rule the marketcontent.karvyonline.com/contents/kstreetissue037.pdfequity economy • uzbekistan...

ISSUE: 037

18TH MAY, 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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Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither KSBL nor any associate companies of KSBL accepts any liability arising from the use of information and views mentioned in this report. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. Actual results may differ materially from those set forth in projections. Associates of KSBL might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. Associates of KSBL might have received compensation from the subject company mentioned in the report during the period preceding twelve months from the date of this report for investment banking or merchant banking or brokerage services from the subject company in the past twelve months or for services rendered as Registrar and Share Transfer Agent, Commodity Broker, Currency and forex broker, merchant banker and underwriter, Investment Advisory services, insurance repository services, consultancy and advisory services, realty services, data processing, profiling and related services or in any other capacity.KSBL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. Compensation of KSBL’s Research Analyst(s) is not based on any specific merchant banking, investment banking or brokerage service transactions. KSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover.KSBL or its associates collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. KSBL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report and have no financial interest in the subject company mentioned in this report. Accordingly, neither KSBL nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that KSBL and Research Analysts, primarily responsible for this report and whose name(s) is/ are mentioned therein of this report have not received any compensation from the subject company mentioned in the report in the preceding twelve months. It is confirmed that Research Analyst did not serve as an officer, director or employee of the companies mentioned in the report. KSBL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor KSBL have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on KSBL by any Regulatory Authority impacting Equity Research Analyst activities.

CPI at 2.92% for April 2019

Despite a weakening economy, inflation increased to 2.92% YoY for April 2019 from 2.86% in March

2019 and exceeded the last 3-month number. However, inflation is within the RBI target and is unlikely

to be a worry for the economy.

The fine print has some encouraging signs; core inflation has softened significantly to 4.5% in April

2019 from 5.3% in March 2019 driven by deflation in all core items (Clothing, Pan & Tobacco, Housing

and Miscellaneous).

While there are some upside risks to inflation, we believe that inflation is unlikely to breach RBI’s target.

However, the economy faces downside risks to growth. Major uncertainty in the economy can be

attributed to weakening global growth and trade. Also, EMEs remain vulnerable to financial market

volatility as the risk of sudden stops and reversals of capital flows has increased. In addition to this,

fluctuating oil prices and currency volatility is likely to strain the trade balance.

Inflation, assuming near normal monsoon in 2019 is estimated to be 2.9-3.0% for H1FY19-20 and at

3.5-3.8% for H2FY19-20 well within the RBI’s medium-term CPI target of 4% (+/- 2%).

We believe that while core inflation may be higher than headline numbers, it is unlikely to be an issue.

Considering weak growth numbers owing to subdued demand, we expect another 25 bps rate cut for

the year, though there may be no change in the June 6, 2019 meeting. More than interest rates, the

central bank needs to ensure better liquidity conditions for growth to recover.

Industrial output declines by 0.1% in March 2019

IIP contracted by 0.1% during March 2019 YoY. This can be attributed to weak demand scenario

amidst a credit crunch post the crisis in the NBFC sector and FII outflows in 2018 and early 2019,

Indian economy has also faced headwinds as the global economy has slowed and there is uncertainty

about election outcome. India has faced an unexpected slowdown in consumer demand leading to an

inventory build-up. An Inventory correction, which we believe is under progress can exaggerate the

extent of the slowdown in final demand.

Automobile sales also reported lower growth numbers indicating subdued urban and rural demand.

Also, capital goods declined by 8.7% YoY in March 2019. This indicates that investment has slowed

down.

Overall in 2018-2019, IIP grew at 3.6% vs. 4.4% the previous year. This could impact GVA growth

estimates for the year. Although corporate credit has picked up during 2018-19 compared to the

previous year, negative growth in the manufacturing sector could be attributed to the “wait and

watch” mode by the corporate amidst uncertainty due to elections. This is expected to have created a

lag between loan disbursal and investments.

Apart from elections, better liquidity conditions are needed for manufacturing to improve.

12 out of 23 industry groups in the manufacturing sector have shown negative growth during March

2019. Manufacture of tobacco products has shown the highest positive growth of 13.5% followed

by 10.6% growth in manufacture of computer, electronic and optical products. On the flipside,

manufacture of furniture has shown the highest negative growth of (24.6%) followed by (18.5%) de-

growth in manufacture of other transport equipment.

CONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-16

TeamDr. Ravi Singh

Syed Hasan Jafar

Amit Samar

Viplav Dhandhukia

Vaishali Paruthi

Chetan K Waghray

Vivek Ranjan Misra

Sachin Mittal

Thomas V Abraham

Vivek Lohumi

Kiran Shankar Prasad

Veeresh Hiremath

Siddhesh Ghare

Ramesh Chenchala

Ravi Pandey

Ravikanth P

Kushal Asthana

Arpit Chandna

Vinod J

Amit Kumar

Karvy Head Office

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

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

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Email: [email protected]

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

- VIVEK RANJAN MISRAHead-Fundamental Research

EQUITY

Economy

• Uzbekistan eyes $1.7 Bn FDI including from India. This investment program has been developed comprising 908 projects which will be implemented in the Andijan region in 2019-2020 which may lead to the creation of over 35 thousand jobs.

• The International Air Transport Association trimmed its 2019 global airline industry profit forecast to $35.5 Bn from $38 Bn after $32.3 Bn in 2018.

Automobiles

• India’s car sales saw a decline of 15.9% in April, the worst in eight years. Overall, the auto industry sold 2,001,096 units during April. In the same period last year, it had sold 2,380,294 million units.

• Maruti Suzuki sets up skill training centre at ITI-Becharaji. It will help over 7,000 trainees become job ready annually.

Banking

• Bank of India posts Rs. 252 crore profit against a net loss of Rs. 3,969 crore in the year-ago quarter. Total non-interest income was up 17% YoY at Rs.1, 603 crore.

• The Reserve Bank of India appointed R Gandhi, a former deputy governor of the central bank on the board of private lender Yes Bank Ltd.

• Bajaj Finance reported a consolidated net profit of Rs. 1,176.06 crore for the quarter ended March 2019. The lender booked 5.83 million new loans during the quarter under review, up 53% from 3.8 million in the same period last year and its assets under management (AUM) grew 41% to Rs. 1.15 Tn in Q4FY19.

Steel

• State Bank of India (SBI) has offloaded its Rs. 929 crore exposure in Indian Steel Corp. Ltd to India Resurgence ARC, a 50:50 joint venture between Piramal Enterprises Ltd and Bain Capital Credit to recover Rs. 362 crore in cash.

FMCG

• Tata puts all its food business on a single platter by acquiring all the branded food businesses from Tata Chemicals Ltd. in an all-stock transaction that is aimed at creating a consumer business company with revenues of Rs. 9,099 crore. As part of the deal, shareholders of Tata Chemicals will get 1.14 new shares of Tata Global for every share held. The transaction values the consumer business of Tata Chemicals at around Rs. 5,800 crore.

• India’s consumers are spending less on everything from toothpaste to automobiles sparking fears of a growth slowdown ahead of fourth-quarter GDP figures that will be released later this month. An assessment by State Bank of India’s research wing has noted that out of 384 companies, more than 330 exhibited negative growth in mid-line and bottom-line in Q4FY19.

NEWS

INTERNATIONAL NEWS

• China is under pressure to boost its economy as the trade war escalates. China’s retail sales growth slowed to a 16-year low last month, raising questions about consumer confidence in one of the world’s biggest markets. Sales grew by 7.2%, far weaker than analyst forecasts of 8.6%.

• US President Donald Trump on Thursday rolled out a merit-based immigration system from which foreigners, including hundreds and thousands of Indian professionals and skilled workers, waiting to get Green Cards or permanent legal residency stand to benefit. The immigration reform proposals significantly increase the quota for skilled workers from existing nearly 12% to 57%.

TRENDSHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 37931 36584 37258 38303 38674 Down

NIFTY 11407 10996 11202 11519 11632 Down

NIFTYBANK 29450 28011 28731 29865 30279 Down

YESBANK 134 111 123 156 177 Down

RELIANCE 1267 1207 1237 1288 1308 Down

BAJFINANCE 3301 2687 2994 3462 3623 Up

SBIN 319 299 309 326 332 Up

ZEEL 372 285 328 397 422 Down

SUNPHARMA 409 304 357 450 490 Down

IBULHSGFIN 723 624 674 750 778 Up

ICICIBANK 390 369 379 396 402 Down

TATASTEEL 469 438 454 487 504 Down

HDFC 1994 1890 1942 2022 2050 Up

FORTHCOMING RESULTSCOMPANY NAME DATE

BHARAT FORGE 20-May-19

BPCL 20-May-19

HEG 20-May-19

HIND PETRO 20-May-19

TATA MOTORS 20-May-19

DLF 21-May-19

KEI 21-May-19

CIPLA 22-May-19

RBL 22-May-19

IGL 23-May-19

HEIDELBERG CEMENT 24-May-19

PAGEIND 24-May-19

KSTREET - 18TH MAY 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

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

NIFTY IN

DEX

SENSEX

IND

EX

SPBSMIP IN

DEX

SPBSSIP IND

EX

NIFTYJR IN

DEX

NSEM

CA

P IND

EX

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

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

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

CC

MP IN

DEX

IND

U IN

DEX

SPX IN

DEX

NK

Y IND

EX

HSI IN

DEX

SHC

OM

P IND

EX

UK

X IN

DEX

CA

C IN

DEX

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

TATA

GLO

BAL

BEVERA

GES LTD

SRF LTD

IND

IABU

LLS VEN

TURES

LTD

LARSEN

& TO

UBRO

IN

FOTEC

H LTD

MA

NA

PPURA

M FIN

AN

CE

LTD

STERLITE TECH

NO

LOG

IES LTD

GRA

PHITE IN

DIA

LTD

IDFC

FIRST BAN

K LTD

UN

ION

BAN

K O

F IND

IA

DISH

TV IN

DIA

LTD

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

BAJA

J FINA

NC

E LTD

BAJA

J FINSERV

LTD

TITAN

CO

LTD

HERO

MO

TOC

ORP LTD

KO

TAK

MA

HIN

DRA

BAN

K

LTD

DR. RED

DY'S

LABO

RATO

RIES

IND

USIN

D BA

NK

LTD

TATA

MO

TORS LTD

SUN

PHA

RMA

CEU

TICA

L IN

DU

S

YES BAN

K LTD

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

13-05-2019 14-05-19 15-05-19 16-05-19 17-05-19

FII DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

ICICIPru Ltd. CMP Rs.337Target Price Rs.431Upside 28%

Investment Rationale

• Value of new Business APE has increased by 11% in Q4FY19 and 3.3% YoY with 60% contribution of VNB from protection with overall expected VNB to increase by 100% in next 3-4 years and focus will be on 4P strategy to grow protection VNB and maintenance of persistency ratio in coming years.

• Focus will be to widen the reach to mass market for group health and individual protection products for rural, tier-3 and tier-4 market and maintaining consistency with existing affluent sector to grow group annuity business for future pensioners on growing population of above 58 years. Persistency improvement across all the cohorts will improve due to better mortality experience and has started showing in operating assumption changes for this fiscal. Growth in embedded value is experienced due to unwinding of ULIP business and improvement in VNB margin which will continue in coming years. Back book growth has been 226% this fiscal due to increase in non-par business growth particularly on pure protection, group annuity, credit life which creates new cash value account and will continue to grow.

VALUE PARAMETERSFace Value (Rs.) 10.0

52 Week High/Low (Rs.) 435/277

M.Cap (Rs. Bn/US $mn) 48.71/0.69

EPS (Rs.) 10.6

P/E Ratio (times) (FY20E) 30.9

Dividend Yield (%) 0.9

Stock Exchange NSE/BSE

P/E CHARTValuation

We have valued the stock based on 1.07x forward P/EV on premium with a mean of 2.28x over the peers and 33.34x forward P/VNB and have arrived at a price target of Rs. 431 with potential upside of 28%. We rate the stock as ‘BUY’. Risk to valuation could be steep decline in economy and loss in market share due to prevailing competition.

EQUITY

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19E FY 20E

YE Mar FY19 FY20E FY21E

APE 77990 82547 88208

VNB 13258 14446 15701

Op.ROEV(%) 15.1 18.2 16.4

AUM 160402 192495 237861

EPS (Rs.) 7.9 10.2 10.6

RoE (%) 16.6 20.5 19.3

75.0%

10.1%

6.5%

8.4%

Promoters

FII's

DII's

Others

74.0

3.5

10.6

11.9

Promoter

FII

DII

Others

0.00

50.00

100.00

150.00

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

GMDC Sensex

0.0

50.0

100.0

150.0

200.0

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

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18

Oct

-18

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-18

Dec

-18

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19

Feb-

19

Mar

-19

Apr

-19

May

-19

IPRU IN Sensex

75.0%

10.1%

6.5%

8.4%

Promoters

FII's

DII's

Others

74.0

3.5

10.6

11.9

Promoter

FII

DII

Others

0.00

50.00

100.00

150.00

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

GMDC Sensex

0.0

50.0

100.0

150.0

200.0

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

IPRU IN Sensex


BEAT THE STREET - FUNDAMENTAL ANALYSIS

GMDC Ltd. CMP Rs.74Target Price Rs.87Upside 18%

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 127/69

M.Cap (Rs. Bn/US $mn) 23.46/0.33

EPS (Rs.) 6.9

P/E Ratio (times) (FY20E) 5.5

Dividend Yield (%) 2.5

Stock Exchange NSE/BSE

EQUITY

P/E CHART

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY19 FY20E FY21E

REVENUE 18797 19920 21169

EBITDA 5561 5568 5955

EBITDA %) 29.6 28.0 28.1

PAT 2199 3966 4272

EPS (Rs.) 6.9 12.5 13.4

RoE (%) 5.1 8.9 8.9

Investment Rationale• Full year FY19 consolidated operating performance got adversely impacted

by sharp decline in lignite sales which at 9.19 Mn tonnes declined by 13.3% whereas sales value at Rs. 15870 Mn de-grew by 9.0%. Realization at Rs. 1727 per tonnes grew by 5% over FY18. Decline in sales volume and value contributed in moderate growth in EBITDA by 1.3% to Rs. 5561 Mn whereas PAT de-grew by 36.6% to Rs. 2199 over FY18 on account of Rs. 2142 Mn of associate loss accounted for using equity method.

• GMDC has posted stronger set of standalone numbers for Q4FY19 on the back of 26% rise in volume to 2.66 Mn tonnes as against 2.104 Mn tonnes in previous quarter. Lignite sales in Q4FY19 also increased by 29% to Rs. 4680 Mn on the back of higher realization which has increased by 2% to Rs. 1763 per tonne. Combined power production in Q4FY19 stood at 374 MUs and sales at Rs. 756 Mn thereby registering a growth of 6% and 4% respectively over previous quarter.

• Lignite demand will pick up on the back of increased focused on power capacity expansion by the government.

• GMDC enjoys sound financials. It is a debt free company with cash & cash equivalents of about Rs. 482 Mn in FY19. It has generated operating margins of 30% and RoCE of 11% in FY19.

