56 while relative strength index placed at 51.52 with MACD having a bearish crossover expects supply at higher levels.

Traders can fade the rallies for the week around 64.50-64.60 TGT 63.90-63.80 SL 64.90.

TECHNICAL RECOMMENDATIONMARKET STANCE

The Federal Reserve Open Market Committee (FOMC) had increased the interest rates by 25 Bps as globally expected. Fed also cited for another rate hike in 2018. Federal Reserve maintained its confidence in US economy to grow robustly in the coming quarters. Italian government failed to keep its promise of maintaining fiscal deficit under 2.0% of GDP by agreeing to maintain fiscal deficit at 2.4% of GDP. US GDP grew at 4.2% (QoQ) in Q2 in line with fed expectations also added gravity to the Euro fall. The dollar index spiked higher this week boosted by hawkish Fed and Robust US economic data. Widening yield differential between the US and Japanese treasury yields is keeping the Yen under pressure.

Fed is making grounds to raise further rates supported by stronger than expected US economic data, Japanese economy failing to show a revival in inflation numbers would continue to widen the yield differential and make the case more dollar supportive. Back home, Indian Rupee remained in a range after opening lower against the dollar.

The crude prices spiked sharp after the news of Saudi and OPEC’s plan to keep the prices above $80 added weakness to the Rupee. Indian Government increased the import duty on 19 goods in an attempt to curb the widening current account deficit. But, these measures were seen inadequate, and rupee is likely to extend its weakness. Fourth RBI Bi-monthly monetary policy meet scheduled next would confirm the direction.

NEWS FLOWS OF LAST WEEK

• Fed raises interest rates by 25bp to the range of 2-2.25%. 2018 GDP forecast raised. Drops “accommodative” from FOMC statement.

• U.S. Federal Reserve Chairman says the U.S. does not face a large chance of near-term recession.

• The UK’s CAD was GBP 20.3 Bln (3.9% GDP) in Q2 2018, a widening of GBP 4.6 Bln from a revised deficit of GBP 15.7 Bln (3.0% GDP) in Q1 2018 and the widest deficit since Q2 2017.

• Trump said “Canada has mistreated the US in trade” and threatened to tax cars if Canada doesn’t make a deal with the US while rejecting a one-on-one meeting.

• US president Donald Trump – Japan Prime Minister Shinzo Abe meet concluded with an agreement to enter into bilateral trade negotiations for US-Japan trade agreement. Both leaders were also discussed over North Koreas missile programs.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USD/INR 72.40 73.05 72.32 72.75

EUR/INR 85.02 86.14 84.40 84.48

GBP/INR 94.81 96.40 94.62 95.05

JPY/INR 64.25 64.97 64.21 64.28


ECONOMIC GAUGE FOR THE NEXT WEEK

GMT Date Local Time Country Indicator Name Period Poll Prior Unit

1-Oct 13:30 EU Markit Mfg Final PMI Sep 53.3 53.3 Index (diffusion)

1-Oct 14:00 UK Markit/CIPS Mfg PMI Sep 52.5 52.8 Index (diffusion)

1-Oct 14:30 EU Unemployment Rate Aug 8.2% 8.2% Percent

1-Oct 19:15 US Markit Mfg PMI Final Sep 55.6 Index (diffusion)

1-Oct 19:30 US Construction Spending MM Aug 0.4% 0.1% Percent

1-Oct 19:30 US ISM Manufacturing PMI Sep 60.4 61.3 Index

1-Oct 19:30 US ISM Mfg Prices Paid Sep 71.3 72.1 Index

2-Oct 11:30 UK Nationwide house price mm Sep 0.2% -0.5% Percent

2-Oct 11:30 UK Nationwide house price yy Sep 1.9% 2.0% Percent

2-Oct 14:00 UK Markit/CIPS Cons PMI Sep 52.5 52.9 Index (diffusion)

2-Oct 14:30 EU Producer Prices MM Aug 0.2% 0.4% Percent

2-Oct 14:30 EU Producer Prices YY Aug 3.9% 4.0% Percent

3-Oct 01:00 US Total Vehicle Sales Sep 16.75M 16.72M Number of

3-Oct 13:30 EU Markit Serv Final PMI Sep 54.7 54.7 Index (diffusion)

3-Oct 13:30 EU Markit Comp Final PMI Sep 54.2 54.2 Index (diffusion)

3-Oct 14:00 UK Markit/CIPS Serv PMI Sep 54.0 54.3 Index (diffusion)

