RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue007.pdfKSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining

ISSUE: 007

20TH OCTOBER, 2018

RULE THE MARKET

From The Desk Of Research HeadCONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-14

Events 15

TeamDr. Ravi Prakash SinghSyed Hasan JafarAmit SamarAmrita PreetamViplav DhandhukiaSrinivas Krishnan BobbaVaishali ParuthiChetan K WaghrayMurad Bapuji ChinoyPankaj WadhwaniBenjamin FrancisVivek Ranjan MisraMunindra UpodahyayaYash BhutikaKiran Shankar PrasadVeeresh HiremathArpit Chandna Anup B.PAmit KumarVinod.JRahul ChanderSiddesh GhareDeepak AgarwalBharath Sunnam

D Jayant Kumar

Karvy Head Office

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

For More updates & Stock Research

Visit: www.karvyonline.com

Toll free: 1800 419 8283

Email: [email protected]

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

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

- DR. RAVI PRAKASH SINGHHead-Technical & Derivatives Research

Falling Rupee, a concern for Indian Economy

One of the major headlines and a cause of political cry by opposition parties these days is depreciation of rupee against the US dollar. This week we shall focus on understanding its causes and effects. The following reasons can be majorly attributed to the same.

Rise in Crude Oil prices: Our domestic produce amounts to only 20% of our crude oil requirement and the rest is imported from the Middle East and other countries. A report says that there is an increase of $21billion payments to $109billion this fiscal year from $88billion in the last year. Indian Economic survey 2018 estimates every 10 dollars per barrel increase in Crude Oil may adversely affect the GDP by 0.2-0.3%. US trade sanctions on Iran and a lowered production of crude oil by OPEC countries have contributed to the surge in oil prices recently.

Impact of Trade wars: In the ongoing scenario of trade wars, the price of the imported goods shoots up and will increase the outflow of the dollar from the Indian market which devalues the rupee.

Increasing Trade Deficit: The higher trade deficit and the higher demand for dollars from India have resulted in currency depreciation. India’s trade deficit was the widest in FY 2017-18 since 2012-13 with $157 billion. In FY 2012-13, the trade deficit was of $190 billion.

FPI remittances: So far in 2018, FPIs pulled out close to Rs. 93,450 cr from Indian capital markets, which comprises around Rs.60,276 cr from debt segment alone and the remaining from equities. One major reason which we can attribute to FPI outflow may be the investor uncertainty ahead of the Indian General Elections 2019.

Effects of currency depreciation

• Will lead to an increase in cost-pull inflation which is not desirable at the macro–level.

• May cause a slowdown of Economy if the currency continues to depreciate with no increase in the country’s productivity.

• Will cause an increase of the Current Account Deficit (CAD), due to the cascading effect on the Economy.

• May cause a decrease of base metal prices and an increase in prices of Gold.

What steps are to be taken by the government to curb the rupee fall?

To contain the widening of the Current Account Deficit and falling rupee, the government has recently announced the following steps, estimating dollar inflow in the future:

• The government decided to review the mandatory hedging conditions for infrastructure loans.

• The government has decided to permit the manufacturing sector companies to avail ECBs close to $50 million with minimum maturity of one year versus the earlier period of three years.

• The government will review the removal of exposure limits of 20% of FPI’s corporate bond portfolio to a single corporate group, company and related entities, and 50% of any issue of corporate bonds.

• The government decided to exempt the withholding tax for issuing Masala Bond issues in FY 2018-19 and removal of restrictions on market-making by Indian banks for such (rupee-denominated) bonds which also includes restrictions on underwriting.

• The government would also impose restrictions on the import of non-essential items and take steps for the encouragement of exports.

• The government will make terms with oil-exporting countries, to review the payment terms with India in terms of rupee.

What else could be done?

• The RBI can ensure that export earnings come back to the country on time and by asking the importers to hedge, lowering the speculation element which comes into the picture every time the rupee keeps falling.

• RBI may also focus on currency as the second variable to increase the interest rates which results in higher FPI inflows to the debt segment.

• The RBI should also monitor the other major areas of demand for dollars such as imposing limits on spending such as travel, investment and education.

• The government should ease the existing export financing impediments to the exporters

• The government should also focus on the tax credit/refund issues of SME exporters, who are dominant in the export market.

EQUITY

Domestic Economy

• A search committee appointed by the finance ministry is expected to appoint a new chief economic advisor in the next one or two months.

• RBI has announced more measures to increase the liquidity flows to the NBFC’s.

Aviation

• Air India suggested Government to sell Air India Express and SAT first.

• Tata group wants complete control over Jet Airways along with the exit of Naresh Goyal and has rejected the initial proposal for part ownership.

Automobile

• Tata Motors eyes tie-ups with Ola, Uber with new shared mobility platform. It has created a separate division exclusively for shared mobility as the company manufactures an entire gamut of vehicles needed for last mile connectivity ranging from small cars to trucks and buses. The division will also work on new technologies like augmented reality, virtual reality and big data to help create certain mobility solutions.

BFSI

• RBI refused more time to Rana Kapoor and asked Yes Bank to appoint a new chief by Feb 1.

E-commerce

• The American e-commerce giant, Amazon, is set to pick up a stake of just under 10% in Future Retail, which is likely to be approved by the latter’s board on October 29. Amazon is expected to pick up shares through the foreign portfolio investors route at a hefty premium to the prevailing share price for gaining business exclusivity and future shareholding rights.

Oil & Gas

• Adani Group announced the signing of an agreement with French energy giant Total for Liquefied Natural Gas (LNG) import terminals and fuel retail network. The partnership has set a target of developing various regasification terminals, including Dhamra LNG, on the East coast of India. Total and Adani will create a joint venture to build a retail network of 1,500 service stations over a period of 10 years.

• Petrol and diesel prices were reduced first time in two months because of a drop in the cost of production. Petrol and diesel prices were cut down by 21 and 11 paise.

Metals

• The Arcelor Mittal has an advantage as Numetal Mauritius may not bid for Essar steel as it is not able to settle the outstanding dues.

• A number of Indian and international steel plant equipment makers and technology providers are set to sign the deal in Bhubaneswar next week.

Pharma

• Mobile service customers who want to delete their Aadhaar documents can do it by providing another valid document for verification.

• NASSCOM inks MoU to expand Indian SMEs in MENA region.

NEWS

INTERNATIONAL NEWS

• China to allow bank wealth-management funds to be invested in stocks.

• US economic policy toward China to get tougher, say economists: Reuters poll.

• 50,000 Indians took US citizenship in 2017: US Department of Homeland Security.

• Elon Musk’s Tesla launches new Model 3 at $45,000.

• US treasury secretary opts out of Saudi investment summit over Jamal Khashoggi affair.

• India engaged with all stakeholders on Iranian oil import issue: MEA.

• No impact of Rafale controversy on India’s ties with France: Govt.

• Shell to invest up to $2 bn annually to explore, produce oil in Brazil through 2025.

• Alibaba uncorks $290 million deal with stake purchase in wine e-tailer 1919.cn.

• UAE’s ADNOC starts producing new Umm Lulu crude oil stream.