Valuation

Given the backdrop of strong demand for lignite from power generator and cement, we expect that the sales and profitability of the company to remain at decently elevated level. We have valued the stock at 1 yr forward PE 6.5x of FY21 EPS and have reached at downwardly revised TP of Rs. 87 with potential upside of 18%. Risk to valuation could be cheapening of steam coal price in domestic and international markets and steeper contraction in industrial activities

75.0%

10.1%

6.5%

8.4%

Promoters

FII's

DII's

Others

74.0

3.5

10.6

11.9

Promoter

FII

DII

Others

0.00

50.00

100.00

150.00

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

GMDC Sensex

0.0

50.0

100.0

150.0

200.0

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

IPRU IN Sensex

75.0%

10.1%

6.5%

8.4%

Promoters

FII's

DII's

Others

74.0

3.5

10.6

11.9

Promoter

FII

DII

Others

0.00

50.00

100.00

150.00

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

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18

Oct

-18

Nov

-18

Dec

-18

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19

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19

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-19

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-19

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-19

GMDC Sensex

0.0

50.0

100.0

150.0

200.0

Apr

-18

May

-18

Jun-

18

Jul-

18

Aug

-18

Sep-

18

Oct

-18

Nov

-18

Dec

-18

Jan-

19

Feb-

19

Mar

-19

Apr

-19

May

-19

IPRU IN Sensex


EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

L&T Technology Services Limited (LTTS)

L&T Technology Services Limited (LTTS) is a global leader in Engineering and R&D (ER&D) services. With 399 patents filed for 51 of the Global Top 100 ER&D spenders, LTTS’ expertise in engineering design, product development, smart manufacturing, and digitalization touches every area of our lives. With 49 Innovation and R&D design canters globally, they specialize in disruptive technology spaces such as 5G, Artificial Intelligence, Collaborative Robots, Digital Factory, and Autonomous Transport. LTTS is a publicly listed subsidiary of Larsen & Toubro Limited, the $18 Bn Indian conglomerate operating in over 30 countries. Technically, LTTS has rallied from 712.25 to 1855 on weekly chart and has corrected to 38.20% Fibonacci retracement levels of the said rally i.e. around 1418 and bounced back from there to close above 23.6% Fibonacci retracement levels indicating end of the correction and a possible fresh leg of rally from these levels. Adding to it, Heiken candlesticks and Parabolic SAR is signalling positive trend on the weekly charts reflecting the stock is well placed to move higher in the coming days. 14 period RSI is trading above the 9 period averages on daily as well as weekly charts indicating positive momentum in the counter for all major time frames. On Bollinger bands, weekly chart stock has tested the upper band 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 1740-1750 levels for the potential upside targets of 2275-2310 levels over the next 6-9 months keeping a stop loss below 1400 levels.

Tata Global Beverages Limited (formerly Tata Tea Limited)

Tata Global Beverages Limited (formerly Tata Tea Limited) is an Indian multinational non-alcoholic beverages company headquartered in Kolkata, West Bengal, India and a subsidiary of the Tata Group. It is the world’s second-largest manufacturer and distributor of tea and a major producer of coffee. Tata Global Beverages markets tea under the major brands Tata Tea, Tetley, Good Earth Teas and JEMČA. Tata Tea is the biggest-selling tea brand in India. Tetley is the biggest-selling tea brand in Canada and the second-biggest-selling in United Kingdom and United States and JEMČA is the biggest-selling tea brand in the Czech Republic. Last week, Tata Global Beverages Ltd. announced the acquisition of all the branded food businesses from Tata Chemicals Ltd in an all-stock transaction that is aimed at creating a consumer business company with revenues of Rs. 9,099 crore. The stock has rallied from 97.5 to 321 on monthly chart and has corrected to 61.80% Fibonacci retracement levels of the said rally i.e. around 182 and bounced back from there to close near 38.20% Fibonacci retracement levels indicating end of the correction and a possible fresh leg of rally from these levels. The Heiken candlesticks and parabolic SAR is signalling positive trend on the weekly charts reflecting the stock is well placed to move higher in the coming days. 14 period RSI is trading above the 9 period averages on daily 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. At the current levels, the stock has given an excellent opportunity for medium to long term investors to accumulate the stock around 225-230 levels for the potential upside targets of 290-310 levels over the next 6-9 months keeping a stop loss below 190 levels.

STOCK LTTS

CMP 1759.05

ACTION BUY

ENTRY 1740-1750

AVERAGE 1450

STOP LOSS 1400

TARGET 1 2275

TARGET 2 2310

TIME FRAME 6-9 MONTHS

STOCK TATAGLOBAL

CMP 235.40

ACTION BUY

ENTRY 225-230

AVERAGE 200

STOP LOSS 190

TARGET 1 290

TARGET 2 310

TIME FRAME 6-9 MONTHS


EQUITY

Sentiment

Stop Loss 171.5

Target 145

Lot Size 2300

Margin 66000

21-DEMA 166

Open Interest Shares 37655600

Change in OI -3996200

Cost of Carry (%) 8.72

SECTORAL SNIPPETS

NIFTY FIN SERVICE (12,640.80) has ended the week with a positive return of over 3.5% outperforming the benchmark index NIFTY which closed with a positive return of around 1.2%. After witnessing a fall from its life-time highs, the index consolidated around its 50 DEMA and saw a good bounce from the said moving average. Technically, the NIFTY FINSE index closed the week above all its major moving averages on all time frames (daily, weekly as well as monthly charts) which suggests inherent strength in the index. The stocks which outperformed the NIFTYFINSE index during the week were BAJFINANCE, BAJAJFINSV, BAJAJHLDNG, KOTAKBANK, IIFL while HDFCLIFE, BHARATFIN, ICICIPRULI, EDELWEISS, MFSL, M&MFIN, RECLTD, PFC, SRTRANSFIN, ICICIBANK underperformed the index. On the momentum oscillator front, the 14-day RSI line is placed above the 9-day signal line indicating positive bias reflecting the index may trade with strength in the coming trading sessions. The index is placed above the parabolic SAR on the daily as well as weekly chart which indicates the ongoing uptrend. Going ahead, the index is expected to trade with sideways to positive bias. The immediate support for the NIFTY FINSE index is pegged around 12400-12450 levels followed by 12300 levels. On the higher side, the immediate resistance for the index is placed near its life time highs around 12730-12750 levels above which if the index crosses and sustains then it may head higher towards the psychological mark of 13000.

NIFTY BANK (29,450.15) outperformed the Nifty with a gain of 1.41% during the week passed by while the broader index Nifty gained by 1.14%. During the last week, the index witnessed a consolidated movement for the most part of the week and witnessed a breakout rally towards 29450 before the conclusion of the general elections. During the week, the index witnessed support at 28855 and 28785 levels and technically, it may trade with an upward bias until and unless 29200 levels are taken off from upside. On the earnings front, robust growth in net interest income and a sharp decline in loan-loss provisions helped Bank of India report a turnaround performance, posting a net profit of Rs. 252 crore in the fourth quarter against a net loss of Rs. 3,969 crore in the year-ago quarter. In the reporting quarter, the public sector bank reported a 58% year-on-year (YoY) jump in net interest income at Rs. 4,044 crore. In a major development regarding Yes Bank, RBI in exercise of powers conferred under sub-section (1) of Section 36AB of the Banking Regulation Act, 1949 appointed R Gandhi, Ex-Deputy Governor RBI as additional director on the board of the bank for a period of two years with effect from May 14, 2019 to May 13, 2021 or till further orders whichever is earlier. On the stock front, YESBANK, IDFCFIRSTB lost by 18.16% and 15.26% respectively during the week while on the other side KOTAKBANK and SBIN gained by 4.78% and 4.20% respectively. Bank Nifty may face resistance at 30120 levels followed by 30670 levels. For the week ahead, support for the index can be pegged at 29000 levels followed by 28500 levels.

NIFTY METAL (2,807.25) index after cracking more than 6.50% previous week has cracked this week and closed at 2807 levels with a cut of more than 2.00%. Nifty metal index has continued its underperformance over Nifty 50 index which has ended with a gain of around 1.25% during the same period. During the start of the month, Nifty Metal index has broken bearish head and shoulders pattern with an unfilled huge gap down and strong volumes indicating possible start of fresh leg of down move in the metal space. Continuing that, Nifty Metal index has seen a follow on selling this week also indicating bears are having good grip on the index for now. The index is also sustaining well below its all major moving averages, supporting the bearish view. Going into the internals of the metal index, the weakness in the continued for the second week also with the breadth of the index for the week standing at 2 stocks closing in green while rest of the stocks have closed in deep red. Leading the leader board, VEDL has gained around 3% followed APLAPPOLLO which has managed to close above flat line. While on the flipside, all major stock has continued to lose their ground in the range of 2-6% with an outlier of 9% on WELCORP and SAIL. Over last few days, index is trading in the range of 2750-2870. For now, immediate supports for the Nifty Metal index may be assumed at 2750-2770 levels followed by 52 wk lows zone of 2640-2660 levels. Whereas on the upside, immediate resistances may be assumed at 2900-2950 levels followed by 3040-3060 zone.