3-Oct 14:30 EU Retail Sales MM Aug 0.2% -0.2% Percent

3-Oct 14:30 EU Retail Sales YY Aug 1.6% 1.1% Percent

3-Oct 17:45 US ADP National Employment Sep 184k 163k Person

3-Oct 19:30 US ISM N-Mfg PMI Sep 58.2 58.5 Index

4-Oct 18:00 US Initial Jobless Claims 29 Sep, w/e 210k 214k Person

4-Oct 18:00 US Continued Jobless Claims 22 Sep, w/e 1.661M Person

4-Oct 19:30 US Factory Orders MM Aug 1.8% -0.8% Percent

5-Oct 13:00 UK Halifax House Prices MM Sep 0.2% 0.1% Percent

5-Oct 18:00 US Non-Farm Payrolls Sep 184k 201k Person

5-Oct 18:00 US Private Payrolls Sep 180k 204k Person

5-Oct 18:00 US Unemployment Rate Sep 3.8% 3.9% Percent

5-Oct 18:00 US Average Earnings MM Sep 0.3% 0.4% Percent

5-Oct 18:00 US Average Earnings YY Sep 2.8% 2.9% Percent

5-Oct 18:00 US International Trade $ Aug -52.6B -50.1B USD

CURRENCY


MUTUAL FUNDS

FUND MANAGER APPROACH TO INVESTMENT

(An open ended equity scheme following a value investment strategy)

TATA EQUITY P/E FUND

Asset Allocation• 70% to 100% investment in Equity & Equity related - Companies whose

rolling P/E at the time of investment is lower than the rolling P/E of the BSE SENSEX and up to 30% in equity & equity related instruments of other companies

Who should invest • Believing in value style of investing

• Looking for investing in good stocks at cheap valuations and not cheap stocks

Key Attributes• Value conscious fund where 70% of net assets are invested in shares

whose rolling P/E ratios are less than that of BSE Sensex at the time of investment

• Flexibility to invest up to 30% of its assets in well researched growth stocks

• A disciplined way of booking profits by the investor without any tax liability using Dividend trigger facility

Product Note:• P/E ratio is the commonly used term for the ratio of Market Price of a share to Earnings per Share (EPS). It could be used as an indicator of how much an investor may be

willing to pay for a share for every rupee of its earnings. One of the widely used screening parameter for value stocks is the Price to Earnings ratio (P/E ratios)

• Tata Equity P/E Fund follows the value-conscious style of investing. The Scheme aims to invest at least 70% of its assets in companies which, at the time of investment, have a rolling twelve month P/E ratio lower as compared with the rolling twelve month P/E ratio of the BSE Sensex. Buying good companies at an attractive P/E ratio is a good discipline, but clearly not the only anchor. The Fund uses several other qualitative and quantitative screens to buy companies. The Fund strives to “buy good stocks at cheap valuations and not “cheap” stocks”

• Tata Mutual Fund offers two ’Dividend Trigger Option’ under the existing dividend option of Tata Equity P/E Fund. The trigger options available are Option A (Trigger A) and Option B (Trigger B) for 5% and 10% appreciation respectively.

• Under Dividend Trigger A, the Fund will initiate the declaration of dividend when there is an appreciation in NAV from the last ex-dividend NAV during the immediate preceding calendar quarter by 5%.

• In case of Dividend Trigger B, the Fund will initiate the declaration of dividend when there is an appreciation in NAV from the last ex-dividend NAV during the immediate preceding calendar quarter by 10%.

Fund Manager Profile• Sonam Udasi - backed with 19 years of his expertise in Equities Research is

presently the Fund Manager for many of the equity schemes at Tata Asset Management, since April 2016.

• Sonam joined Tata Asset Management as Head Research in April 2014. He has also served as the Principal Officer for the Portfolio Management Services vertical of Tata Asset Management.

• Prior to joining Tata Asset Management, Sonam headed the Research Team at IDBI Capital Market Services Ltd. for 4 years. During this tenure, IDBI Capital Research Team was rated as No. 3 “Top Most Award Winning Team” by Thomson Reuters Starmine Awards for Excellence for Fiscal Year 2013.

• He started his career as an Analyst with the Quantum Group headed by Ajit Dayal, building expertise in sectors like Consumer Staples, Retail, Media, Pharma and Utilities.

• He later joined JM Financial AMC as Senior Analyst reporting to the CIO. Apart from this, he has also worked with erstwhile ASK Raymond James and BRICS Securities (Head – Consumer Vertical).