TREND SHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 34315.63 33222 33769 35234 36152 Down

NIFTY 10303.55 9961 10132 10593 10882 Down

NIFTYBANK 25085.5 24315 24700 25693 26301 Down

RELIANCE 1,101.30 1008 1055 1164 1226 Down

IBULHSGFIN 653.80 419 536 874 1094 Down

INFY 683.55 651 667 711 738 Down

INDUSINDBK 1,576.70 1488 1532 1658 1740 Down

YESBANK 217.90 187 202 244 270 Down

BAJFINANCE 2,140.50 1873 2007 2322 2503 Down

SBIN 261.10 248 254 271 282 Down

HDFC 1,660.25 1572 1616 1740 1819 Down

ICICIBANK 315.45 299 307 326 336 Up

AXISBANK 562.55 528 545 589 616 Down

FORTHCOMING EVENTSCompany name Result Date

ALEMBIC PHARMACEUTICALS LTD. 22-Oct-18

ASIAN PAINTS LTD. 22-Oct-18

CAN FIN HOMES LTD. 22-Oct-18

CHEMO PHARMA LABORATORIES LTD. 22-Oct-18

GLAXOSMITHKLINE PHARMACEUTICALS LTD. 22-Oct-18

HINDUSTAN ZINC LTD. 22-Oct-18

INOX LEISURE LTD. 22-Oct-18

JUBILANT LIFE SCIENCES LTD. 22-Oct-18

KANSAI NEROLAC PAINTS LTD. 22-Oct-18

LAKSHMI MACHINE WORKS LTD. 22-Oct-18

OBEROI REALTY LTD. 22-Oct-18

ADANI PORTS AND SPECIAL ECONOMIC ZONE LTD. 23-Oct-18

AMBUJA CEMENTS LTD. 23-Oct-18

BAJAJ CORP LTD. 23-Oct-18

BAJAJ FINSERV LTD. 23-Oct-18

BAJAJ FINANCE LTD. 23-Oct-18

KSTREET - 20TH OCTOBER 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

0.00

0.50

1.00

1.50

2.00

2.50

NIFTY SENSEX SPBSMIP SPBSSIP NIFTYJR NSEMCAP -2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

NSEA

UTO

NSEBA

NK

NSESRV

NSEPH

RM

NSEIT

NSEM

ET

NSEN

RG

NSEC

ON

NSEREA

L

NSEFM

CG

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

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

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

ITC IS

KM

B IS

UPLL IS

ON

GC

IS

HN

DL IS

MPH

L IS

AIA

E IS

RJEX IS

DBL IS

CBO

I IS

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

GRIL IS

FCO

N IS

FRETAIL IS

PEPL IS

FB IS

RJEX IS

DITV

IS

MTC

L IS

PNBH

OU

SI IS

DEW

H IS

-4000

-3000

-2000

-1000

0

1000

2000

3000

10/12/20

18

10/13/20

18

10/14/20

18

10/15/20

18

10/16/20

18

10/17/20

18

FII/FPI DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

Tata Sponge Iron LtdCMP Rs.813.05 Target Price Rs.976Upside 20%

Investment Rationale

• Tata Sponge Iron Limited posted a weaker set of quarterly numbers mainly on account of shutting down of all three kilns for maintenance activities for forty days for a maintenance cost of around Rs. 100 Mn. However, when compared H1FY18 performance, the company registered sales, EBITDA and PAT growth of 39.4%, 23.4% and 25.8%, respectively in H1FY19 which are quite encouraging numbers.

• The management has set a production target of 425,000 MT for FY19 and is optimistic about exceeding the same as well, given the backdrop of favorable macroeconomic environment for the steel industry.

• The company’s iron ore production capacity stands at 425K MTs, and considering the growing demand, the management has sought for environment clearance for enhancing capacity to 465K MTs. The clearance is expected anytime. Some progress on setting up 1.5 Mn MTs of steel plant has also been made.

• Our analysis suggests that there exists a positive correlation between GDP and steel consumption growth. Thus, GDP growth forecast at 7.3% for FY19, would contribute in likely steel consumption growth by 5.5%. We believe that the topline of the company would grow at CAGR of 5.4% and margin to stay in the range of 19-19.5% over FY18-20E.

• The smoother H1FY19 performance of the company, confirms the encouraging trend in volume and realization growth. During H1FY19, Sponge iron production was up by 5%, while power sales were up by 3%.

Realization in H1FY19 grew by 30%.

VALUE PARAMETERSFace Value (Rs.) 10.0

52 Week High/Low (Rs.) 1249/774

M.Cap (Rs. Bn/US $mn) 12.52/0.24

EPS (Rs.) 91.0

P/E Ratio (times) (FY20E) 8.9

Dividend Yield (%) 37.9

Stock Exchange NSE/BSE

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

REVENUE 8002 8592 8889

EBITDA 1857 1672 1700

EBITDA(%) 22.8 19.5 19.1

PAT 1409 1354 1401

EPS (Rs.) 91.5 87.9 91.0

ROE (%) 15.2 13.1 12.3

P/E CHART

Valuation

Tata Sponge Iron with the leadership position in direct reduced iron and with active support from its parent company Tata Steel is well positioned to capitalize on emerging opportunities in sponge iron industry. We have valued stock at 1 yr fwd PE 10.7x of FY20E EPS and have arrived at TP of Rs. 976 with a potential upside of 20%. Stock valuation is at discount of NSE Metal Index PE of 22x. The key risk to valuation is aggravating of global trade. war situation.

EQUITY


BEAT THE STREET - FUNDAMENTAL ANALYSIS

TriveniTurbine LtdCMP Rs.97.5Target Price Rs.132Upside 35.4%

Investment Rationale

• Triveni Turbine revenue grew by 41% YoY to Rs. 1.7 bn in Q1FY19 on the back of strong execution in the exports orders (~111%) which accounted for 63% of revenue for the quarter.

• In term of order inflows, Triveni witnessed strong traction in the domestic market which led to overall inflows to grow by 11% YoY to Rs. 2.4 bn during Q1. Order backlog grew by 7% to Rs. 7.8 bn, however, management expects good traction in international orders as well in Q2.

• In terms of profitability, EBITDA margin expanded by 260 bps in Q1 to 17.7% and EPS reached Rs. 0.58 during Q1. Going forward, we believe Triveni could deliver revenue CAGR growth of ~14% led by execution of backlog in both exports and domestic markets and EPS could reach Rs. 4.4 by FY20E.

• Revival in the domestic economy, funding availability and investments related to productivity gains in the sugar sector have aided Triveni to book bulk orders in the domestic market which accounted for 60% of inflows driven by sectors such as sugar co-gen, process co-gen and metals.

• Robust inflows led to order backlog growth of 7% to Rs. 7.8 bn, of which exports accounted for 42%. In terms of product mix, aftermarket backlog grew by 20% to Rs. 1 bn which carries higher than blended margins.

VALUE PARAMETERSFace Value (Rs.) 2.0

52 Week High/Low (Rs.) 800/551

M.Cap (Rs. Bn/US $mn) 267/3600

EPS (Rs.) 18.0

P/E Ratio (times) (FY20E) 23.0

Dividend Yield (%) 0.4

Stock Exchange BSE

Valuation

Order inflow offers revenue visibility and there is scope for margin expansion for the next two years. We assign ‘BUY’ rating for a target of Rs. 132 by valuing Triveni at 30x FY20E EPS of Rs. 4.4.