NIFTY PHARMA (8,448.95) has been one of the most bearish sectors in last few weeks which exhibited wild intraday swings for most of the sessions with undertone continuing to be on the lower side. The index has been a major underperformer in the last few weeks and ended lower by more than 5% on weekly basis with benchmark index Nifty concluding on the positive note. On the stock front, AUROPHAMRA emerged as the top loser which ended with cuts of more than 10% for the week. Among the other stocks, DRREDDY, GLENMARK, and LUPIN also ended with deep cuts in line with the overall sectoral weakness. On the other side, DIVISLAB remained untouched with the selloff in the peers and ended the week with just a percent cut on weekly basis. Technically, the index is trading with negative bias and has given closing below the mean of the Bollinger band (20, 2) indicating further weakness is likely to continue in the near term. The index witnessed selling pressure for the whole week and closed below 8500 levels indicating the underlying weakness. The immediate support for the index is pegged around 8300 levels followed by 8200 levels while near term resistance for the index is placed around 8600 followed by 8800 levels. For the upcoming week, the index is expected to trade with sideways to negative bias and may remain in the trading range coupled with stock specific action.

WIPRO LIMITED: BUY WIPRO (MAY FUTURE) | CMP: 286.40 SECTOR: IT

WIPRO has been a low beta counter and is one of the preferred pick from the Nifty IT space ahead of an expected highly volatile week. Technically, the stock is in secular uptrend and is placed near a strong support. In the past week, the stock has seen a good recovery from the levels and settled above all its major moving averages indicating strength in the counter. On oscillator front, 14 period RSI is on the verge of giving a positive crossover and is placed in a comfort zone of 52-55 levels. On the Bollinger band (20, 2), the stock has seen a recovery from its lower band and has headed towards the mean, even the band is narrowing down indicating less of downside and more of room left on the higher side in the counter. The key support is placed round 280 levels sustaining which it may surge towards its 52 weeks high levels. Hence, it is advisable to go long in the counter keeping a stop loss placed below the support zone of 280 levels for an immediate upside of 295 levels in near future.

Sentiment

Stop Loss 280

Target 295

Lot Size 3200

Margin 163000

21-DEMA 286

Open Interest Shares 34659200

Change in OI 2800000

Cost of Carry (%) 0.00

VEDANTA LTD : SELL VEDL (MAY FUTURE) | CMP: 161.45 SECTOR: METAL

VEDL is in cyclical downtrend forming lower highs and lower lows on daily chart. On the price chart, the stock has witnessed a resistance around its weekly 21EMA and halted its up move from the lows of 153.6 levels. Also on the daily charts, the stock is trading below its 21/50/100/200 days EMA indicating weak bias. Among other observations, the stock seems to be facing resistance near its mean in Bollinger bands and is moving towards lower band indicating weak momentum in the counter. Stock has retraced by 50% of its fall from 248.5 levels to 145 levels and started to fall again and closed below the 23.3% Fibonacci level of the fall suggesting that the chances of retesting the previous low of 145 is more likely. Hence, we suggest Smart Traders to short this counter around 161.5 levels with a stop loss placed at 171.5 levels for the target of 145 levels.


TYPE: BUY CALL IN RELIANCE

FIRST LEG Buy RELIANCE MAY 1280 CE @ CMP (46)

BEP 1326

MAX PROFIT Unlimited

MAX LOSS 23000

STOP LOSS 20 (option levels)

RATIONALE The stock has halted its current decline at its major moving averages and is consolidating over last few days. The stock has formed multi candle reversal pattern on Tuesday and is trading well above it since then. Hence bullish view for near term.

WEEKLY VIEW OF THE MARKET

NIFTY (11407.15): We are entering into the week of high volatility; initially exit polls of general election will dictate the move and eventually on the D-day, final outcome of the election will

set the stage for further course of action of the Market. Technically, Nifty found support above its major 200-DEMA and consolidated above 11100 mark for four sessions and witnessed

smart recovery in the last session of the week. Lastly, Nifty shut the shop at 11407.15. Going forward, Nifty index is likely to find immediate resistance near 11600 levels, sustaining above

which rally may extend towards 11800-11900 levels; while on the downside, key support is pegged near 11000-11100 levels, failing to protect which Nifty may slide further towards 10800

levels or lower. Markets are likely to be dictated by outcome of the election which can unfold in three scenarios-

• If BJP gets more than 280 seats, Nifty shall climb above 12000 and higher levels.

• If NDA manages to cross the half way mark, Nifty may rise towards all time highs of 11750-11800 levels.

• While on the flipside, if there is any disappointment and any signs of unstable government, it may trigger a slide on Nifty below 11000 mark.

Since markets are expected to remain volatile, it is advisable for the participants to stay hedged with existing position and a better way is to hedge with the underlying options.

DERIVATIVE STRATEGIES

DERIVATIVES

TYPE: CALL RATIO IN NIFTY

FIRST LEG Buy 1 Lot of NIFTY 30 MAY 11700 CE @ CMP (155)

SECOND LEG Sell 2 Lots of NIFTY 30 MAY 11900 CE @ CMP (90)

Max Profit 16875

BEP 12125

MAX LOSS Unlimited beyond BEP

RATIONALEThe index has bounced from major moving averages and closed beyond small trading range indicating possible reversal of the current short term downtrend. The index has gained more than 1.40% on the last trading session. For now, supports may be assumed at the recent swing lows of 11100-11200 zone and key resistances at all time high zone.

TYPE: PROTECTIVE PUT IN SBIN

FIRST LEG Buy 1 Lot of SBIN MAY Futures @ CMP (320)

Second Leg Buy 1 Lot of SBIN May 300 PE @ CMP (5.50)

BEP 325.50

MAX PROFIT Unlimited

MAX LOSS 76500

RATIONALE The stock has ended the week on a strong note with gains of more than 4.00% and closed at the month highs for now. It is one of the stocks which has moved much higher and outperformed its broader index and sectoral index. Hence bullish view for near term.

TYPE: CALL RATIO IN BANKNIFTY

FIRST LEG Buy 1 Lot of BANKNIFTY 30 MAY 29500 CE @ CMP (910)

SECOND LEG Sell 2 Lots of BANKNIFTY 30 MAY 30500 CE @ CMP (425)

Max Profit 18800

BEP Lower BEP : 29560 and Upper BEP : 31440

MAX LOSS Unlimited beyond Upper BEP

RATIONALEBANKNIFTY has ended the week on a positive note with huge gains on Thursday and Friday. The index has ended on a strong note with a gain of more than 1.50% at the highs of the day and week indicating positivity. Technically, immediate supports are around the current major rally starting point of 28500-29000 zone whereas immediate resistances are pegged around all time highs zone of 30400-30600.