• Sonam has a Post Graduate Diploma in Business Administration, specializing in Finance.

Exit Load : 1 % Exit Load if Redeemed on or before 18 Months.

RISK-O-METER

Growth at Reasonable Price - Our Predominant Investment Style


Investor awareness program organised by Karvy in ICAR, Hyd

Investor awareness program organised by Karvy in Suzlons, Hyd

Investor awareness program organised by Karvy in St. Mary’s, Hyd

DEMATERIALISATIONIS MANDATORY

Ministry of Corporate Affairs under Government of India has set 2nd October, 2018 as a deadline to convert all existing physical shares of the unlisted companies to demat form and also made it mandatory for these companies to issue shares in demat form only.

As per the notification:

• Buyback, bonus issue and rights issue cannot be issued by these companies unless securities of company’s promoters, directors, etc. are in dematerialised form.

• Any investor who holds shares in unlisted companies has to get it dematerialised if he wants to transfer shares

• Any investor who wants to buy shares through private placement or avail bonus shares and rights issue has to hold shares in dematerialised form.

All unlisted companies are required to secure ISIN from CDSL or NSDL for each type of security.

Karvy being a pioneer in the financial realm since 3 decades and providing depository and RTA services as well can facilitate the process of dematerialisation of existing shares and also offer demat account opening facility.

Q. What is the main objective of a Demat account?

The main objective of a demat account is to facilitate easy trade and transfer of the shares and also enable an investor to get the benefits of corporate actions like bonus shares, dividend, rights issue, etc.

Q. How many accounts can I have?

• You can open more than one Demat Account.

• You can hold shares, debentures, bonds, NSC, KVP in a single Demat Account.

• You can save charges on multiple accounts by consolidating your holdings into one account, if there are no other compelling reasons to keep separate accounts.

Q. Can I take a loan on my demat holding?

1. Yes, you can pledge the securities in your account in favor of a lender to avail a loan.

Q. Is there nomination facility in Demat Account?

• Nomination can be made only by individuals holding beneficiary accounts either singly or jointly.

STEPS TO TRANSFER SHARESFROM ONE DEMAT ACCOUNT TO ANOTHER

Fill the DIS form & submit to your current broker

Your broker will send request to

depository (NSDL/CDSL)

Depository shall transfer the shares to your new Demat

Account

Shares shall reflect in your new Demat

Account

Investor surrenders the physical certificates to the DP

DP informs the

Depository about the request

DP submits the certificates to the Registrar of the issuer company

Registrar communicates

with the depository to confirm the

request

Dematerialization of the certificates

is done by the Registrar

Registrar informs the

depository about completion of

dematerialization

1 2 3 654

STEPS TO CONVERT PHYSICAL SHARES TO DEMAT

• The Nominee needs to complete a few formalities with DP and get the securities transferred into his/her account.

Q. Do I have to contact all companies for any updation in my personal details?

For your demat shares, your one point contact for all the changes/updation is DP.

Q. What precautions should I take to prevent misuse of securities lying in my account?

• Keep DIS book in safe custody.

• When writing an instruction on the DI Slip, strike-out the empty spaces.

• Change your password frequently if you are using internet facility for your Demat Account.

• Before giving Power of Attorney (POA) to any person operating your Demat Account, understand the contents and implication of such POA.

Q. How much do I pay for my Demat Account?

1. You can pay Rs. 650 as an account opening fee and enjoy many exclusive offers*.

Q. Whom should I contact in case of any queries?

1. You can call on our toll free no 18004198283 or write a mail at [email protected].

Q. What all documents are required to Open Demat Account?

1. To open a demat account, you need a mobile number linked to Aadhaar, active mobile number, PAN card, digital signature, cancelled personalized cheque.

Q. What if I already have a Demat account with another Depository Participant?

You can open a trading account with us and link it to your existing demat account. Alternately, you can open a new trading and demat account with us, transfer your securities and funds to the new account and close the older account.

Q. Things to check before Opening Demat Account

Before opening a demat account, one should always check the brokerage charges, annual maintenance charges, any other charges if applicable, technology and trading platforms and other supporting value-added features and customer services.

Q. Various Types of Demat Account

At Karvy, we offer customized solutions to meet every investor’s unique requirements. You can opt for only demat or only trading account, demat and trading account with access to trading equity, commodity, currencies, mutual funds and other exchange-traded securities.

Documents

RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue004.pdfCAD is likely to widen from 1.8% to 2.5% in 2019, according to consensus estimates. Our study of the