EQUITY

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

REVENUE 7511 8365 9829

EBITDA 1578 1916 2290

EBITDA % 21 22.9 23.3

PAT 960 1208 1453

EPS (Rs.) 2.9 3.7 4.4

RoE (%) 22.4 25 26.4

PE (x) 34.5 26.3 22.2

P/E CHART


EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

Varun Beverages Ltd

VBL is one of the major food processing companies producing and marketing the products of Pepsico in India. VBL is in a secular uptrend from the low of 340 levels in weekly

charts forming higher highs and higher lows and it is moving steadily upwards in channel respecting the supports suggesting a strength in the counter. The stock was unfazed

by the recent sell off in the broader markets indicating bullishness in the counter. Adding to it, Heiken candlesticks is signalling positive trend on the weekly charts reflecting

the stock is well placed to move higher in the coming days. 14 periods RSI is trading above the 9 period averages in 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. On Bollinger

bands weekly chart stock has moved above the mean and is moving towards 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 770 levels for the potential upside targets of 920-950

levels over the next 6-9 months, keeping a stop loss below 650 levels.

GEPIL

GEPIL has rallied from 618 levels in September 2017 to 1035 levels in January 2018 and corrected from there to 719 levels on closing basis, which is around 78.40% Fibonacci retracement level of the said rally and bounced back to test 50% retracement levels of the said rally indicating the end of the correction. Stock has given breakout from falling trend line in weekly chart indicating a fresh leg of rally from these levels. Adding to it, the Parabolic SAR and Heiken candlesticks is signalling positive trend on the weekly charts reflecting the stock is well placed to move higher in the coming days. 14 periods RSI is trading above the 9 period averages in weekly chart indicating positive momentum. The stock is trading well above all of its major moving averages on daily as well as weekly charts indicating strong positive momentum in the counter for all major time frames. On Bollinger bands daily 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 810 levels for the potential upside targets of 975-1010 levels over the next 6-9 months, keeping a stop loss below 680 levels.

Stock VBL

CMP 776.1

Action BUY

Entry 770

Average 700

Stop loss 650

Target 920

Target 2 950

Time Frame 6-9 Months

Stock GEPIL

CMP 816.25

Action BUY

Entry 810

Average 730

Stop loss 680

Target 975

Target 2 1010

Time Frame 6-9 Months


EQUITY

Sentiment

Stop Loss 618

Target 540

Lot Size 1250

Margin 111600

21-DEMA 613

Open Interest Shares 3307500

Change in OI (Weekly) -230400

Cost of Carry (%) 10.79

SECTORAL SNIPPETS

NIFTY BANK (25,085.80) traded highly volatile during the week and bounce well from the low of 24,240 levels with supportive volume formation on the daily charts. However, the index has closed the week in red and generated a negative return of around 1.22%. Considering the current market volatility and the favorable indications of further rebound in the index, the market participants may focus on earnings, global markets and currency movement for further cues. On the stock front barring one stock, all the stocks ended in green: KOTAKBANK, FEDERALBNK and BANKBARODA gained by around 2.47%, 10.40% and 6.58%, respectively. On the flip side, AXISBANK, ICICIBANK and INDUSINDBK closed the week in red and generated 3.88%, 1.08% and 4.60 %, respectively on the weekly closing basis. The heavyweight stock like HDFCBANK results is expected coming week and scheduled on 20 Oct. Technically, BankNifty is expected to find resistance at 25,550 levels above that the next resistance is placed around 25,900 levels. Whereas, support is placed around 24,500 levels and below that are 24,250 levels. The Index is expected to trade in the range of 24,300- 26,000 levels.

NIFTY FMCG (28,845.25) ended with a gain of more than 2.46% for the week and has outperformed the broader Nifty 50 index. The index has gained in all 4 trading session in the week and has ended in the higher zone of the weekly candle. The breadth on the index for the week is also positive and strong with 9 stocks ending in green and 6 stocks ending in red. Leading the leaders’ board, tasty pizzas Jubilant food works has gained around 7%, followed by Godrej consumer products with a gain of around 5%, thereby regaining some lost ground of last few trading sessions. On the laggard board, Britannia biscuits have become stale and lost around 3% for the week, followed by Emami Ltd. Hindustan Unilever has announced its quarterly numbers which were mostly in line with the street expectations. While in the coming week, FMCG index major ITC shall declare its report card on 26 Oct 2018, Jubliant Food works shall declare on 24 Oct 2018. For now, the index is approaching the previous major gap down zone of 29,250-29,600 levels, which also coincides with cluster of medium-term moving averages, while supports may be assumed at 27,400-27,800 zone where unfilled gap up is placed. Going forward for the week, the index is likely to trade in the range of 28,000 to 29,500 with a positive bias.

NIFTY AUTO (8690.25) ended the week with a negative return of more than 4% concluding around 8700 levels. The index has broken the major supports and is trading well below all the short and medium term moving averages on the weekly charts. The index has an unfilled gap around 9300-9350 levels on the daily charts which acted as a stiff resistance for the price in the last week. The current structure of the index looks extremely weak in the all the timeframes with crucial support placed around 8500 levels which is the recent swing low. Technically, the Index has witnessed a strong rally from 6859 levels to 12,108 levels on monthly charts and after that witnessed a round of correction which dragged the price towards its 61.80% (Golden ratio) Fibonacci retracement level of the said rally. On oscillator front, the 14-period RSI is trading below its 9-day signal line and poised with weak bias, suggesting weakness in the index in near term. Going forward, the supports for the index are placed around 8450-8500 levels followed by 8150 levels. Whereas on the upside, resistance is placed around 9250 levels followed by 9350 levels. Among the index, MARUTI seems to be extremely bearish followed by BAJAJ-AUTO and HEROMOTOCO while MOTHERSUMI, AMARAJABAT and BOSCHLTD are expected to outperform the Index in the near term.

NIFTY REALTY (204.30) underperformed the Nifty 50 index on week to week basis and ended the week in red over 2.50%, which was majorly due to the fall in high weightage counters like DLF, IBREALEST, SUNTEK and UNITECH which fell approximately 3.30%, 21.60%, 5.70% and 14% respectively. However, there were counters like GODREJPROP, PRESTIGE and SOBHA which ended the week on a positive note by approximately 4.50%, 9.50% and 4.40% respectively managing the broader index to stay stable. Technically, the index has seen a relief rally in the starting of the week taking the base support of 198-199 levels. However, all the gains were eroded by the fall seen in last two trading days indicating lack of strength in counter at higher levels. The support zone of 198-199 levels played a crucial role and reverted the trend for the index. On the daily chart, the counter is still placed below all its major moving average and the upside may be expected near to the recent swing high placed around 212-215 levels, which would play a crucial role for resisting the index. On the weekly chart, 14 periods RSI is placed near the oversold zone suggesting a cautious approach in the counter. The immediate support for the index is placed around 198 levels followed by 188 levels while on the contrary the resistance is pegged around 215-216 levels followed by 220-222 levels. For the coming week, stock specific action can be seen as the quarterly result session has started. Hence, it is advisable to trade cautiously in the counter and to look for stock specific action.