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7KSTREET - 18TH MAY 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

BAJAJFINSV 7992.95 1.00 780500 38.60

SRF 2798.45 14.41 830250 29.52

TATAGLOBAL 235.4 18.59 16019550 26.08

DCBBANK 221.85 2.40 5328000 22.06

MUTHOOTFIN 579.4 1.10 2925000 19.12

EICHERMOT 20937 2.86 439650 17.38

BANKNIFTY OPTION OI CONCENTRATION CHANGE IN BANKNIFTY OPTION OI

TOP 6 SHORT CLOSURE


KAJARIACER 594.75 1.95 1623700 -40.55

BATAINDIA 1374.8 1.86 1612600 -24.39

EQUITAS 128.55 2.68 8476000 -23.36

SIEMENS 1125.95 5.13 1100000 -20.22

BEL 91.95 2.51 26682000 -16.60

MANAPPURAM 122.6 5.24 7824000 -13.53

TOP 6 SHORT BUILD UP


GODREJIND 450.05 -4.49 1746000 43.88

UNIONBANK 70.65 -15.94 38234000 33.48

MRPL 62.25 -2.43 5395000 31.36

INFIBEAM 42.65 -1.27 13556000 26.46

BALKRISIND 794.90 -5.30 1664800 26.43

ARVIND 74.2 -3.82 6736000 24.19

TOP 6 LONG CLOSURE


ICICIPRULI 339.25 -3.65 4606500 -24.38

IGL 305.55 -1.91 2565750 -20.32

AJANTPHARM 1026.00 -3.96 674500 -17.04

TORNTPHARM 1647.85 -2.06 733000 -16.37

CHENNPETRO 213.45 -7.48 1357200 -14.61

AMARAJABAT 630.70 -0.66 1356600 -13.52

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI

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COMMODITIES

BASE METALSBase metals traded positive amid positive sentiments brought in the market after US indicated that the trade conflict could possibly resolve and US president will discuss the same with Chinese counterpart during G20 summit. On the economic front, US President Trump decided to raise the tariffs from 10% to 25% on $200 Bn worth Chinese goods after being patient for the past two times. President Donald Trump said Beijing “broke the deal” by reneging on earlier commitments made during months of negotiations. Indian government delayed enacting retaliatory tariffs against US goods, thus postponing the possible date for the duty to May 16. The proposed tariffs were first queued up last June in response to the Trump Administration’s Section 232 tariffs on aluminum and steel. Initially set to begin last summer, the measure has been repeatedly delayed due to talks between the governments and hopes of a deal to be ironed out by negotiators. Metals pack also inched higher after the macroeconomic sentiments improved after better data from China & US. Chinese CPI for April stood at 2.5% in line with the expectations giving less support to the Yuan and PPI came in at 0.9% above the expectations of 0.6% capping the fall in prices due to US-China trade talks. US housing data released on Thursday showed homebuilding increased more than expected in April while unemployment benefits fell more than expected last week pointing to sustained labour market strength that should underpin the economy. Residential starts increased 5.7% to a 1.24 million annualized rate after a 1.7% gain in March that was previously reported as a drop. On Thursday, US Labor Department showed initial jobless claims fell more than forecast last week to a four-week low of 212,000 offering the latest evidence the jobs market remains tight.

BULLIONGlobal bullion market had witnessed a roller coaster ride during the week ended on 17th May 2019. The CME gold futures started the week with a bang wherein June expiry futures prices rallied to 5 week high on emergence of safe have asset buying. Renewal of trade war between US and China after imposition of higher tariffs on each other’s goods supported the yellow metal prices. On 10th May 2019, US President Donald Trump increased tariff from 10% to 25% on USD 200 Bn worth Chinese goods. In retaliation, China also increased tariff on USD 60 Bn worth US goods with effective from 1st June 2019. The gains were not sustained in later part of the week as investors went on booking profits on their long positions. Though the US and China have increased tariff on each other’s goods, they are still open to have trade negotiation. The US President Donald Trump is likely to meet Chinese Premier Xi Jinping next month in Japan wherein both leaders are likely to have trade negotiation discussion. During the week major economic releases were retail sales which came at -0.2% in April against market expectation of 0.2% and previous reading of 1.7%; US industrial production contracts in April by -0.5% against previous reading of 0.2%; building permits and housing starts improved by 1.30 million and 1.24 million respectively. Recovery in the US equity market as well as dollar index also weighed on the bullion prices in later part of the week. On domestic front, MCX gold futures were also surged to multi week high tracking stronger international market as well as depreciation of Indian Rupee against US Dollar. Since India is approaching general election results on 23rd May 2019, the Indian Rupee is showcasing volatile trend thereby having its impact on the bullion market.

CRUDE OILCrude oil prices posted the weekly gains owing to geopolitical instability in the Middle East and rising trade tensions between US & Iran over nuclear sanctions. Saudi Arabia said armed drones struck two of its oil pumping stations on Tuesday, two days after the sabotage of oil tankers near the United Arab Emirates and the US military said it was braced for “possible imminent threats to US forces in Iraq” from Iran-backed forces. OPEC said on Tuesday that world demand for its oil would be higher than expected this year as supply growth from rivals including US shale producers slows, pointing to a tighter market if the exporter group refrains from raising output. The market is also awaiting the decision of the OPEC and other producers on whether to continue with supply cuts that have boosted prices more than 30% so far this year. A meeting of OPEC’s ministerial monitoring committee in Saudi Arabia this weekend will assess member states’ commitment to a deal reducing oil production, Iraq’s oil minister said on Thursday. Meanwhile, tighter gasoline supplies on the US East and West Coasts have left both regions prone for potential price spikes before the start of summer driving season. Supplies on both coasts are at seasonal five-year lows just days ahead of the May 27 Memorial Day holiday weekend, the unofficial beginning of summer. During the weekly release, US crude oil stockpiles rose unexpectedly last week, climbing to their highest since 2017 amid a release from the national emergency reserve while gasoline inventories decreased more than forecast. Crude inventories rose by 5.4 million barrels in the last week compared with markets expectations for a decrease of 800,000 barrels.

COTTONMCX Cotton Futures extended its losses following weaker cues from global market. Renewed trade dispute between US and China pressurized prices during last week. US has raised tariff from 10% to 25% on the Chinese imports worth $200 Bn wherein China increased tariff on $60 Bn US goods in terms of retaliation. Increased price disparity of Indian fiber due to comparatively larger fall in ICE cotton futures added negativity to prices. ICE cotton futures have slumped by more than 14% in last one month ruled near 66 cent/lb on Friday wherein MCX cotton futures has tumbled by 5%. Ongoing trade dispute

between US and China and expectation of rise in yield levels due to favourable weather condition for sowing and crop progress in US pressurized ICE cotton prices during above mentioned period. Moreover, ICE cotton futures tracked negative cues from USDA latest monthly supply and demand estimation report released on Friday for the month of May. USDA released its preliminary estimates of supply and demand for world as well as for US projected remarkable rise in cotton production in US during year 2019-20. USDA estimated cotton production in US for year 2019-20 at 22 million bales of 480 pound each compare to 18.37 million bales of prior year, higher by almost 20% on yearly basis. Despite rise in export of cotton from US, US cotton inventory levels are likely to be higher by 38% on yearly basis could stand near about 6.40 million bales. USDA estimated export for year 2019-20 at 17 million bales compared to 14.75 million bales of prior year wherein consumption is pegged at 3.10 million bales unchanged from previous year. At the same time, USDA raised the production estimation for global cotton production and consumption for year 2019-20 estimated at 125.45 million bales of 480 lb each and 125.93 million bales respectively. Global cotton inventory is expected to be down by 1% y/y and could stand near 75.69 million bales as per USDA estimates. According to USDA’s weekly crop progress report, cotton has been planted in 26% of the area which is down at 34% compared to same period a year ago and lower from 32% five year average. Only 19% of cotton planting completed in US till 12th May compared to 27% of prior year. Meanwhile, Cotton Association of India revised its cotton production estimation for India from 321 lakh bale to 315 lakh bales. Total cotton supply estimated by the Cotton Association of India (CAI) during the period from October 2018 to April 2019 is 314 lakh bales of 170 kgs each which consists of the arrival of 278.73 lakh bales upto 30th April 2019, imports of 7.27 lakh bales upto 30th April 2019 and the opening stock at the beginning of season on 1st October 2018 at 28 lakh bales. Domestic consumption estimated by the CAI for the entire crop year i.e. upto 30th September 2019 is 315 lakh bales which is lower by 1 lakh bales compared to its previous estimate made during last month while the CAI has estimated exports for the season at 46 lakh bales which are lower by 23 lakh bales compared to the previous year’s cotton exports estimate of 69 lakh bales. The carry over stock estimated at the end of the season is estimated at 13 lakh bales.