HINDUSTAN UNILEVER LTD: BUY HINDUNILVR (NOV FUTURE) | CMP: 1577.65 SECTOR: FMCG

HINDUNIVLR managed to close with gains of nearly half a percent, whereas NIFTY FMCG Index closed with gains of 2.80% on a weekly closing basis. However, as compared to the benchmark NIFTY Index which closed cuts of 1.6%, the stock managed to outperform. In the last week stock price consolidated near its 50-DEMA and witnessed smart rebound in last three trading sessions. After placing an all-time high of 1808 in mid of Aug’18 stock price witnessed price correction, under which stock has retraced 61.8% of the move started from the swing low of 1281 to an all-time high of 1808, and subsequently witnessed recovery in the last couple of sessions, depicting strong support to prices. Technically stock price is poised above its major 200-DEMA while holding marginally below its 21 & 50-DEMA. On the momentum setup 14-period weekly RSI found support above 40-levels, and gave a positive crossover of its signal line, exhibits underlying strength in the counter and momentum may accelerate further in sessions to come. Hence we recommend Smart Trader to initiate Long position near 1570 levels for the higher target of 1675, keeping a stop loss below 1500 levels.

Sentiment

Stop Loss 1500

Target 1675

Lot Size 600

Margin 141700

21-DEMA 1583

Open Interest Shares 9624000

Change in OI (Weekly) 1417000

Cost of Carry (%) -37.77

CONTAINER CORPORATION OF INDIA LTD: SELL CONCOR (NOV FUTURE) | CMP: 594.45 SECTOR: LOGISTICS

CONCOR has given a breakdown of an upward sloping trend line on the weekly charts drawn from the swing low of 583 levels. The stock has closed the week in red and generated negative return of around 2%. The stock has seen a sharp fall from the swing high of around 712 levels and fall in the stock has seen supportive volume formation on the weekly charts. The stock is trading near all its major moving averages on the daily charts. On technical setup, the 14 period RSI has given a negative crossover with signal line and trending well below the same on the daily charts, which indicates weakness in the stock. The parabolic SAR is placed above the price action which indicates selling pressure in the stock will remain intact in near term. The recent development in the stock reflects that the stock is well placed to take its down move. Hence we are suggesting short in the stock for downside target of 540 with a stop loss placed above 618 levels.


WEEKLY VIEW OF THE MARKET

NIFTY (10,303.55): During the last week, markets continued to witness white-knuckle whiplashes as global cues dictated terms to the Indian markets, thereby moving in a wide range of about 4.49%. In the week gone by, markets remained highly volatile, just like the previous one even as it made a higher high and a higher low, but closing lower by 1.61% on Friday. Earlier during the last week, results of companies like TCS pulled the markets higher whereas RELIANCE, IBULHSGFIN, INFY and HDFC twins played the spoilsport on Friday, thereby contributing the most to the Nifty’s loss during Friday’s session which saw the Nifty erasing about 150 points in a single day, thus impacting the overall loss on the index front for the whole week. As far as the results of Q2FY19 are concerned, most companies have delivered a decent set of numbers by meeting analysts and market estimates and we feel that this trend is likely to continue in the days to come. During the last week, Nifty made a low of 10249.60 and failed to recover lost ground, adding to the pessimism. This week we expect the Nifty to continue trading on a volatile note in a range of 10100-10600 as we move into the derivatives expiry week and traders will roll over their positions from the October 2018 series to the November 2018 series. Breaking the said range in either direction will open a window of another 100-150 points in the direction of the breakout or breakdown. The index has its weekly supports pegged around 10,100-10,050 whereas resistances are pegged around 10,600-10,700. It will also be important to keep an eye on prices of crude oil as it has again come back above the $80 per barrel mark and this will have a direct impact on the movement of the rupee coupled with the cascading effect on the equity markets. Happenings in the global setup will have a direct impact on the further trend of the broader markets.

DERIVATIVE STRATEGIES

Type: SHORT STRANGLE IN NIFTY

First leg Sell one lot of NIFTY 25 OCT 10550 CE @ 13.50

Second leg Sell one lot of NIFTY 25 OCT 9950 PE @ 18.50

Max Profit 2400

UBEP 10582

LBEP 9918

Cum Premium 32.0

Max Loss Unlimited beyond BEP'S

Stop loss BEP'S

Rationale The index is expected to trade in the range of 10,000 - 10,500 levels in the near term.

DERIVATIVES

Type: Bull call spread in LT

First leg Buy one lot of LT Nov 1220 CE @ 44.50

Second leg Sell one lot of LT Nov 1260 CE @ 28.50

BEP 1236

Max Profit 18000

Max Loss 12000

Rationale The stock is currently finding support around 1200 levels and is expected to revert around its 20 SMA which is currently placed around 1260 levels.

Type: Bear put spread in BHARTIARTL

First leg Buy one lot of BHARTIARTL OCT 290 PE @ 8.75

Second leg Sell one lot of BHARTIARTL OCT 270 PE @ 2.25

BEP 283.5

Max Profit 22,950

Max Loss 11,050

Rationale The stock is in a short-term down trend; trading below its short-term moving average, hence a bearish strategy is recommended.

Type: SHORT STRANGLE IN BANK NIFTY

First leg Sell one lot of BANK NIFTY 25 OCT 25900 CE @ 39.50

Second leg Sell one lot of BANK NIFTY 25 OCT 24200 PE @ 64.00

Max Profit 4120

UBEP 26003.5

LBEP 24096.5

Cum Premium 103.5

Max Loss Unlimited beyond BEP'S

Stop loss BEP'S

Rationale The index is expected to trade in the range of 24,400 - 25,700 levels in the near term.

7KSTREET - 20TH OCTOBER 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

HINDZINC 286.45 3.21 9760000 28.58

MCX 774.7 3.89 4728500 19.39

INFY 683.55 0.70 36652800 18.62

KOTAKBANK 1198.95 2.72 11884800 15.67

CHENNPETRO 265.25 2.67 1255500 14.50

TV18BRDCST 36.25 3.13 56610000 12.77

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

TOP 6 SHORT CLOSURE


CESC 907.65 0.74 5106750 -17.32

MOTHERSUMI 256.05 7.27 14616000 -14.17

IGL 247.6 2.44 3135000 -13.96

ESCORTS 604.35 0.51 4490200 -12.91

BIOCON 661.05 9.01 6310800 -8.33

JUBLFOOD 1268.3 6.82 2933000 -8.04

TOP 6 SHORT BUILD UP


JPASSOCIAT 6.55 -1.50 172108000 65.97

DHFL 210.55 -27.96 18880500 47.42

RBLBANK 506.1 -3.94 6793200 43.39

REPCOHOME 314.05 -16.63 854100 43.35

IBULHSGFIN 653.8 -29.85 22232000 40.62

ACC 1424.4 -5.24 1432800 40.42

TOP 6 LONG CLOSURE


KSCL 506.05 -1.86 924000 -17.87

EQUITAS 126.05 -2.21 10372000 -15.15

CHOLAFIN 1113.7 -6.35 844500 -8.16

MARICO 310 -1.57 8026200 -7.38

TECHM 690.8 -0.43 13882800 -6.66

ICICIBANK 315.45 -1.24 96365500 -4.34

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI


COMMODITIES

BULLIONGold and silver market had witnessed a narrow trading range during the week ended on 19th October 2018. Gold futures on COMEX witnessed a positive momentum during the week on the emergence of safe buying as the global equity market was under pressure. Issues ranging from trade worries, Italy’s 2019 budget, higher U.S. interest rates and growth concerns in China led to a slump in equity market thereby attracting gold as a safe investment. Prospect of an interest rate hike by US FOMC has capped a sharp rise in the price of the yellow metal. COMEX gold futures surged to trade near 2 ½ months high on Thursday as economic uncertainty gave a push to the bullion market. According to the data released, US government closed the 2018 fiscal year with $779 billion losses, it highest deficit in six years. The buying interest in the gold can be seen with the rise in SPDR Gold Trust holding, which has increased by 2.5% in the last two weeks. On the domestic front, MCX gold futures are trading near Rs 32,000 per 10 grams level making its move in line with volatile USDINR.

SPICESCardamom futures noted decent gains during the last week; good buying activities at the spot market as well as supply concerns due to lower crop size supported gains. For the week ahead, cardamom futures are expected to extend gains on the overall fundamentals of lower crop size. However, recent rainfall in Idukki district may be favorable for the crop leading to hopes of increasing quantity as well as the quality of arrivals in the next round of picking activities. Exporters are actively buying cardamom at the spot markets even though exports to Saudi Arabia is yet to start. 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.

Turmeric futures traded mostly down extending prior loss during the week. Limited buying at the spot markets as against expectations of good buying weighed down prices; subdued trading was also seen due to festival mood. For the week ahead, turmeric futures could trade higher on lower levels buying activities as well as on expectations of pick up in seasonal demand during marriage and festivals. However, expectations of increased crop production backed by higher area and favorable weather conditions will cap the gains.

Jeera futures traded in a positive note and registered gains for the third consecutive week. Active buying in the spot market ahead of festivals amid supply concerns supported gains in jeera futures prices. Strong export demand is expected for jeera as India is the major supplier to the world market. There is the anticipation of higher sowing area during the upcoming sowing season due to higher prices of the commodity. However, there are concerns fears that area may lose if rainfall remains scanty in the major growing regions of Gujarat. Hence, we expect jeera futures to trade further higher and extend gains during the upcoming week.

Dhaniya futures rallied to their multi-month high prices during the week on the concerns of a sharp decline in the sowing area. Farmers may shift cultivation from dhaniya to other remunerative crops as they have got poor returns for the 2-3 straight seasons by cultivating dhaniya. Hence, bull-run in dhaniya futures to continue further and prices may touch 6000 levels in the short term. However, a sharp increase in prices in a few days may prompt few farmers to perceive with dhaniya for the season.

BASE METALSMetals segment which was expected to gain prices by the end of week tumbled & dropped heavily by Thursday. Individually, except Lead other metals fell subsequently weighed by the comments of Fed meeting, loss of growth in demand from China, a top metal consumer. Though the fundamental factors remained in support for each metal, the economic news released on respective days added pressure on the prices of metals. On the international front, Lead fell by around 3.1% during the week weighed by the global trade war tensions and increasing concerns over demand growth for metal. Also, LME Copper lost 1.7% by Thursday backed by Fed comments and gloomy market economy. Meanwhile, China’s third-quarter GDP which was 0.1% down from the previous quarter made the market raise its concerns for the demand growth amid U.S-China trade war. Of all the metals, Zinc alone remained in the positive territory gaining 0.7% during the week tracing the falling inventory levels at SHFE warehouses. However, during the week Zinc prices experienced a downfall as Zinc spreads are tightening with more metal arrival in Chinese warehouses. SHFE warehouse inventories showed that zinc arrivals jumped by 14,169 tons, or 48.5 percent, over the past two weeks to 43,373 tons. Also, the World Steel Association doubled its 2018 and 2019 forecasts for growth in global demand for the material used in sectors from cars to construction but said trade tensions were clouding the market’s outlook. Changes in base metal prices can be expected with abating trade tensions and weakening dollar index as the fundamental factors are strongly positive.

ENERGY COMPLEXCrude oil prices closed the week on a negative tone for the second consecutive week providing relief to the global markets which were in vain due to higher crude oil prices. The prices although pared some losses on Friday but overall WTI went down more than 3% in NYMEX, whereas Brent drifted lower around 0.5% and are $7 down from four-year highs reached in October. The prices on Friday breathed easy over the higher demand pull from China which is the second largest crude oil consumer although the week ended in red over the surging inventories in US storage and also due to concerns of a trade war. Recently, China refinery output rose to a record high level of 12.5 mbpd in September as various independent refineries restarted their operations. Separately, US crude stocks rose by 6.5 million bbl in last week which was thrice the market estimated. Also casting the negative impact on prices was the increasing export volumes from Iran in October as the major buyers are taking on the deliveries before the sanction implies from Nov 4. Overall the trade war concerns have dampened the demand outlook around the globe but at the same time supply tightness in the market are going to make trade volatile. In the upcoming week, the market will be closely watching EIA inventory reports and drilling update as the production in last week had fallen in the Gulf of Mexico due to Hurricane Michael. Thus, prices are likely to track cues from mentioned fundamental factors.

OILS & OILSEEDSSoybean futures are expected to trade sideways to down in the upcoming week due to surging arrival pressure at key trading centers. Daily arrivals of soybean have reached up to more than 6 lakh bags and expected to improve further due to accelerating harvesting activities across India. 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 prior year, higher by 23% YoY. Soybean Processors Association of India ( SOPA) estimated soybean production for the year 2018-19 at 114.8 lakh tons against the 83.5 lakh tons of the prior year. However, commencement of Bhawantar Bhugtan Scheme in Madhya Pradesh and emerging bargain buying at lower level could cap the excessive losses. Similarly, RM seed futures are expected to trade mixed to down in the upcoming week. Limited domestic buying at prevailing levels and adequate supply at key trading centers could weigh on prices during today’s trade. Apart from that prices may track cues from reports of selling mustard seeds stocks by NAFED in Rajasthan, Haryana and Madhya Pradesh. NAFED has sold about 5240 MT of mustard seed stocks below to the MSP level wherein 94461 MT were under progressive sale till 5th Oct. NAFED procured about 8.5 lakh tons of mustard seed from different states and now released its stocks. Likewise, CPO futures are expected to remain under pressure due to higher production outlook. MPOB released its production estimates for Sep pegged production at 18.53 lakh tons against the 16.2 lakh tons of Aug wherein export estimated at 16.18 lakh tons higher by 47%MoM. Inventory levels increased up to 25.41 lakh tons against the 225.0 lakh tons of the prior month.