RUBBERGlobal rubber futures were traded on a positive note and moved up more than 3% on Thursday and ended the week on 17th May 2019. It is reported that the rubber tapping process has stopped in China’s Jiangcheng Rubber-the country’s biggest plantation-which lent support to the price rally. ICEX rubber futures were also traded on higher note due to supply crunch in major spot markets in Kerala. Tapping activity of rubber has been stopped in the key growing areas of Kerala. Tyre companies are likely to pay more but no supplier in the market. Low tapping usually in summer may add positive sentiments in the market. As per the Skymet & IMD estimation, monsoon will be delayed in India and reach Kerala on 4th June 2019 with the marginal error of 2%. As per the data released by the Vietnam’s Statistics of General Department of Customs, the country had shipped 74.56 thousand tonnes of rubber in April 2019, higher by 7% YoY. In domestic market, Indian natural rubber production fell by 7.5% in 2018-19 while consumption increased by 9% from the previous year. India produced 642 thousand tonnes of natural rubber in 2018-19 which is the second lowest level after a record low in 2015-16 at 562 thousand tonnes. China is the biggest market for Vietnam’s rubber and in first four months exports to China rose by 37% YoY to 269.22 thousand tons and in April, shipment was 50.82 thousand, higher by 7% YoY. The impact of the renewed trade tension between US and China cooled off following comments from US President that both the countries would continue to hold trade dialogues. According to China Association of Automobile Manufacturers (CAAM), the country’s vehicles sales dipped by 14.6% YoY to 1.98 million vehicles in April 2019 marking 10th consecutive month of decline.

SOYBEAN NCDEX soybean futures extended its gains on reports of increased meal export from India. Domestic soybean market reacted positively to the renewed trade tension between US and China as prices moved up in expectation of rise in export demand from India. The Solvent Extractors Association of India has released its monthly data on meal export from India showed remarkable rise in oil meal export during marketing year 2018-19 on yearly basis. The overall export of oil meals during the year (2018-19) has revived and reported at 3,324,693 tons compared to 3,026,628 tons during the same period last year (2017-18). Soybean Meal exported reported at 1,358,083 tons compared to 1,187,818 of prior year up by 14%. Solvent Extractor Association of India’s (SEA) meal export data for the month of April was reported at 12265 MT against the 68264 MT of same month during prior year. Similarly, Mustard seeds futures traded on positive bias on emerging buying interest amid accelerating procurement by government agency at MSP levels. The export of rapeseed meal during April 2018 - March2019 sharply increased to 1,051,869 (663,988) tons, higher by 58% on yearly basis. Rapeseed meals were mainly exported to South Korea, Vietnam and Thailand. Likewise veg oil futures traded sideways to higher following weakness in domestic currency. Meanwhile, Malaysian palm oil board released its monthly data that showed output of palm oil during month of April dropped by 1.4% to 1.65 million tonnes wherein export increased by 2% m/m reported at 1.65 million tonnes. Ending stocks dropped by 6.6% m/m to 2.73 million tones.


CRUDE PALM OIL

COMMODITIES

TRENDSHEET

Commodities 10-May 17-May % Change 52 Week High% Change from 52 Week High

52 Week Low% Change from

52 Week Low% Change from

52 Week Low

MCX Gold (Rs/10 gms) 31904.0 31941.0 0.1% 34031.00 -6.14% 29268.00 9.13% 9%

MCX Silver (Rs/Kg) 37354.0 36622.0 -2.0% 41698.00 -12.17% 34981.00 4.69% 3%

MCX Crude Oil (Rs/bbl) 4326.0 4432.0 2.5% 5669.00 -21.82% 2993.00 48.08% 62%

MCX Natural Gas (Rs/mmBtu) 184.6 184.6 0.0% 358.70 -48.54% 170.70 8.14% 24%

MCX Copper (Rs/kg) 432.2 426.8 -1.2% 493.25 -13.47% 397.40 7.40% 5%

MCX Lead (Rs/kg) 127.4 127.5 0.1% 171.80 -25.79% 125.00 2.00% 8%

MCX Zinc (Rs/kg) 215.4 215.8 0.2% 233.65 -7.64% 163.80 31.75% 6%

MCX Nickel (Rs/kg) 838.4 849.7 1.3% 1063.50 -20.10% 735.00 15.61% 34%

MCX Aluminium (Rs/kg) 147.3 149.7 1.6% 167.80 -10.79% 124.75 20.00% 15%

NCDEX Soybean (Rs/Quintal) 3700.0 3715.0 0.4% 3915.00 -5.11% 3149.00 17.97% 18%

NCDEX Refined Soy Oil (Rs/10 kg) 741.5 760.8 2.6% 786.75 -3.30% 713.60 6.61% 13%

NCDEX RM Seed (Rs/Quintal) 3824.0 3891.0 1.8% 4244.00 -8.32% 3711.00 4.85% 12%

MCX CPO (Rs/10 kg) 518.2 526.2 1.5% 673.00 -21.81% 483.40 8.85% 15%

NCDEX Castor Seed (Rs/Quintal) 5654.0 5680.0 0.5% 6300.00 -9.84% 3831.00 48.26% 21%

NCDEX Turmeric (Rs/Quintal) 6470.0 7000.0 8.2% 7464.00 -6.22% 5958.00 17.49% 3%

NCDEX Jeera (Rs/Quintal) 17340.0 17730.0 2.2% 21000.00 -15.57% 15140.00 17.11% 35%

NCDEX Dhaniya (Rs/Quintal) 7164.0 7451.0 4.0% 7579.00 -1.69% 4186.00 78.00% 13%

MCX Cardamom (Rs/kg) 2370.6 2330.0 -1.7% 2495.40 -6.63% 818.50 184.67% 70%

NCDEX Wheat (Rs/Quintal) 1943.0 1975.0 1.6% 2162.00 -8.65% 1752.00 12.73% 29%

NCDEX Guar Seed (Rs/Quintal) 4380.5 4331.0 -1.1% 4869.50 -11.06% 3494.50 23.94% 25%

NCDEX Guar Gum (Rs/Quintal) 8814.0 8720.0 -1.1% 10510.00 -17.03% 7200.00 21.11% 30%

MCX Cotton (Rs/Bale) 21640.0 21170.0 -2.2% 24280.00 -12.81% 19950.00 6.12% 26%

NCDEX Cocud (Rs/Quintal) 2611.0 2705.0 3.6% 2710.00 -0.18% 1235.50 118.94% 43%

NCDEX Kapas (Rs/20 kg) 868.0 868.0 0.0% 0.00 #DIV/0! 0.00 #DIV/0! 2%

MCX Mentha Oil (Rs/kg) 1410.2 1403.1 -0.5% 1846.10 -24.00% 1106.00 26.86% 58%

TECHNICAL RECOMMENDATIONS

LEAD

COPPER

As on 17th May 2019, Crude palm oil May contract futures at the MCX platform are hovering around Rs. 526/Kg. In the mentioned price chart, it is visible that prices are trading below the daily 8, 13 EMA (528/530) resistance levels and also trading below the long term and intermediate trendline resistance levels. The momentum indicators William R and RSI-14 have recovered from oversold zone to normal zone and have a potential to move lower. Overall bearish trend is intact and we recommend selling on pullbacks.Recommendations Sell Crude Palm oil May MCX: at Rs 530-532 TP 510 SL 539

As on 17th May 2019, Lead May MCX contract futures were trading around Rs. 127.45. Since last several sessions, prices are falling along with trend channel supports and resistances. Lead futures prices have breached long term consolidation phase support levels around Rs. 133 and are also trading below the daily EMA Support levels at 130 levels. However, indicators are providing positive clues. William R % and RSI-14 is witnessing a positive divergence at oversold territory and MACD is witnessing bullish crossovers. Therefore, we expect a mere pullback towards the breakout point in the coming week and we recommend building long positions from lower levels.

Recommendations:

Buy Lead May MCX at RS 125-126 TP 133 SL 122

As on 17th May 2019, Copper June contract futures at the MCX platform are trading around Rs. 428/kg. Prices are trading below the weekly 8, 13 EMA support levels at Rs. 438. The weekly MACD and RSI-14 is providing negative clues and William R % has approached the oversold zone. Overall bearish trend is in progress and we are expecting copper futures to extend the fall towards the long term rising trend line support levels of Rs. 418.

Recommendations:

Sell Copper June MCX at Rs 432-434 TP 420 SL 440


COMMODITIES

NYMEX CRUDE OIL CALENDAR SPREAD NYMEX NATURAL GAS CALENDAR SPREAD

MCX CRUDE OIL MCX NATURAL GAS

NEWS DIGEST

• De-escalation of a trade war could result in a weaker dollar and stronger global growth

which along with International Maritime Organization (IMO) changes to shipping fuel rules

could raise Brent oil to $90 a barrel, Bank of America Merrill Lynch said.

• US crude oil stockpiles rose unexpectedly last week climbing to their highest since 2017

amid a release from the national emergency reserve while gasoline inventories decreased

more than forecast, the Energy Information Administration said on Wednesday.

• Crude inventories rose by 5.4 million barrels last week compared with analysts’

expectations for a decrease of 800,000 barrels. Nearly 1.8 million barrels was added

to supply through the release from the US Strategic Petroleum Reserve. The US Energy

Department said in February it was offering up to 6 million barrels of sweet crude oil

for delivery in May from the SPR in a sale mandated by a previous law to raise funds to

modernize the facility. Overall crude inventories, not including the SPR rose to 472 million

in the latest week, their highest since September 2017 and about 2% above the five year

average for this time of year, according to EIA data.

• ILZSG anticipates an increase in world refined lead metal output of 2.5% to 11.94 million

tonnes in 2019.

• As per ILZSG report, global demand for refined zinc metal will exceed supply in 2019 with

extent of deficit forecast at 121,000 tonnes and an anticipation of rise in output by 3.6% to

13.65 million tonnes in 2019.

• The global demand for refined lead is anticipated to rise by 1.2% in 2019 to 11.87 million

tonnes after declining by a marginal 0.2% in 2018.

WEEKLY COMMENTARY

• Copper prices on the London Metal Exchange are on track to fall for a fifth straight week as deepening

• US-China trade tensions sparked concerns about weak demand. After a series of tariff hikes by the world’s two biggest economies, the US on Thursday added Chinese telecom giant Huawei Technologies Co Ltd. HWT.UL to a blacklist, making it extremely difficult for it to do business with US firms.

• Gold price was mostly unchanged on Friday after a steep fall in the previous session with gains curbed by a firmer dollar and a pullback in global equities on US-China trade tensions offering support.

• Crude oil edged up towards $73 a barrel on Friday heading for a weekly gain supported by supply cuts and concern over potential further disruption to Middle East shipments as political tensions rise.

• US sanctions on Iran have cut the OPEC member’s crude exports further in May adding to supply curbs implemented through an OPEC-led pact. Meanwhile, fears of conflict in the Middle East have also raised concern about additional supply disruption.

• Chicago corn extended a rally on Friday to hit a four-month high, as forecasts of heavy rain in parts of the US Midwest next week fuelled concern about worsening planting delays. Wheat also extended gains to a six-week high, supported by corn as well as worries that excess moisture could hamper sowing of spring wheat and the final growth stages of winter wheat.

• Malaysian palm oil futures closed Friday’s trading unchanged as the market lost steam after a four-session rally backed by strong demand for the edible oil. Malaysian palm oil shipments rose between 4% and 15% during May 1-15 from the corresponding period last month according to data from three cargo surveyors, Amspec Agri Malaysia, Intertek Testing Services and Societe Generale de Surveillance.

0

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COMMODITIES

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

Commodity Exchange Contract 10-May 17-May % change

Aluminium LME 3M 1815.00 1855.00 2.20%

Copper LME 3M 6146.00 6081.50 -1.05%

Lead LME 3M 1819.00 1831.50 0.69%

Nickel LME 3M 11960.00 12125.00 1.38%

Zinc LME 3M 2641.00 2632.50 -0.32%

Gold CME June 1286.80 1287.00 0.02%

Silver CME July 14.72 14.47 -1.70%

WTI Crude oil CME June 61.71 63.14 2.32%

Natural Gas CME May 2.62 2.64 0.76%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 10-May 17-May % change

Soybean CBOT July 815.00 853.50 4.72%

Soy oil CBOT July 26.79 27.68 3.32%

CPO BMD June 1984.00 2096.00 5.65%

Cotton ICE July 68.40 66.86 -2.25%

FUTURE PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONS)

Commodity Previous week This week Change % Change

Copper 203750 190550 -13200 -6.48%

Zinc 105400 105300 -100 -0.09%

Aluminium 1261450 1239975 -21475 -1.70%

Lead 73800 73400 -400 -0.54%

Nickel 169218 164400 -4818 -2.85%

SHANGHAI WAREHOUSE STOCKS (IN TONS)*


Copper 194208 187963 -6245 -3.22%

Zinc 69788 68808 -980 -1.40%

Aluminium 601362 569131 -32231 -5.36%

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

GLOBAL STOCK POSITION (IN TONS)

COMEX WAREHOUSE STOCKS (IN TONS)


Copper 32586 32216 -370 -1.14%

USDA World Agricultural Supply and Demand Estimation Report (May, 2019): Cotton Projection for year 2019-20

-3.41%

-2.41%

-1.91%

-1.69%

-1.32%

-0.81%

-0.09%

0.04%

0.36%

0.56%

0.67%

0.75%

0.82%

0.79%

1.29%

1.30%

1.51%

1.47%

2.31%

2.57%

2.67%

3.12%

3.16%

4.79%

13.18%

-6.00% -4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00%

Silver

Cotton

Cardamom

Copper

Guar Seed

Guar Gum

Barley

Mentha Oil

Gold

Lead

Natural Gas

Zinc

Soybean

Castor Seed

Nickel

Aluminum

CPO

Wheat

RM Seed

Jeera

Crude Oil

Soy Oil

Cotton Seed Oil Cake

Dhaniya

Turmeric

CountriesBeginning

StocksProduction Imports Consumption Exports

Ending Stocks

World 76.47 125.45 45.35 125.93 45.35 75.69

United States 4.65 22 0.01 3.1 17 6.4

Australia 1.3 2.2 3/ 0.04 2.4 1.07

Brazil 12.21 12 0.08 3.6 8.2 12.48

India 7.13 28.5 1.4 25.3 4.5 7.23

Mexico 0.72 1.75 0.85 2 0.55 0.75

China 33.62 27.75 11 41.5 0.13 30.74

European Union

0.31 1.78 0.67 0.73 1.69 0.29

Turkey 1.53 4.1 3 6.7 0.38 1.55

Pakistan 2.78 8 2.9 10.7 0.15 2.81

Indonesia 0.61 3/ 3.2 3.2 0.01 0.61

Thailand 0.2 3/ 1.18 1.15 0 0.21

Bangladesh 1.98 0.14 8.4 8.4 0 2.11

Vietnam 1.29 3/ 7.6 7.6 0 1.29


USD/INR

USDINR is currently trading at 70.22. During the week, it made a high of 70.53 and low of 69.99. The RSI is at 50.96. Moving average of 32 is at 70.18 and 55 is at 70.72. The trend is looking positive for the week. Hence, recommend buying at 69.80-69.70 TP 70.70 SL 69.20

EUR/INR

EURINR is currently trading at 78.40. During the week, it made a high of 79.23 and low of 78.30. The RSI is trading at 43.72. Moving average of 32 is at 80.20 and 55 is at 80.45. The trend is looking negative for the week. Hence, recommend selling at 78.70-78.80 TP 77.30 SL 79.30.