COTTONCotton Futures are expected to trade higher in the upcoming days due to weaker production outlook. USDA released its monthly supply and demand estimation report last week, trimmed world cotton production for the year 2018-19 at 121.66 million bales of 480 lb each against the 121.97 million bales of the prior year due to lower production in Australia. USDA cut its cotton production forecast for Australia from 3 million bales to 2.5 million bales. The production forecast for India remained unchanged at 28.7 million bales (368 lakh bales of 170 kg each), wherein US cotton production was raised from 19.68 million bales to 19.76 million bales. USDA revised its projection for global ending stocks downwardly from 77.46 million bales to 74.45 million bales due to fall in inventory levels in India. Cotton inventory in India for the year 2018-19 is pegged at 8.98 million bales against the 11.88 million bales of the prior month down by 24% MoM. USDA projected global cotton consumption for the year 2018-19 at 127.76 million bales. Moreover, firmness in ICE cotton futures could be another factor which may support prices. ICE cotton futures could trade higher on rising concerns over the quality of the new crop. USDA rated 35% of the crop in good to excellent condition till the end of 14th Oct against the 58% of the prior year for the corresponding period. About 32% of the crop for the year 2018-19 in the US has been harvested till 14th Oct as shown in the weekly report released by USDA. Meanwhile, Cotton Corporation of India could commence procurement of cotton in Telangana and other cotton growing states due to surging arrival pressure. Cotton Association of India estimated beginning stocks for the year 2018-19 at 23 lakh bales, wherein total production is projected at 348 lakh bales against the 365 lakh bales of prior year lower by 5% YoY.


GOLD

As on 19th October 2018, Gold December contract delivery futures at the COMEX platform are trading around $1230/ounce. In the previous week, the prices broke consolidation phase resistance levels around $1220 and are hovering above the same. Also, prices have broken 8&13 EMA resistance levels around $1210 levels. The momentum indicator, RSI-14 is treading neutral at 54.50. Higher side, the Fibonacci 38.2% retracement is providing resistance around $1256. While combining above technical clues, we are expecting the commodity to trade in the range of $1210-1255 on a positive note. MCX Gold December contract delivery futures are expected to trade within a range of Rs. 31400-32600/10Grams.

COPPER

As on 19th October 2018, Crude Oil November contract delivery futures at the NYMEX platform are trading around $69.70/Barrel. In the mentioned price chart, it is visible that prices are moving higher along with trend channel supports and resistance. At present price are trading above the 8EMA and below the 13EMA. In the coming week, prices are expected to rebound after taking support around $68.50-68.00(Chanel lower trend line support levels). Higher side resistance is seen around 71.40 levels. Overall the commodity is expected to move within a range of $71.40 to 68.00. MCX Crude Oil November contract futures are expected to trade within a range of Rs 5000-5300/Barrel on a positive note.

CRUDE OIL

As on 19th October 2018, LME 3M copper forwards is trading around $6180/Mt. According to the Elliott wave theory, prices have completed primary wave two around $5840 in May 2018. Now impulsive Primary wave is in progress which is bullish in nature. In primary wave three, intermediate wave one is completed around $6350 and expected to complete intermediate wave two around $6100 mark. Overall in the coming week, the commodity is expected to move in the range of $6100-6350 mark on a positive bias. MCX November contract delivery futures are expected to move in the range of Rs 440-465/Kg.

COMMODITIES

TREND SHEET

Commodities 12-Oct 19-Oct % Change 52 Week High% Change from 52

Week High52 Week Low

% Change from 52 Week Low

MCX Gold (Rs/10 gms) 31154 31868 2.3% 32014 -0.5% 28055 13.6%

MCX Silver (Rs/Kg) 39274 39015 -0.7% 41698 -6.4% 36000 8.4%

MCX Crude Oil (Rs/bbl) 5546 5262 -5.1% 5669 -7.2% 3264 61.2%

MCX Natural Gas (Rs/mmBtu) 232.7 232.9 0.1% 250.8 -7.1% 162.5 43.3%

MCX Copper (Rs/kg) 456.55 461.85 1.2% 493.25 -6.4% 402.55 14.7%

MCX Lead (Rs/kg) 147.9 152.4 3.0% 172.5 -11.7% 137.25 11.0%

MCX Zinc (Rs/kg) 197.95 198.65 0.4% 232.7 -14.6% 163.8 21.3%

MCX Nickel (Rs/kg) 940.2 939.2 -0.1% 1095.2 -14.2% 692.8 35.6%

MCX Aluminium (Rs/kg) 157.7 151.45 -4.0% 178.85 -15.3% 128.3 18.0%

NCDEX Soybean (Rs/Quintal) 3240 3233 -0.2% 3895 -17.0% 2754 17.4%

NCDEX Refined Soy Oil (Rs/10 kg) 752.85 750 -0.4% 796.35 -5.8% 655.05 14.5%

NCDEX RM Seed (Rs/Quintal) 4117 4060 -1.4% 4262 -4.7% 3675 10.5%

MCX CPO (Rs/10 kg) 594.9 587.2 -1.3% 673 -12.7% 533.5 10.1%

NCDEX Castor Seed (Rs/Quintal) 4654 4862 4.5% 4890 -0.6% 3831 26.9%

NCDEX Turmeric (Rs/Quintal) 6946 6912 -0.5% 8066 -14.3% 6316 9.4%

NCDEX Jeera (Rs/Quintal) 19195 20135 4.9% 22360 -10.0% 14010 43.7%

NCDEX Dhaniya (Rs/Quintal) 4839 5065 4.7% 6021 -15.9% 4186 21.0%

MCX Cardamom (Rs/kg) 1387.4 1380 -0.5% 1458.3 -5.4% 818.5 68.6%

NCDEX Wheat (Rs/Quintal) 2046 2025 -1.0% 2074 -2.4% 1575 28.6%

NCDEX Guar Seed (Rs/Quintal) 4227.5 4145 -2.0% 4737 -12.5% 3465 19.6%

NCDEX Guar Gum (Rs/Quintal) 9112 9080 -0.4% 10468 -13.3% 7200 26.1%

MCX Cotton (Rs/Bale) 22180 22690 2.3% 24280 -6.5% 18180 24.8%

NCDEX Cocud (Rs/Quintal) 1706 1775 4.0% 1878.5 -5.5% 1166 52.2%

NCDEX Kapas (Rs/20 kg) 868 868 0.0% 1010 -14.1% 854 1.6%

MCX Mentha Oil (Rs/kg) 1716.5 1682.7 -2.0% 1991.9 -15.5% 1106 52.1%

TECHNICAL RECOMMENDATIONS


COMMODITIES

MCX CRUDE MCX NATURAL GAS

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

NEWS DIGEST

• Markets regulator SEBI on Tuesday issued a framework to bring uniformity in the procedure for obtaining samples of agricultural commodities at the exchange accredited warehouses. The move comes after the Securities and Exchange Board of India (Sebi) noticed varied approaches being followed by the exchanges in this regard. In a circular, the regulator has asked the exchanges and clearing corporations to ensure that adequate samples are collected from the goods deposited and are sealed in the presence of the depositor or his authorized representative.