GBP/INR

GBPINR is currently trading at 89.53. During the week, it made a high of 91.94 and low of 89.41. The RSI is trading at 42.87. Moving average of 32 is at 91.54 and 55 is at 91.39. The trend is looking negative for the week. Hence, recommend selling at 90.30-90.40 TP 88.50 SL 90.90.

JPY/INR

JPYINR is currently trading at 64.08. During the week, it made a high of 64.41 and low of 63.81. The RSI is at 56.17. Moving average of 32 is at 63.55 and 55 is at 63.07. The trend is looking positive for the week. Hence, recommend buying at 63.80-63.90 TP 65.00 SL 63.30.

TECHNICAL RECOMMENDATIONMARKET STANCE

USD/INR closed for the day and week at 70.24. India’s inflation rate for the month of April 2019 increased marginally to 2.92 % vs. 2.86 %. Nifty 50 recovered losses of the week in just one trading session as it closed with gains of 1.14% for the week ended May 17 ahead of exit call due on May 19. April CPI food price inflation came at 1.1 % from 0.30 % in March. China’s offshore Yuan hit a fresh 2019 low as a fresh escalation in US-China trade tensions hit sentiment with each country raising tariffs on the other’s goods. The seventh and final phase of the voting exercise will conclude on May 19 in India. India VIX fell down by 1.01% at 28.07 levels. However, the VIX is still trading at higher levels and a high VIX suggests that volatile swings could continue in the market ahead of election polls and outcome. Currency market is expected to be extremely volatile in the short term.

NEWS FLOWS OF LAST WEEK

• China will raise tariffs on US goods from June 1st. About $60 Bn of goods to be tariffed. China is said to raise tariffs on 2493 US goods to 25%.

• India’s inflation rate for the month of April 2019 increased marginally to 2.92% vs. 2.86%. April CPI food price inflation came at 1.1% from 0.30% in March.

• The seventh and final phase of the voting exercise will conclude on May 19. Exit polls will be released on the very same day.

• US President Donald Trump insisted that trade talks with China has not collapsed.

• Britain faces a potentially disorderly exit from the European Union as Prime Minister Theresa May has struggled to keep her Brexit deal. This has pushed the Pound to a three-month low

• As per news, China’s Central Bank not likely to let the Yuan weaken past 7 per dollar.

• Euro has fallen to its lowest level in more than a week against the dollar on concerns about next week’s European parliamentary elections.

• Robust US housing data and a weekly jobless claims report pointed to sustained labor market strength in US.

• BOJ’s Kuroda said today that inflation will pick up gradually towards 2% goal in Japan as price momentum is being maintained.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 69.32 70.06 69.29 69.91

EURINR 77.46 78.69 77.45 78.53

GBPINR 90.94 91.18 90.52 90.96

JPYINR 62.61 63.88 62.43 63.71


ECONOMIC GAUGE FOR THE NEXT WEEK

Local Time Country Indicator Name Period Poll Prior Unit

19:30 United States Existing Home Sales Apr 5.30M 5.21M Number of

19:30 United States Exist. Home Sales % Chg Apr 2.6% -4.9% Percent

05:20 Japan Trade Balance Total Yen Apr 203.2B 527.8B JPY

14:00 United Kingdom Core CPI MM Apr 0.4% 0.2% Percent

14:00 United Kingdom Core CPI YY Apr 1.9% 1.8% Percent

14:00 United Kingdom CPI MM Apr 0.7% 0.2% Percent

14:00 United Kingdom CPI YY Apr 2.2% 1.9% Percent

14:00 United Kingdom CPI NSA Apr 107.000 Index

16:30 United States MBA Mortgage Applications 17 May, w/e -0.6% Percent

16:30 United States Mortgage Market Index 17 May, w/e 415.7 Index

16:30 United States MBA Purchase Index 17 May, w/e 268.5 Index

16:30 United States Mortgage Refinance Index 17 May, w/e 1,232.6 Index

16:30 United States MBA 30-Yr Mortgage Rate 17 May, w/e 4.40% Percent

20:00 United States EIA Weekly Crude Stocks 17 May, w/e 5.431M Barrel

20:00 United States EIA Weekly Dist. Stocks 17 May, w/e 0.084M Barrel

20:00 United States EIA Weekly Gasoline Stk 17 May, w/e -1.123M Barrel

20:00 United States EIA Weekly Crude Imports 17 May, w/e -0.106M Barrel

20:00 United States EIA Weekly Rfg Stocks 17 May, w/e 0.012M Barrel

20:00 United States EIA Weekly Heatoil Stock 17 May, w/e -0.577M Barrel

20:00 United States EIA Weekly Prods Imports 17 May, w/e -0.377M Barrel/Day

20:00 United States EIA Weekly Dist Output 17 May, w/e 0.175M Barrel/Day

20:00 United States EIA Weekly Crude Runs 17 May, w/e 0.271M Barrel/Day

20:00 United States EIA Weekly Refining Util 17 May, w/e 1.6% Percent

20:00 United States EIA Wkly Crude Cushing 17 May, w/e 1.805M Barrel

20:00 United States EIA Weekly Gasoline O/P 17 May, w/e -0.217M Barrel/Day

23:00 United States EIA Ethanol Ref Stk 17 May, w/e 22,250k Barrel

23:00 United States EIA Ethanol Fuel Total 17 May, w/e 1,051k Barrel/Day

17:30 United States Build Permits R Numb Apr 1.296M Number of

17:30 United States Build Permits R Chg MM Apr 0.6% Percent

18:00 United States Initial Jobless Claims 18 May, w/e 215k 212k Person

18:00 United States Jobless Claims 4-Wk Avg 18 May, w/e 225.00k Person

19:15 United States Markit Comp Flash PMI May 53.0 Index (diffusion)

19:15 United States Markit Mfg PMI Flash May 52.7 52.6 Index (diffusion)

19:15 United States Markit Svcs PMI Flash May 53.2 53.0 Index (diffusion)

19:30 United States New Home Sales-Units Apr 0.679M 0.692M Number of

19:30 United States New Home Sales Chg MM Apr -2.7% 4.5% Percent

20:00 United States EIA- Nat Gas, Change Bcf 13 May, w/e 106B Cubic foot

20:00 United States Nat Gas-EIA Implied Flow 13 May, w/e 106B Cubic foot

20:30 United States KC Fed Manufacturing May 12 Index

20:30 United States KC Fed Composite Index May 5 Index (diffusion)

18:00 United States Durable Goods Apr -2.0% 2.6% Percent

8 May 2019 20:00 United States Not Rated EIA Weekly Refining Util 3 May, w/e

8 May 2019 20:00 United States Not Rated EIA Wkly Crude Cushing 3 May, w/e

8 May 2019 20:00 United States Not Rated EIA Weekly Gasoline O/P 3 May, w/e

8 May 2019 20:30 United States Low TR IPSOS PCSI May

8 May 2019 23:00 United States Not Rated EIA Ethanol Ref Stk 3 May, w/e

8 May 2019 23:00 United States Not Rated EIA Ethanol Fuel Total 3 May, w/e

CURRENCY


8 May 2019 China (Mainland) High Exports YY Apr 2.3%

8 May 2019 China (Mainland) High Imports YY Apr -3.6%

8 May 2019 China (Mainland) High Trade Balance USD Apr 35.00B

8 May 2019 China (Mainland) Not Rated Yuan-Denominated Exports Apr

8 May 2019 China (Mainland) Not Rated Yuan-Denominated Imports Apr

8 May 2019 China (Mainland) Not Rated Yuan-Denominated Trade Ba Apr

9 May 2019 04:31 United Kingdom Medium RICS Housing Survey Apr -22

9 May 2019 07:00 China (Mainland) High PPI YY Apr 0.6%

9 May 2019 07:00 China (Mainland) High CPI YY Apr 2.5%

CURRENCY


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