• Wholesale onion prices in Lasalgaon- the country’s biggest wholesale market for the bulb have firmed up with rain eluding the state thereby affecting the early Kharif and late Kharif crop. With the summer stocks depleting and the delayed arrival of new onion crop, the wholesale onion prices are likely to cross Rs 2,500 per quintal in the festive season, industry experts pointed out.

• Wholesale prices of just-harvested Kharif crops are trading at lower than minimum support prices (MSPs), despite the government’s promise to ensure better prices for farmers. The center significantly raised MSPs in July to ensure 50% returns over costs and followed it up with a new procurement mechanism named PM-AASHA. However, farmers in several states are selling soya bean, and pulses such as moong and urad at lower than MSP.

• The delayed southwest monsoon withdrawal will benefit winter (Rabi) crops like wheat and mustard, the sowing of which has kick-started in pockets of Rajasthan, according to Agriculture Commissioner S K Malhotra. The sowing of crops (wheat, barley, gram, lentil, rapeseed, mustard and safflower) begins typically from October through February and harvesting starts from March

WEEKLY COMMENTARY

• Short positions on most Asian currencies were seen unwinding over the past two weeks, a poll from Reuters showed on Thursday, with traders turning skeptical of the dollar’s bull-run after U.S. retail sales data came in below expectations.

• Gold has finally broken out of its narrow trading range, in which it had been oscillating for the past one and a half month, thanks to a selloff witnessed in equities. Gold is finally getting the benefits of haven investments, as the global equity market continues to plunge.

• Also, the World Steel Association doubled its 2018 and 2019 forecasts for growth in global demand for the material used in sectors from cars to construction but said trade tensions were clouding the market’s outlook.

• Most of the base metals have witnessed a fall in prices in the previous session ended on Thursday weighed by the Federal comments. Individually, Copper slipped to one week low as investors worried about Chinese growth and higher US interest rates.

• Yangshan copper premiums are hovering around $120 since late September, the highest since 2015 indicating strong demand for the red metal.

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

0.15

5-Oct 7-Oct 9-Oct 11-Oct 13-Oct 15-Oct 17-Oct 19-Oct

$/B

BL

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

5-Oct 7-Oct 9-Oct 11-Oct 13-Oct 15-Oct 17-Oct 19-Oct

$/M

MB

tu

205

210

215

220

225

230

235

240

245

0

10000

20000

30000

40000

50000

60000

70000

24-Sep 26-Sep 28-Sep 3-Oct 5-Oct 9-Oct 11-Oct

Open Interest Volume Price (INR/MMBTU)

4700

4800

4900

5000

5100

5200

5300

5400

5500

5600

5700

0

20000

40000

60000

80000

100000

120000

140000

160000

27-Sep

28-Sep

1-Oct

3-Oct

4-O

ct

5-Oct

8-Oct

9-Oct

10-O

ct

11-Oct

12-Oct

15-Oct

16-Oct

17-Oct

18-Oct

Volume Open Interest Price (INR/Bbl)


COMMODITIES

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

Commodity Exchange Contract 12-Oct 19-Oct % change

Aluminium LME 3M 2030.5 2008 -1.1%

Copper LME 3M 6288.5 6132 -2.5%

Lead LME 3M 2046 1999.5 -2.3%

Nickel LME 3M 12685 12295 -3.1%

Zinc LME 3M 2638.5 2665 1.0%

Gold CME DEC 1221.6 1228.9 0.6%

Silver CME DEC 14.63 14.59 -0.3%

WTI Crude oil CME OCT 71.51 68.65 -4.0%

Natural Gas CME OCT 3.146 3.227 2.6%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 12-Oct 19-Oct % change

Soybean CBOT NOV 894.25 890.5 -0.4%

Soy oil CBOT DEC 29.38 29.03 -1%

CPO BMD DEC 2194 2222 1%

Cotton ICE DEC 78.48 78.07 -0.5%

SPOT PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONNES)

Commodity Previous week This week Change % Change

Copper 161700 153950 -7750 -4.79%

Zinc 188850 171250 -17600 -9.32%

Aluminium 926100 1066725 140625 15.18%

Lead 116300 115225 -1075 -0.92%

Nickel 222102 219978 -2124 -0.96%

SHANGHAI WAREHOUSE STOCKS (IN TONNES)*


Copper 125700 140789 15089 12.00%

Zinc 43373 53479 10106 23.30%

Aluminium 842676 820675 -22001 -2.61%

*Until Wednesday

COMEX WAREHOUSE STOCKS (IN TONNES)


Copper 166200 163866 -2334 -1.40%

WEEKLY STOCK POSITION IN LME (IN TONNES)

-5.39%

-4.53%

-2.86%

-1.62%

-1.51%

-0.73%

-0.60%

-0.09%

0.05%

0.35%

0.34%

0.37%

0.46%

0.53%

0.79%

0.88%

1.44%

2.01%

2.84%

3.65%

5.40%

7.97%

8.03%

9.27%

11.68%

-10.00% -5.00% 0.00% 5.00% 10.00% 15.00%

Turmeric

Lead

Crude Oil

Copper

Nickel

Aluminum

Natural Gas

Cotton

Silver

Gold

CPO

Soybean

Zinc

Cotton Seed Oil Cake

Wheat

Mentha Oil

Jeera

Soy Oil

RM Seed

Cardamom

Barley

Castor Seed

Guar Gum

Guar Seed

Dhaniya

Government raises MSP for Rabi Crops

The central government had announced the Minimum Support Price (MSP) for the crops grown in the Rabi season which commences from October. This time the announcement came at the beginning of the season, which will help the farmers in making decisions regarding the selection of crops. The MSP announcement is done on the recommendation of the Commission for Agriculture Costs and Prices (CACP). While recommending MSP for crops, CACP considers the cost of cultivation.

While presenting the budget 2018-19, the finance minister Mr. Arun Jaitley proposed to fix the MSP at a price, which would be 1.5 times the cost of production. The government gave its nod to the proposed MSP recommendations made by CACP.

The MSP for wheat, the largest Rabi grown crop, was raised by 112% of the cost of production and 6% over previous year to Rs. 1840 per quintal. For Gram, the largest pulse grown in Rabi season, MSP was fixed at Rs. 4620 per quintal, higher by 75% over the cost of production and 5% over the previous year. MSP for mustard seed was fixed at Rs. 4200 per quintal, almost the double of the cost of production and 5% year on year.

Since the MSP announcement has been made at the beginning of the rabi season, it will help the farmers in deciding on the selection of the crops. As per our analysis, farmers may not show much interest in planting gram as the current market prices are below the MSP of last year. The gram acreage is expected to shift to wheat, which had shown a sharp rise in the prices. Mustard seed acreage is likely to increase despite recent fall in the prices as efforts are being made to increase export of mustard meal and oil.

CropProjected

Cost of Production

MSP 2019-20 Marketing

Season

MSP 2018-19 Marketing

Season

Change over Cost of Production

Change over Previous Year

Wheat 866 1840 1735 112% 6%

Barley 860 1440 1410 67% 2%

Gram 2637 4620 4400 75% 5%

Lentil 2532 4475 4250 77% 5%

Mustard Seed 2212 4200 4000 90% 5%

Safflower 3294 4945 4100 50% 21%


USD/INR

This is the daily charts of USDINR FUT pair, the pair has been trading in a broader range of 74.21 on the higher side and 73.36 on the lower side for the week

The pair corrected from the higher levels and made a low near 73.36 as we had seen divergence between price and RSI (Relative Strength index) but still pair traders above 20DMA & 50DMA while MACD remains above the zero line. BUY USDINR FUT 73.10-73.00 TGT 73.70 SL 72.85.

EUR/INR

This is the daily chart of EURINR, the pair traded in a broader range of 86.09 on the higher side and 84.15 on the lower side.

The pair had a strong momentum on the downside and violated the supports of 85.00 and trended on the lower side, Relative Strength at 45 while MACD having a negative crossover but above zero line while pair trades below the 20DMA SELL EURINR FUT 84.40-84.60 TGT 83.70 SL 84.85.

GBP/INR

This is the daily chart of GBPINR Traded in a range of 97.61 on the higher side and 95.65 on the lower side.

The pair had a reversal from the higher levels after previous week had a shooting star while Relative Strength index placed at 62 levels while prices trade below the 20DMA and MACD having bearish crossover SELL GBPINR FUT 95.95-96.25 TGT 95.00 SL 96.40.

JPY/INR

This is the daily chart of JPYINR FUT trade in a broader range of 66.51 on the higher side and 65.26 on the lower side,

The pair had a bearish candle and traded lower, while 20DMA support comes ta 65.26 while MACD giving a negative crossover with RSI (Relative Strength Index) placed at 55 and prices likely to test 65 levels in near term SELL JPYINR FUT 65.70-65.90 TGT 65.00 SL 66.20.

TECHNICAL RECOMMENDATIONMARKET STANCE

Crude Prices gave the much-needed cheer for the Indian Rupee, which ended with modest gains for the second straight week. Albeit, the Dollar Index edged higher this week, thanks to the soft crude prices which helped to add gains to Rupee. Continuous Dollar capital outflow had restricted the gains in Rupee. News over the disappearance of Saudi Prominent Journalist Khashoggi maintained the Dollar Index under check early during the week ahead of the release of FOMC meeting minutes. The Dollar index bounced back from 95 during the week on Wednesday as the minutes of Federal Reserve Open Market Committee pointed for further rate hikes. FOMC members were also9 seen confident over the US economy, expecting it to grow robustly despite rate hikes in contrast with President Trump accusing Fed could potentially lower the US economic growth. Dollar index was also boosted by the weakness in Euro, as the European Commission issued a warning letter to Italy, which agreed to maintain fiscal deficit at 2.7%, while the rules suggest to hold it under 0.1%. Bank of Japan Governor Kuroda said that the Japanese economy is expanding moderately, but the consumer prices are on the weaker note when compared with the economic growth. He also pointed out that inflation is likely to accelerate gradually towards BOJ target of 2%. Indian FX Reserves were down by $5.14 billion from $ 399.61 billion for the week ended on 12 October. For the week the Indian Rupee is likely to remain higher but with the limited gains considering Brent crude to hover around $80.

NEWS FLOWS OF LAST WEEK

• The European Commission issued a warning regarding Italy’s budget at the 2-day EU economic summit.

• U.S. industrial production increased for a fourth straight month in September, boosted by gains in manufacturing and mining output.

• India Trade balance improved from $ -17.39 billion to $ -13.98 billion, despite a slowdown in the export growth as the Import were remained lower compared with the drawdown in exports.

• US Core retail sales inched lower at -0.1% from 0.2% against the expectations at 0.4%

• Prices in the UK remained softer during September with UK CPI at 2.4% from 2.7% (YoY).

• Meanwhile, the consumer prices in Europe remained unchanged at 2.1%.

• Crude prices moved lower as the US reported a huge buildup in crude inventories at 6.49 Mln in contrast with the expectations at 1.60 Mln.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 73.79 74.07 73.29 73.32

EURINR 85.20 85.83 84.03 84.11

GBPINR 96.68 97.41 95.51 95.54

JPYINR 65.84 66.34 65.14 65.17


ECONOMIC GAUGE FOR THE NEXT WEEK

GMT Date Local Time Country Indicator Name Period Poll Prior Unit

23-Oct 19:30 Euro Zone Consumer Confid. Flash Oct -3.2 -2.9 Net balance

24-Oct 13:30 Euro Zone Money-M3 Annual Grwth Sep 3.5% 3.5% Percent

24-Oct 13:30 Euro Zone Markit Mfg Flash PMI Oct 53.0 53.2 Index (diffusion)

24-Oct 13:30 Euro Zone Markit Serv Flash PMI Oct 54.4 54.7 Index (diffusion)

24-Oct 13:30 Euro Zone Markit Comp Flash PMI Oct 53.8 54.1 Index (diffusion)

24-Oct 19:15 United States Markit Mfg PMI Flash Oct 55.6 55.6 Index (diffusion)

24-Oct 19:30 United States New Home Sales-Units Sep 0.630M 0.629M Number of

24-Oct 20:00 United States EIA Weekly Crude Stocks 19 Oct, w/e 6.490M Barrel

24-Oct 20:00 United States EIA Weekly Dist. Stocks 19 Oct, w/e -0.827M Barrel

24-Oct 20:00 United States EIA Weekly Gasoline Stk 19 Oct, w/e -2.016M Barrel

24-Oct 20:00 United States EIA Weekly Crude Imports 19 Oct, w/e 1.012M Barrel

24-Oct 20:00 United States EIA Wkly Crude Cushing 19 Oct, w/e 1.776M Barrel

25-Oct 17:15 Euro Zone ECB Refinancing Rate Oct 0.00% 0.00% Percent

25-Oct 17:15 Euro Zone ECB Deposit Rate Oct -0.40% -0.40% Percent

25-Oct 18:00 United States Durable Goods Sep -2.3% 4.4% Percent

25-Oct 18:00 United States Durables Ex-Transport Sep 0.3% 0.0% Percent

25-Oct 18:00 United States Initial Jobless Claims 15 Oct, w/e 210k Person

25-Oct 18:00 United States Continued Jobless Claims 8 Oct, w/e 1.640M Person

25-Oct 19:30 United States Pending Sales Change MM Sep -1.8% Percent

25-Oct 20:00 United States EIA- Nat Gas, Change Bcf 15 Oct, w/e 81B Cubic foot

25-Oct 20:00 United States Nat Gas-EIA Implied Flow 15 Oct, w/e 81B Cubic foot

26-Oct 18:00 United States GDP Advance Q3 3.3% 4.2% Percent

26-Oct 18:00 United States Core PCE Prices Advance Q3 2.1% 2.1% Percent

26-Oct 19:30 United States U Mich Sentiment Final Oct 99.5 99.0 Index

CURRENCY


IAP Activity in Thattvaa Fincorp, Thrissur, Kerala

IAP Activity in Karvy Barnala Branch

IAP Activity in Karvy Pune Branch

DEMATERIALISATIONIS MANDATORY

As per the notification issued by Ministry of Corporate Affairs, unlisted companies cannot issue physical shares from 2nd October, 2018. They have to issue shares in demat form only.

• 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.

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

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

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/kstreetissue007.pdfKSBL generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining