RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue021.pdf · Ravikanth Pedapati Bharath Sunnam: Anup B.P Amit Kumar: Vinod Jaya Kumar Karvy Head Office: Karvy

ISSUE: 021

26TH JANUARY, 2019

RULE THE MARKET

From The Desk Of Research Head

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Indian IT sector overcoming Automation fears

With the Nifty IT Index up by 8% within the past year, IT stocks witnessed a stellar rally, outperforming

other sectors in Indian equity markets. The December quarter earnings from India’s leading IT firms

recommend that the market’s optimistic bets were right. Even in the September-December quarter,

which has historically been a weak quarter, the sector announced astonishingly robust numbers. As

this was followed by an equally strong July-September quarter, hopes are currently high that leading

IT companies can shut FY19 with a good greenback revenue growth that betters Nasscom’s forecast

of 7%-9%. This might signal that the IT sector after battling odds from slowing down deals, automation

and disruptions in demand for the last 3 years, is currently out of the woods.

Reasons for Resilience

There are 3 aspects to the numbers that recommend the recent recovery isn’t simply a flash within

the pan.

1. If we notice, all the three frontline IT firms have posted robust revenue growth in constant

currency terms (Wipro at 7%, Infosys at 10.1% and TCS at 12.1%) suggesting real business

traction, without factoring the tailwinds from the depreciatory Rupee.

2. They’ve additionally reported a rising variety of transformational deal-wins through 2018, with a

positive comment on the important BFSI and North America segments.

3. Digital offerings have continued to expand upwards of 30% showing that the leading players

have molded a business transformation to faucet into aggressive segments of the worldwide

IT pie. We need to remember that this kind of performance is achieved while the international

markets are facing a turbulent scenario within.

The above points imply that the looming international risks like US-China trade wars, slowing down

global economic growth or Brexit might not essentially matter for Indian IT majors, who might end

up to be beneficiaries of belt-tightening efforts. However, to note on the major front, operating

margin pressures may continue to persist, despite robust business growth. TCS and Infosys saw their

operating profit margins shrink within the December quarter due to increased onshore hiring and

sub-contracting overheads on the back of USA visa curbs and lower billing rates.

What else could be done?

Given this scenario, the turnaround within the IT pack could also be excellent news for the securities

market that has been trying to name a few of index constituents to hold profit growth this year.

However, this sector may not be a significant employment booster for the economy given the

structural changes in the industry as discussed above. As the IT companies’ ability to survive within

the international marketplace currently depends on the standard of their new hires instead of quantity,

the Indian policymakers need to stand with them to focus on new sectors for additional employment

creation.

CONTENTSEquity 1-6

Derivatives 7-8

Commodity 9-12

Currency 13-14

Events 15

TeamDr Ravi Singh

Arun Kumar Mantri

Aditya Kistampally

Deepak Balkrushna Sakure

M V Narasinga Rao

Naga Chaitanya

Osho Krishan

Srinivas Krishnan Bobba

Vivek Korkondabhattar

Vivek Ranjan Misra

Vishal kumar Shah

Kiran Prasad

Konpal Pali

Veeresh Hiremath

Siddhesh Ghare

Ravi Pandey

Ramesh Chenchala

Arpit Chandna

Ravikanth Pedapati

Bharath Sunnam

Anup B.P

Amit Kumar

Vinod Jaya Kumar

Karvy Head Office

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

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

- DR. RAVI SINGHHead-Technical & Derivatives Research

EQUITY

Economy

• The Interim Finance Minister Piyush Goyal, will meet the heads of the country’s state-owned banks for a review meeting.

• The government will soon announce a package for farmers to boost their income, Minister of State for Agriculture Parshottam Rupala said amid speculations that the Centre is considering various measures to address distress in the farm sector.

• The Indian government is likely to seek to raise about Rs. 800 billion ($11.21 billion) through the sale of state-owned assets in the next fiscal year.

• The Department of Industrial Policy and Promotion has called for a round-table meeting on Feb 4 to discuss concerns on taxation of angel funds raised by start-ups and others.

Automobile

• Tata Motors Ltd seems to be in no mood to continue with Ratan Tata’s dream car Nano as it may not invest in upgrading it to meet the Bharat Stage-VI norms.

• Maruti Suzuki has launched the new WagonR at a competitive price range of Rs. 419-516 k for 1.0L variant and Rs. 489-569 k for 1.2L variant. This new-gen model is built with a total investment of Rs. 6.7 bn.

BFSI

• YES Bank said that the Reserve Bank of India approved the appointment of Ravneet Singh Gill as its managing director and chief executive officer.

• State Bank of India extended the deadline to Feb 11 from Jan 30 to bid for Rs. 154 bn loan to Essar Steel, which have turned non-performing.

Aviation

• The civil aviation ministry will reveal results for the third round of regional connectivity scheme auction on Friday.

• Etihad Airways wants to open the JetPrivilege loyalty programme to other carriers as it negotiates fund infusion into the cash-strapped Mumbai-based airline.

Metals

• Agarwal recently spent USD 2.4 billion to buy close to 22% in Anglo, which owns 85% of De Beers, the world’s leading diamond company.

Pharma

• Glenmark Pharmaceuticals Ltd received tentative approval from the US Food and Drug Administration for Topiramate capsules, in 25 mg, 50 mg, 100 mg, 150 mg and 200 mg strengths, the company said.

Oil and gas

• India is aiming to halve the natural gas flaring from its oilfields in a year to curb waste of energy and damage to the environment. The Directorate General of Hydrocarbons (DGH), the upstream regulator, has directed oil producers to take quick steps to curb flaring following a recent review of their efforts at this.

NEWS

INTERNATIONAL NEWS

• US Initial weekly jobless claims were 199,000, a decrease of 13,000 from the previous week’s revised level, the US Department of Labor announced. This is the lowest level for initial claims since 15th November 1969 when it was 197,000.

• The tariff war between the US and China is benefitting India as its exports to the neighboring country have increased by about 25% during June-November 2018 to $8.46 billion, apex exporters body FIEO said.

• The European Central Bank (ECB) kept its monetary policy unchanged as expected on Thursday, maintaining the key deposit rate at -0.40%.

• US Markit Manufacturing PMI improves to 54.9 in January vs 53.5 expected. The improvement in overall business conditions was driven by the fastest expansion of production since May 2018.

TRENDSHEETSymbol CMP S2 S1 R1 R2 TREND

SENSEX 36025.54 35479 35752 36500 36974 Down

NIFTY 10780.55 10610 10696 10927 11072 Down

NIFTYBANK 27115.3 26684 26900 27477 27838 Down

YESBANK 219.60 160 190 247 275 Up

RELIANCE 1,246.00 1157 1202 1278 1309 Up

SUNPHARMA 422.40 369 396 444 465 Down

MARUTI 6,513.40 5798 6156 7126 7738 Down

ZEEL 318.40 194 256 413 507 Down

KOTAKBANK 1,266.15 1180 1223 1309 1351 Up

HDFCBANK 2,096.00 2041 2069 2145 2194 Down

ITC 279.20 263 271 291 302 Down

ICICIBANK 357.20 341 349 371 384 Down

INFY 730.35 704 717 747 764 Up

FORTHCOMING EVENTSSECURITY NAME COMPANY NAME RESULT DATE

532483 CANBK 28TH JAN

500495 ESCORTS 28TH JAN

540065 RBL BANK 28TH JAN

532259 APARINDS 29TH JAN

532215 AXIS BANK 29TH JAN

500034 BAJFINANCE 29TH JAN

532977 BAJAJ AUTO 30TH JAN

532174 ICICI BANK 30TH JAN

500253 LICHSGFIN 30TH JAN

532454 BHARTI AIRTEL 31ST JAN

500096 DABUR 31ST JAN

KSTREET - 26TH JANUARY 2019 1

INDIAN INDICES (% CHANGE)

GLOBAL INDICES (% CHANGE)

NIFTY MIDCAP100TOP GAINERS & LOSERS (1W)

SECTORAL INDICES (% CHANGE)

FII/FPI & DII TRADING (IN RS. CRORES)

NSE NIFTY TOP GAINERS & LOSERS (1W)

EQUITY

Source: Bloomberg

-4.00

-3.50

-3.00

-2.50

-2.00

-1.50

-1.00

-0.50

0.00 NIFTY IN

DEX

SENSEX

IND

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SPBSMIP IN

DEX

SPBSSIP IND

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NIFTYJR IN

DEX

NSEM

CA

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-8

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IND

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NSEBA

NK

IND

EX

NSESRV

IND

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NSEPH

RM IN

DEX

NSEIT IN

DEX

NSEM

ET IND

EX

NSEN

RG IN

DEX

NSEC

ON

IND

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NSEREA

L IND

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NSEFM

CG

IND

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-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

CC

MP IN

DEX

IND

U IN

DEX

SPX IN

DEX

NK

Y IND

EX

HSI IN

DEX

SHC

OM

P IND

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UK

X IN

DEX

CA

C IN

DEX

-2

0

2

4

6

8

10

12

14

16

SUN

PHA

RMA

AD

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NC

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RESEARC

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INFO

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OBERO

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DIV

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PAG

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IDFC

FIRST BAN

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AJA

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LTD

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ALO

RE REFINERY &

PETRO

-8

-6

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0

2

4

6

8

10

12

YES BAN

K LTD

SUN

PHA

RMA

CEU

TICA

L IN

DU

S

RELIAN

CE IN

DU

STRIES LTD

GA

IL IND

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DR. RED

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ICIC

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POW

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RP OF

IND

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NTPC

LTD

ITC LTD

TATA

MO

TORS LTD

-1000

-800

-600

-400

-200

0

200

400

600

800

1000

FII/FPI

DII


BEAT THE STREET - FUNDAMENTAL ANALYSIS

Tata Sponge Iron Ltd. CMP Rs.696Target Price Rs.944Upside 36%

Investment Rationale

• Tata Sponge Iron in Q3FY19 has reported a mixed set of numbers, wherein its consolidated revenue from operations has grown by 21.6% to Rs. 2608 Mn on YoY basis. However, EBITDA registered de-growth by 36.9% mainly due to a sharp increase in raw materials cost by 49% on YoY basis. The steeper rise in raw materials cost led to a contraction in EBITDA margin by 1080 bps to 11.6% on YoY basis. PAT and EPS too, de-grew by 25.5% on YoY basis as a result of increased raw materials cost.

• Sponge iron production in Q3FY19 was at 109370 MT and realization per MT stood at Rs. 22673 which is up 5% on QoQ basis and 23.8% up on YoY basis. Power sale was at 36 MKWH and realization per KWH came in at Rs. 4.7 which is up 3% on QoQ basis and down 9% on YoY basis. Thus, it is a sharper increase in raw materials price in comparison to realization in sponge iron and power business that led to a decline in EBITDA and PAT.

• Declining trend in iron ore and coke coal prices is witnessed, while sponge iron price is strong. Although global metals demand outlook appears bit uncertain, demand for steel is likely to remain robust in the domestic market on the back of increased infrastructure and urbanization activities.

• TSIL is in process of acquiring Usha Martin Limited through Slump Sale which has alloy based manufacturing capacity of 1.0 mtpa in long products. UML has a producing iron ore mine, a coal mine underdevelopment and a captive power plant. The company caters to value-added customer segments like construction, automotive and engineering

VALUE PARAMETERSFace Value (Rs.) 10.0

52 Week High/Low (Rs.) 1249/690

M.Cap (Rs. Bn/US $mn) 10716.8/150.5

EPS (Rs.) 91.5

P/E Ratio (times) (FY20E) 7.5

Dividend Yield (%) 3%

Stock Exchange NSE/BSE

P/E CHART

Valuation

Going forward, we believe that the softer trend in iron ore and coke coal prices amidst stronger demand for sponge iron price and increased product portfolio (post-acquisition of UML) will boost the profitability of the company. We have valued the stock on 2-yr fwd at 5 years average PE 10.2x of FY21 EPS and have arrived at TP of Rs. 944 with a potential upside of 36%. However, a slowdown in economy and dumping of steel by competing countries could be a risk to valuation.

EQUITY

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19E FY 20E

REVENUE 8002 8592 8842

EBITDA 1827 1672 1691

EBITDA(%) 22.8 19.5 19.1

PAT 1409 1354 1393

EPS (Rs.) 91.5 87.9 90.4

ROE (%) 15.2 13.1 12.3


BEAT THE STREET - FUNDAMENTAL ANALYSIS

JK Cement LimitedCMP Rs.710Target Price Rs.843Upside 19%

Investment Rationale

• In FY2017-18, the company commenced Brownfield expansion of 4.2 MTPA, which is expected to be ready by 2020. This involves a capital expenditure of Rs. 2000 cr, by raising debt and by internal accruals and recently the company raised some part of capital through QIP.

• The company is also planning a 3.5 MTPA greenfield project with a capital expenditure of 2,500 crore. Post-implementation of the company’s two-phased expansion plan, company’s production capacity of grey cement will become 18 MTPA in next 5 years.

• The company has access to high-quality limestone mines, helping to meet the limestone requirement for the next several years.

• The strong brand name and extensive distribution network will help the company to improve its market share and develop long term customer relationships.

• Being the third largest manufacturer of white cement in the world has helped the company to create a dominant position in this product segment.

• The company owns and operates an integrated manufacturing plant, which are located near the limestone mines and are connected to the markets by road and rail networks.

• The company majorly uses petcoke to meet its fuel requirement, and as of now the prices of crude oil have declined, This would add advantage to the company as the cost of fuel would be lower.

VALUE PARAMETERSFace Value (Rs.) 10.0

52 Week High/Low (Rs.) 1164/650

M.Cap (Rs. Bn/US $mn) 54868/770

EPS (Rs.) 41.4

P/E Ratio (times) (FY20E) 15.8

Dividend Yield (%) 1.40

Stock Exchange BSE

ValuationThe company is operating with an installed cement manufacturing capacity of grey cement with10.5MTPA, white cement with 1.20 MTPA and wall putty with 0.7 MTPA. The company has a sustainable business model wherein the company is also taking various measures for uninterrupted operations and cost reduction, which clearly states that the margins shall be in intact. JK Cement Ltd is currently trading at EV/EBITDA of 5.86x of FY20E. So we initiate the company for a ‘BUY’ rating valuing at 10.13x EV/EBITDA (5 years average forward multiple) on FY20E EBITDA for the target price of 843 representing an upside of 19% for the next 12-15 months..

EQUITY

P/E CHART

% OF SHARE HOLDING

in Rs.Mn ACTUAL ESTIMATE

YE Mar FY 18 FY 19 FY 20

REVENUE 48463 52901 58687

EBITDA 7875 8396 9484

EBITDA(%) 16.2 15.9 16.2

PAT 3037 2877 3145

EPS (Rs.) 41.4 41.1 45

RoE (%) 16.5 12.5 11.5

PE (x) 28.0 25.5 21.7


EQUITY

BEAT THE STREET - TECHNICAL ANALYSIS

Oberoi Realty Limited

OBEROIRLTY has been the outperformer in the realty space. The counter has been showing strength in the sideways market conditions from last few months after forming a swing low around 350 levels in October 2018. The counter formed a good base around 350-370 levels which is the 61.8% retracement levels from the swing corners of all-time highs and recent swing low of 201.80 levels on the weekly charts, indicating a possible reversal of the trend from the current levels. On the oscillator’s front, RSI (14) is trading in the comfortable zone with Parabolic SAR trading well below the current market price of the stock. The stock is also trading well above it short and medium-term moving averages fueling the bullishness in the stock. The overall chart structure looks very positive for medium to long term perspective with good price volumes action in the recent weeks. Even the Bollinger band (20, 2) is facing on the upper direction, indicating the momentum is likely to continue towards the higher levels. We expect the counter to continue its outperformance in the coming trading sessions as well and may move towards 570 levels in short term timeframe of 6-9 months with a stop loss placed below 400 which is the 50% Fibonacci retracement previous mentioned swing corners.

Havells India Limited

Havells India Limited is the country’s leading Fast Moving Electrical Goods (FMEG) manufacturer, producing a wide range of world-class industrial and consumer electrical products. The stock has posted an all-time high of 728.75 levels on 3rd September 2018. Thereafter, on account of profit taking, the price corrected and made a low of 549.85 levels on 19th October 2018. The stock witnessed a significant rally from the low of 549.85 levels till it clocked its recent high of 724 levels which is more than 31%, reflecting positive momentum in the stock will remain intact in coming months as well. On the daily charts, the stock is trading above most of its major moving averages namely 21/50/100/200 –DEMA, indicating the inherent strength in the counter. The counter is likely to head northward towards 830-860 levels in the medium to long term. Among the indicators and oscillators, the 14-day RSI has already given a positive crossover with 9-day signal line on the weekly chart and is pointing northwards, indicating the bullish trend in the stock is likely to continue and the counter is expected to head higher in the near to medium term. The Parabolic SAR (Stop & Reverse) is comfortably trading below the price on daily as well as on a weekly chart, which reflects buying will remain intact in the counter in the near term. The MACD is trading above the signal line in buy territory on the daily chart, indicating positive momentum in the stock is likely to continue in medium-term perspective. From the above observation, we recommend medium to long-term investors to go long in the stock around Rs.695-700 levels and any dip towards 650 levels can be used to accumulate the stock with a stop loss of 600 levels on a closing basis with the projected target of 830levels followed by 860 levels in next 6-9 months.

Stock OBEROIRLTY

CMP 459.50

Action BUY

Entry 445-455

Average 420

Stop loss 400

Target 1 570

Target 2 590

Time Frame 6-9 Months

Stock HAVELLS

CMP 711.9

Action BUY

Entry 695-700

Average 650

Stop loss 600

Target 1 830

Target 2 860

Time Frame 6-9 Months


EQUITY

Sentiment

Stop Loss 210

Target 180

Lot Size 2300

Margin 79200

21-DEMA 192.5

Open Interest Shares 40355800

Change in OI -1173000

Cost of Carry (%) -3.12

SECTORAL SNIPPETS

NIFTYFINSE (11,483.60): NIFTYFINSR made a bearish engulfing candlestick pattern on the weekly charts and closed on a negative note, lower by -1.6% towards the end of the last week. The movement during the whole of the last week remained volatile as the rate sensitive financial services index swiveled in a range of around 275 odd points. In the said duration, stocks like AXISBANK, BAJAJFINSV, KOTAKBANK & BAJFINANCE gained, whereas stocks like BAJAJHLDNG, BHARATFIN, EDELWEISS, GICRE, HDFC TWINS, IBULHSGFIN, ICICIBANK, ICICIPRULI, IIFL, M&MFIN, MFSL, PFC, REC, SBIN and SRTRANSFIN witnessed selling pressure. Technically, immediate supports for the said index on weekly timeframe are pegged around 11,400-11,380 followed by 11,300-11,250, whereas on the upside, immediate resistances are pegged around 11,620-11,680 followed by 11,720-11,750. However, if the overall market continues to witness choppiness, then expect a further sell-off in this space as the overall sentiment will go from bad to worse. We expect the stocks from the financial services space to continue witnessing volatile movement during the week to come as derivatives contracts for January 2019 will expire and traders will roll over their position to the February 2019 series.

NIFTYBANK (27,115.30): NIFTYBANK underperformed Nifty with a loss of 1.24% during the week passed by, while the broader index Nifty lost 1.16%. During the week, the index took resistance at 27,620 levels and couldn’t surpass the previous swing high at 27,750 levels. On the last trading day of the week, the index broke the crucial support at 27,220 levels, indicating further weakness in the index. Considering the technical setup on the daily charts, the index may trade with a negative bias in the short term ahead until unless 27,430 levels are surpassed. On the stock specific front, PNB and BANKBARODA lost by 7.12% and 6.31%, respectively during the week. On the other side, YESBANK gained by 10.67% on the weekly closing basis due to the announcement of its new CEO and MD. Deutsche Bank India CEO Ravneet Gill has been named as Rana Kapoor’s successor. Gill will take charge of Yes Bank from March 2019 and the bank will appoint an interim CEO next week as Kapoor’s tenure ends by January 2019. Technically, BankNifty may face crucial resistance at 27,430 and 27,750 levels. For the week ahead, support for the index can be pegged at 26,900 levels followed by 26,700 levels.

NIFTYIT (15039.25): NIFTYIT traded on a positive note, settled with gains of nearly 1.14% on the weekly closing basis, exhibiting a positive bias in the index. On the stock specific front, few stocks managed to outperform the underlying Index. TECHM gained 3.08%, OFSS gained 2.88%, WIPRO gained 2.43%, TCS gained 1%, HCLTECH gained 0.9% and MINDTREE gained 0.07%, while INFY lost -0.09%, INFIBEAM lost -4.5% and TATAELXSI lost -5.08%. NIFTY IT Index, after placing a swing low near 13958.85, witnessed a gradual recovery in the last couple of sessions. Technically, Index found support near its major 200-DEMA which is currently placed near 14,215 levels and also holding above its 21 & 50-DEMA which is currently placed near 14,682 & 14,624 levels respectively. On the momentum setup, 14-period RSI found support near 40-levels and is gradually inching higher towards overbought territory, indicating gaining strength in the Index. On the downside, Index has immediate support near 14,800 levels followed by 14,600 levels, while on the higher side 15,200 will work as an immediate resistance followed by 15,600. Going forward Index on sustaining above 14,800 levels is likely to trade with a positive bias towards 15,400-15,600 levels.

NIFTYPHARM (8891.00): NIFTYPHARM closed the week with a positive return of more than 2% and outperformed its benchmark index NIFTY which closed the week with a negative return of more than 1%. The major gainers from the Pharma index were SUNPHARMA along with DRREDDY, AUROPHARMA, GLENMARK and BIOCON, while on the flipside, CADILAHC, CIPLA and DIVISLAB closed in red. On the technical indicator front, 14-period RSI has given a positive crossover with 9-day signal line on the weekly chart and poised with a bullish bias, indicating the index is likely to continue its outperformance in the coming week as well. The MACD is trading above the signal line in the negative territory on a daily chart and inching towards equilibrium line, reflecting strength in the up move. The immediate support for the NIFTYPHARM is pegged around 8,820-8,800 followed by 8,700 levels, while on the higher side, the index may face resistance around 8,950-8,970 levels followed by 9,100 levels. Going forward, we are expecting the index is likely to trade with a positive bias in the coming week. Stock specific action is expected to be seen in the sector during the next week.

TATA CONSULTANCY SERVICES LIMITED: BUY TCS (FEB FUTURE) | CMP: 1928.80 SECTOR: IT

TCS managed to close with gains of nearly 1%, whereas NIFTYIT closed with gains of 1.14% on a weekly closing basis, exhibiting stock price moved in tandem with underlying Index. The stock price, after clocking an all-time high of 2275, witnessed price correction, and eventually entered into a consolidation mode, finding support near its major 200-DEMA, which is currently placed near 1824 levels. Technically, the stock price after placing a swing low near 1808 witnessed a recovery and attempted to give a breakout from a falling trendline. Currently, the price is holding above its 21-DEMA, placed near 1898 levels. On the momentum setup, 14-period weekly RSI has witnessed a positive crossover of its 9-pd signal line above 40-levels, and on a daily timeframe chart, its moving equilibrium levels exhibits gaining strength in the counter and momentum may accelerate further in sessions to come. Prices managed to sustain above its middle Bollinger Band (20,2) in the last couple of sessions. Hence, we recommend Smart Trader to initiate Long position on dips near 1920 levels for the higher target of 2070, keeping stop loss below 1820 levels.

Sentiment

Stop Loss 1820

Target 2070

Lot Size 250

Margin 85700

21-DEMA 1897

Open Interest Shares 14141000

Change in OI -620250

Cost of Carry (%) -2.85

VEDANTA LIMITED: SELL VEDL (FEB FUTURE) | CMP: 195.40 SECTOR: CEMENT

VEDL traded the week with a negative bias. The stock closed the week with a negative return of nearly 2% ending at 195 levels. Technically, the stock closed below its 21/50/100/200 DEMA on the daily chart, exhibiting underlying weakness in the stock. On the technical indicator front, the 14-period RSI has given negative crossover with 9-day signal line on the weekly chart and poised with weak bias, indicating downtrend in the counter in the near term. The Parabolic SAR (Stop & Reverse) on the daily chart is trading above the price on the weekly chart, indicating weakness is likely to continue in the stock. The MACD is trading below its signal line on the daily chart, indicating weakness is likely to continue in the stock. From the above observation of price momentum, it seems the stock is likely to trade with a negative bias in the coming trading sessions also. Therefore, we recommend Smart Traders to initiate a short position in the counter around 198 levels with a stop loss placed above 210 levels for the lower target of 180 levels.


WEEKLY VIEW OF THE MARKET

NIFTY (10,780.55): Nifty after making a swing high at 10,987 levels witnessed a sharp decline towards 10,775 levels and closed with a weekly loss of 1.16%. The index accumulated the losses during the week to close at 10,780 levels due to due to muted corporate earnings and volatile global markets. In the current scenario, 10,935-10,985 zone may act as a hurdle zone which is in confluence with prior swing highs and 50% Fibonacci retracement for the down move of 11,760 levels to the major swing low of 10,030 levels. This indicates that the above resistance zone might act as strong resistance in the short run ahead. Nifty may indicate further strength once the resistance at 10,985 levels is confidently taken out from the downside. For the week ahead to watch, market participants may lay their focus on Brexit vote in UK Parliament on 30th January and India’s Fiscal deficit and Infrastructure Output numbers releasing on 31st January which may decide the further direction in markets along with the corporate earnings release. On the derivatives front, open interest data suggests that the index is likely to trade with a negative bias during the week as the index witnessed short covering of puts at lower strikes, while 10,900 and 11,000 levels may act as resistance levels.

DERIVATIVE STRATEGIES

DERIVATIVES

Type: Buy Call in TCS

First leg Buy TCS 31 Jan 1900 CE @ 32

BEP 1932

Max Profit Unlimited

Max Loss 8000

Stop Loss 12 (option levels)

Rationale The stock has ended the week with a gain of 1% and ended at last few days highest point, indicating the stock has resilience to the ongoing market decline. The stock has outperformed Nifty even on Friday, when Nifty has cracked, while the stock has ended almost near day highs. The volumes on the Friday’s move are also slightly higher and notable. Hence a call option buy is recommended.

Type: Bear Put in MARUTI

First leg Buy one lot of MARUTI 31 JAN 6600 PE @ 200

Second leg Sell one lot of MARUTI 31 JAN 6400 PE @ 115

BEP 6515

Max Profit 8625

Max Loss 6375

Rationale The stock has ended the week on a negative note and clocked fresh 52 wk lows. It is one of the weakest stocks in the auto space and the numbers posted also have disappointed the participants. Hence bearish view for near term.

Type: Buy Put in Nifty

Recommendation Buy NIFTY 10800 PE @ 88-90

Max Profit Unlimited beyond BEP

BEP 10710

Max Loss Unlimited

Stop loss 50 (Option levels)

Rationale The index has been in the range from past few and is showing signs of weakness on the daily charts, facing stiff resistance to cross 10,900 levels decisively on the higher side. We expect the stock to gather the downside momentum in the upcoming week towards 10,650-10,680 levels.

Type: Protective Call in BANKNIFTY

First leg Sell one lot of BANKNIFTYJAN FUT @ 27150

Second leg Buy one lot of BANKNIFTY 31JAN 27100 CE @ 225

BEP 26925

Max Profit Unlimited beyond BEP

Max Loss 3,500

Rationale The stock has given major breakdown below 27350-27400 levels on the daily charts and is showing no signs of strength around higher levels from past few sessions. The overall chart structure of the index seems to be weak for the near term and we expect it to trade with negative bias and drift lower towards 26800-26850 level in the current expiry.

7KSTREET - 26TH JANUARY 2019

DERIVATIVES

FII ACTIVITY IN INDEX FUTURES FII ACTIVITY IN STOCK FUTURES

TOP 6 LONG BUILD UP

Stock Name LTP % Price Change Open Int % OI Change

OFSS 3708 2.55 150150 20.02

AXISBANK 669.75 0.77 36231600 8.85

KSCL 590.35 5.10 1417500 8.62

RBLBANK 573.65 0.70 6102000 7.32

NIFTYIT 15039.3 0.98 19950 7.26

HAVELLS 708.15 4.52 5322000 6.78

BANKNIFTY OPTION OI CONCENTRATION CHANGE IN BANKNIFTY OPTION OI

TOP 6 SHORT CLOSURE


SRF 2076.35 0.25 733500 -13.40

KAJARIACER 538.15 0.59 2771600 -12.12

GAIL 334.9 3.96 12636246 -11.11

MANAPPURAM 98.85 1.49 10044000 -11.00

BAJAJFINSV 6321.55 1.15 638500 -10.45

INDIGO 1161.75 7.97 2905200 -9.46

TOP 6 SHORT BUILD UP


ICICIPRULI 299.40 -14.74 7539000 96.48

INFIBEAM 42.40 -4.61 18544000 41.69

PAGEIND 22758.20 -0.92 250925 40.91

TVSMOTOR 496.10 -7.38 6503000 40.45

ZEEL 318.40 -27.69 23990200 39.15

EXIDEIND 230.15 -6.75 7476000 38.50

TOP 6 LONG CLOSURE


DCBBANK 180.40 -2.78 3681000 -30.68

KPIT 112.40 -48.00 3273750 -26.99

MINDTREE 886.10 -0.10 3054000 -24.66

TORNTPHARM 1861.65 -1.90 536000 -16.12

BATAINDIA 1124.20 -2.74 2236850 -15.24

PTC 85.70 -1.89 5560000 -14.83

NIFTY OPTION OI CONCENTRATION CHANGE IN NIFTY OPTION OI


COMMODITIES

BULLIONBullion market was in a consolidation phase during the week ended on 25th January

2019 in absence of major triggers in the market. Continuation of political instability

in the UK on Brexit deal and extension of the partial shutdown of the US government

failed to have a major impact on the market. During the week, CME gold futures

for February delivery traded in the range of $1275.75 - $ 1285.85 per troy ounce.

International Monetary Fund trimmed its global growth forecast for 2019 to 3.5% and

marginal recovery to 3.6% in 2020 against its earlier forecast of 3.7% for both years

made in October 2018. The US home sales declined to their lowest level in three years

in December to 4.99 million against the previous reading of 5.33 million. According to

US economic advisor Kevin Hassett, US could see zero growth in the first quarter, if

the partial shutdown of the government is extended for the whole quarter. The market

focus would be ECB meeting on rate decision. The ECB’s meeting will come a day after

the Bank of Japan cut its inflation forecasts on Wednesday, but maintained its massive

stimulus programme, with Governor Haruhiko Kuroda warning of growing risks to the

economy from trade protectionism and faltering global demand.

ENERGY COMPLEXCrude oil prices opened the trading session around 1% higher on Friday even after the

surprise build up in the US stocks reported by EIA on Thursday late night. The gains

in prices were supported by the threat of further sanctions by the US government

against Venezuela. The US backing of Juan Guaido as Venezuela’s legitimate

president has created some confusion among refiners, producers and traders now

unsure of the legality of future commercial transactions with state-owned PDVSA.

EIA in its weekly reports said that US crude inventories rose by 7.97 million barrels in

the week to 18 January compared to forecasts for a stockpile draw of 0.042 million

barrels. In the previous week, crude inventories declined by 2.683 million barrels.

As per custom data, Russia became China’s largest crude oil supplier in December,

cementing the top spot for all of 2018 for the third year in a row ahead of rival Saudi

Arabia. Imports from Russia reached 7.04 million tons, or 1.658 million barrels per day,

in December, up 40% from 5.03 million tons a year earlier. IEA in its demand growth

forecast steady at 1.3 mb/d. While the optimism in the global economy is not very

positive but the lower prices and a weaker dollar have helped stoke demand a bit.

In the coming week, the prices are expected to remain on upfront as political unrest

in Venezuela could create further tightness in the already tighter market led by US

sanctions on Iran.

BASE METALSWith US Bank remaining closed on account of Martin Luther King Observation

Day, Base Metal prices remained in a mixed and limited range. On Tuesday, the

most expected China’s GDP came in at 6.4% which was unseen in the past three

decades and the prices did not react much to the weaker demand, tracing the

less volume participation from the Chinese market, well ahead of the start of New

Year day. Chinese exports of aluminium in semi-fabricated product form surged

to fresh heights last year. Total exports of unwrought aluminium, including primary

metal, alloy and semis, were 5.8 million tons in 2018, up 21% on 2017. Most of the

exports, something around 5.25 million tons, were in “semis” form. In Copper, refined

production in Chile, the world’s biggest copper mine producing country, increased

by 6% primarily because production in February/March 2017 was restricted by a

strike at Escondida (the world’s biggest copper mine). Indonesian output increased

by 19% due to the fact that comparative output in 2017 was negatively affected

by a temporary ban on concentrate exports that started in January and ended in

April. Production in the Democratic Republic of Congo (DRC) increased by 12% and

Zambian mine output increased by 8% as a result of the restart of temporarily closed

capacity in both countries. The global market for refined zinc metal was in deficit

by 326kt during Jan-Nov, 2018 with total reported inventories decreasing by 161kt

over the same period. A 1.1% fall in global usage of refined zinc metal was mainly

influenced by decreases in apparent demand in China, Korean Republic, South

Africa and Taiwan (China). In Europe, usage increased by 1.4%, influenced by rises

in Belgium, France, Norway and Poland that more than offset reductions in Germany

and Italy. Alumina output in December month was up 19.6% YoY at 6.21 mn tons and

during the whole year, the output was up by 9.9% and in 2018 the total output stood

at 65.35 mn tons. Increasing output amid the falling prices of aluminium is making

the smelters to partially shutdown their operations in order to curb the losses made

on sales. China Nonferrous Metals Industry Association said in December that an

additional 800,000 tons per year of smelting capacity are to be cut in coming

months.

RUBBERTOCOM rubber futures prices traded mixed to downtrend during the week ended

on 25th January 2019 following the weaker oil prices, while lingering worries over

slowing global economic growth weighed on market sentiment. Rubber inventories

at SHFE warehouses fall during the week. Inventories decreased by 2354 tons from

436624 tons to 434270 tons during the week. However, stocks on warrant have

witnessed gain of 1540 tons from 410010 tons from to 411550 tons. International

demand for natural rubber is expected to rise about 2.5% in 2019 to more than

30 million metric tons, according to the International Rubber Study Group (IRSG).

According to the IRSG, global rubber consumption increased by around to 29.3

million tons in 2018. Natural Rubber (NR) growth reached 4.9%, to 13.9 million tons,

and Synthetic Rubber (SR) growth was 1.7%, reaching 15.4 million tons. IMF has cut

2019 global GDP growth forecast to 3.5% from 3.7% earlier, the lowest forecast in

three years. The downgrade comes just a day after the release of Chinese Q4 GDP

numbers and this is the second downgrade in the last six months.

GUAR GUM & GUAR SEEDGuar seed and gum futures prices traded sideways to positivee on Friday after the

selling pressure witnessed on Thursday in the market which was due to bearish

fundamental outlook such as low demand amid restricted supply in major physical

center. Guar seed most active February contract traded down on Thursday by 1.65%

and closed the day at Rs. 4314 per quintal down by Rs. 60 from the previous session,

whereas gum futures fell by 1.35% and settled on Thursday at Rs. 8599 lower by

Rs. 188 from the prior session. On Friday, Guar seed and guar gum went positive

to trade sideways due to anticipatory bargaining buying at lower levels and prices

also tracked strength from gains in crude oil price. However, The prices majorly

recovered due to the anticipation of bargain buying which owing expanding the

supply-demand gap resulted thin supply in the physical market may help the prices

to recover. Arrivals have been shrinking gradually on daily basis and further expected

to fall down which may help the prices to trade with positive bias.

SPICESCardamom futures traded downside during the week ended on 25th Jan on

profit booking for two-week gains and from 8-year high levels. Further, a slight

slowdown in buying activities at higher prices amid increasing supplies at the spot

auctions kept market sentiments down. Most active futures traded in the range of

Rs.1660-1585.2 per kg during the week before closing at Rs.1603 per kg, down by

3.39% from its previous week close. At the spot markets, arrivals were at 457 MTs

until Friday which is higher by last week arrivals of 454 MTs while average auction

prices traded in the range of Rs.1471-1550 per kg. Drop in production during after

heavy monsoon rainfall in Kerala resulted in very limited stocks at the production

centers amid good domestic demand. This limited major price loss during the week.

Turmeric futures during the week ended mostly in a negative note, prices started

off the week positively on expectations of good buying activities of the fresh crop.

However, prices did not sustain at higher levels as they traded lower expectations

of higher arrivals at the spot market. Overall crop is estimated to be lower than

earlier projections of very large crop after the yield concerns in growing states due

to extreme drought. Hence, active futures traded in the range of Rs. 6430-6660

per quintal and closed the week at Rs. 6462 per quintal, lower by 1.13% from its

previous week close. Jeera futures were back in their negative note during the week.

Expectations of higher crop size in Gujarat followed by irrigation facilities by the

government despite lower than last year area weighed prices. Further, lack of major

export demand scenario for old crop waiting for new crop weighed prices. Hence,

active futures traded in the range of Rs.16270-17350 per quintal before closing the

week at Rs.16315 per quintal, lower by 4.31% from last week close. Dhaniya futures

traded in a range with positive bias during the week ended on 25th Jan. Weak

demand amid sufficient availability of stocks at the spot markets weighed down

prices. However, prices noted decent recovery from loss. Expectations of the lower

area under dhaniya during the upcoming sowing season capped major fall as this

will decline crop size. Hence, active futures traded in the range of Rs. 6539-6766 per

quintal before closing with gains of 0.89% from last week.


LEAD

COMMODITIES

TREND SHEET

Commodities 18-Jan 25-Jan % Change 52 Week High% Change from 52

Week High52 Week Low

% Change from 52 Week Low

MCX Gold (Rs/10 gms) 32091.00 32150.00 0.2% 32390.00 -0.74% 29268.00 9.85%

MCX Silver (Rs/Kg) 39198.00 39235.00 0.1% 41698.00 -5.91% 34981.00 12.16%

MCX Crude Oil (Rs/bbl) 3817.00 3790.00 -0.7% 5669.00 -33.15% 2993.00 26.63%

MCX Natural Gas (Rs/mmBtu) 238.20 217.80 -8.6% 358.70 -39.28% 162.50 34.03%

MCX Copper (Rs/kg) 429.35 420.90 -2.0% 493.25 -14.67% 397.40 5.91%

MCX Lead (Rs/kg) 141.85 148.30 4.5% 172.50 -14.03% 133.15 11.38%

MCX Zinc (Rs/kg) 185.30 188.00 1.5% 232.70 -19.21% 163.80 14.77%

MCX Nickel (Rs/kg) 838.70 836.20 -0.3% 1095.20 -23.65% 735.00 13.77%

MCX Aluminium (Rs/kg) 133.10 133.75 0.5% 178.85 -25.22% 124.75 7.21%

NCDEX Soybean (Rs/Quintal) 3733.00 3852.00 3.2% 3915.00 -1.61% 3149.00 22.32%

NCDEX Refined Soy Oil (Rs/10 kg) 762.70 767.25 0.6% 796.35 -3.65% 713.60 7.52%

NCDEX RM Seed (Rs/Quintal) 3860.00 3985.00 3.2% 4262.00 -6.50% 3727.00 6.92%

MCX CPO (Rs/10 kg) 551.60 558.50 1.3% 673.00 -17.01% 483.40 15.54%

NCDEX Castor Seed (Rs/Quintal) 5100.00 5152.00 1.0% 6300.00 -18.22% 3831.00 34.48%

NCDEX Turmeric (Rs/Quintal) 6536.00 6462.00 -1.1% 7702.00 -16.10% 5978.00 8.10%

NCDEX Jeera (Rs/Quintal) 18010.00 16315.00 -9.4% 21000.00 -22.31% 14010.00 16.45%

NCDEX Dhaniya (Rs/Quintal) 5785.00 6588.00 13.9% 6892.00 -4.41% 4186.00 57.38%

MCX Cardamom (Rs/kg) 1659.30 1603.00 -3.4% 1660.00 -3.43% 818.50 95.85%

NCDEX Wheat (Rs/Quintal) 2025.00 2021.00 -0.2% 2162.00 -6.52% 1614.00 25.22%

NCDEX Guar Seed (Rs/Quintal) 4314.00 4312.00 0.0% 4869.50 -11.45% 3494.50 23.39%

NCDEX Guar Gum (Rs/Quintal) 8667.00 8615.00 -0.6% 10510.00 -18.03% 7200.00 19.65%

MCX Cotton (Rs/Bale) 20920.00 20560.00 -1.7% 24280.00 -15.32% 19400.00 5.98%

NCDEX Cocud (Rs/Quintal) 1974.00 1982.00 0.4% 2043.00 -2.99% 1166.00 69.98%

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

MCX Mentha Oil (Rs/kg) 1591.00 1504.00 -5.5% 1846.10 -18.53% 1106.00 35.99%

TECHNICAL RECOMMENDATIONS

CMP Weekly EMA RSI Direction

LME $ 2090/Mt 8 $ 201063 (UP)

MCX Rs 148.30/Kg 13 $ 1990

ZINC

MENTHA OIL

Exchange Entry Target SL

LME $ 2070-2065 $ 2180 $ 1990

MCX Rs 147-146 Rs 155 Rs 142


COMEX $ 2640/Mt 8 $ 256062 UP

MCX Rs 188.50/Kg 13 $ 2530


COMEX $ 2615-2610 $ 2750 $ 196

MCX Rs 186-185 Rs 181 Rs 182


MCX Rs 1490/Kg 13 $ 1590 36 Down


MCX Rs 1520-1530 Rs1420 Rs 1600


COMMODITIES

NEWS DIGEST

• Gold prices recovered from two days falling trend as the dollar weakened against major currencies. Dovish comments from the European Central Bank failed to extend its impact on the market. Investors are also worried about the impact of the longest US government shutdown in history, now in its 34th day, with two bills to end the partial shutdown failing to win enough votes in the Senate.

• Global aluminium production grew at its slowest pace in a decade during half of 2018. Output totaled 64.34 million tons, according to the International Aluminium Institute (IAI), up by just 1.5% on 2017.

• China’s imports of scrap copper from the United States rose in December from the previous month, snapping six straight months of decline as buyers scooped up cargoes before tighter restrictions on scrap took effect for 2019.

• Indonesia will keep its export tax on palm oil shipments at zero in February, the trade ministry said. The ministry set the crude palm oil (CPO) reference price at $565.40 per ton for February, below a threshold of $750 per ton for taxes and $570 per ton for levies.

• The US backing of Juan Guaido as Venezuela’s legitimate president has created some confusion among refiners, producers, and traders now unsure of the legality of future commercial transactions with state-owned PDVSA. With Iran already hit by the US sanctions, a drop in Venezuelan exports could offset some of the record US production.

WEEKLY COMMENTARY

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

• Crude oil prices edged up as turmoil in Venezuela increased the chances of tighter global supply if the US makes good on signals that it could impose sanctions on Venezuelan exports. As per EIA, US gasoline inventories jumped to a record high in the most recent week even as refiners cut back activity while crude stocks rose sharply.

• Zinc prices hit their highest in nearly three months on Friday on worries that weak refined output in China could send the global market into deficit. Lead also hit a three-month peak after inventories dwindled, but the wider industrial metals market was weighed down by worries about global growth.

• The euro was headed for a second weekly decline after the head of the European Central Bank said economic growth was likely to be weaker than previously expected.

• During December 2018 China exported 177,400 tons of alumina which was down 37.9% on a monthly basis, but up 36.7 times YoY. Exports in Jan-Dec stood at 1.46 million tons, while imports were 544,800 tons, with a net export of 917,400 tons.

MCX CRUDE MCX NATURAL GAS

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

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

0.5

14-Jan 16-Jan 18-Jan 20-Jan 22-Jan 24-Jan

$/B

BL

-0.35

-0.3

-0.25

-0.2

-0.15

-0.1

-0.05

0

11-Jan 13-Jan 15-Jan 17-Jan 19-Jan 21-Jan 23-Jan 25-Jan

$/M

MB

tu

190

200

210

220

230

240

250

260

0

20000

40000

60000

80000

100000

120000

9-Jan 11-Jan 15-Jan 17-Jan 21-Jan 23-Jan

Open Interest Volume Price (INR/MMBTU)

3500

3550

3600

3650

3700

3750

3800

3850

3900

0

50000

100000

150000

200000

250000

300000

9-Jan

10-Jan

11-Jan

14-Jan

15-Jan

16-Jan

17-Jan

18-Jan

21-Jan

22-Jan

23-Jan

24-Jan

Volume Open Interest Price (INR/Bbl)


COMMODITIES

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

Commodity Exchange Contract 18-Jan 25-Jan % change

Aluminium LME 3M 1870.00 1885.50 0.83%

Copper LME 3M 6056.00 5915.00 -2.33%

Lead LME 3M 1995.00 2073.50 3.93%

Nickel LME 3M 11810.00 11750.00 -0.51%

Zinc LME 3M 2581.00 2626.00 1.74%

Gold CME FEB 1281.30 1280.00 -0.10%

Silver CME MAR 15.36 15.33 -0.23%

WTI Crude oil CME FEB 53.76 53.18 -1.08%

Natural Gas CME FEB 3.42 3.13 -8.44%

INTERNATIONAL COMMODITY PRICES

Commodity Exchange Contract 18-Jan 25-Jan % change

Soybean CBOT JAN 940.50 942.50 0.21%

Soy oil CBOT JAN 27.88 27.88 0.00%

CPO BMD MAR 2223.00 2292.00 3.10%

Cotton ICE MAR 73.95 73.18 -1.04%

SPOT PRICES (% CHANGE)

LME WAREHOUSE STOCKS (IN TONS)

Commodity Previous week This week Change % Change

Copper 135100 146275 11175 8.27%

Zinc 121650 116400 -5250 -4.32%

Aluminium 1303475 1301100 -2375 -0.18%

Lead 93025 82975 -10050 -10.80%

Nickel 201228 202776 1548 0.77%

SHANGHAI WAREHOUSE STOCKS (IN TONS)*


Copper 97979 100878 2899 2.96%

Zinc 26942 29434 2492 9.25%

Aluminium 692558 687999 -4559 -0.66%

*Until Wednesday

WEEKLY STOCK POSITION IN LME (IN TONS)

EIA Weekly Energy Data Release- 24-Jan-2019

COMEX WAREHOUSE STOCKS (IN TONS)


Copper 98252 92421 -5831 -5.93%

CountryEIA Weekly

DataW/E Poll Actual Prior Unit

USEIA- Nat Gas, Change Bcf

18-Jan -154B -163B -81B Cubic foot

USNat Gas-EIA Implied Flow

18-Jan -163B -81B Cubic foot

USEIA Weekly

Crude Stocks18-Jan -0.042M 7.970M -2.683M Barrel

USEIA Weekly Dist. Stocks

18-Jan -0.229M -0.617M 2.967M Barrel

USEIA Weekly

Gasoline Stk18-Jan 2.655M 4.050M 7.503M Barrel

USEIA Weekly

Crude Imports18-Jan 1.595M -1.220M Barrel

USEIA Weekly Rfg

Stocks18-Jan -0.013M 0.004M Barrel

USEIA Weekly

Heatoil Stock18-Jan 0.224M 0.346M Barrel

USEIA Weekly

Prods Imports18-Jan -0.274M 0.310M Barrel/Day

USEIA Weekly Dist Output

18-Jan -0.208M -0.151M Barrel/Day

USEIA Weekly Crude Runs

18-Jan -0.174M -0.343M Barrel/Day

USEIA Weekly Refining Util

18-Jan -0.9% -1.7% -1.5% Percent

USEIA Wkly

Crude Cushing18-Jan -0.190M -0.743M Barrel

USEIA Weekly

Gasoline O/P18-Jan 0.020M 0.192M Barrel/Day

USEIA Ethanol

Ref Stk18-Jan 23,501k 23,351k Barrel

USEIA Ethanol Fuel Total

18-Jan 1,031k 1,051k Barrel/Day

-13.25%

-9.41%

-8.10%

-5.47%

-3.39%

-1.37%

-1.77%

-1.13%

-0.68%

-0.60%

-0.07%

-0.20%

-0.05%

0.58%

0.36%

0.41%

0.83%

0.71%

1.02%

1.34%

1.67%

3.19%

3.24%

4.83%

13.88%

-15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00%

Barley

Jeera

Natural Gas

Mentha Oil

Cardamom

Copper

Cotton

Turmeric

Crude Oil

Guar Gum

Nickel

Wheat

Guar Seed

Silver

Gold

Cotton Seed Oil Cake

Aluminum

Soy Oil

Castor Seed

CPO

Zinc

Soybean

RM Seed

Lead

Dhaniya


USD/INR

USDINR is currency trading at 71.17. During the week, it made a high of 71.52 and low of 70.94. The RSI is at 53.33. Moving average of 32 is at 70.30 and 55 is at 69.25. The trend is looking positive for the week. Hence, we recommend buying at 71.00-70.90 for target price 72.00 with stop loss of 70.50.

EUR/INR

EURINR is currency trading at 80.68. During the week, it made a high of 81.24 and low of 80.34. The RSI is trading at 47.34. Moving average of 32 is at 80.96 and 55 is at 80.17. The trend is looking sideways for the week. Hence, we recommend buying at 80.30-80.20 for target price 81.20 with stop loss of 79.80.

GBP/INR

GBPINR is currency trading at 93.05. During the week, it made a high of 93.40 and low of 91.34. The RSI is trading at 62.81. Moving average of 32 is at 91.22 and 55 is at 90.58. The trend is looking positive for the week. Hence, we recommend buying at 92.50-92.60 for target price of 94.00 with stop loss of 92.00.

JPY/INR

JPYINR is currency trading at 64.83. During the week, it made a high of 65.33 and low of 64.59. The RSI is at 63.21. Moving average of 32 is at 63.23 and 55 is at 62.37. The trend is looking bullish for the week. Hence, we recommend buying at 64.30-64.20 for target price of 67.00 with stop loss of 63.70.

TECHNICAL RECOMMENDATIONMARKET STANCE

Markets evolved around the discussion of partitions across the globe, building a wall between US-Mexico and Britain exit from European Union. US government partial shutdown entered into Thirty-Fifth-day building pressure on the dollar index. Despite negative economic data published from Euro zone, dollar index failed to parade in the north direction as the economic impact of government shutdown worried investors. Separately, Theresa finally seems to have slowly won the hearts of opposition party over her Brexit Plan-B after her initial Plan-A was beaten down by a historic margin. Just a day after China reported that its Q4 GDP expanded at the slowest rate since the global financial crisis, IMF has predicted the global economy would grow 3.5% in 2019 and 3.6%in 2020 due to weakness in Europe and few Emerging markets. Broad weakness in the dollar index, gains in the neighboring Asian currencies and a halt in the resurgence of crude oil prices has benefited the Rupee. But the month end Dollar demand from importers and Dollar bids from foreign banks on behalf of foreign investors for portfolio adjustment have restrained the gains in Rupee.

NEWS FLOWS OF LAST WEEK

• The ECB made no changes to its monetary policy in a meeting scheduled this week. The ECB President noted that the risks to the economic outlook have “moved to the downside”.

• UK pay growth surges as employment hits a record high. Average weekly earnings s were up by 3.4% in November, the biggest rise early global recession days.

• BOJ maintains the short term interest rates at -0.1% and leave unchanged pledge to buy JGB in a flexible manner at an annual pace of 80 TRLN Yen. Governor Kuroda also warned that there is a growing risk to the economy from trade protectionism and faltering global demand.

• Adding fuel to the concerns of a slowdown in global economic growth the IMF has cut 2019 global GDP growth forecast to 3.5% from 3.7% earlier, this is the lowest forecast in three years by global lender, while increased India growth projection by 10 bps to 7.5%.

• British PM Theresa May unveils Brexit plan- B and the bill will come to vote in the House of Commons on 29th January.

• Japan’s manufacturing growth stalled in January as export orders fell at the fastest pace in 2-1/2 years.

• India’s fiscal deficit is expected to widen to 3.7% in this financial year that ends Mar. 31, breaching the government’s budget gap target by 40 basis points, BofA Merrill Lynch Global Research said in a note.

• Moody’s expects fiscal deficit target to be breached in this financial year and sees the print marginally higher at 3.4% of gross domestic product, against the earlier aim of 3.3%.

CURRENCY

CURRENCY TABLE

Currency Pair Open High Low Close

USDINR 71.19 71.52 70.94 71.19

EURINR 81.17 81.24 80.34 80.68

GBPINR 91.72 93.40 91.34 93.05

JPYINR 64.86 65.33 64.59 64.83


ECONOMIC GAUGE FOR THE NEXT WEEK

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

25 Jan 2019 19:00 US Retail Sales Ex-Autos MM Dec 0.1% 0.2% Percent

25 Jan 2019 19:00 US Retail Sales MM Dec 0.2% 0.2% Percent

25 Jan 2019 19:00 US Retail Control Dec 0.4% 0.9% Percent

28 Jan 2019 14:30 EU Money-M3 Annual Grwth Dec 3.8% 3.7% Percent

28 Jan 2019 19:00 US Durable Goods Dec 1.8% Percent

28 Jan 2019 19:00 US Durables Ex-Transport Dec 0.3% Percent

28 Jan 2019 19:00 US International Trade $ Nov -54.0B -55.5B USD

28 Jan 2019 20:30 US Construction Spending MM Nov 0.2% -0.1% Percent

28 Jan 2019 20:30 US Factory Orders MM Nov 0.2% -2.1% Percent

28 Jan 2019 20:30 US New Home Sales-Units Nov 0.560M 0.544M Number of

28 Jan 2019 20:30 US Wholesale Invt(y), R MM Nov 0.5% Percent

29 Jan 2019 19:30 US CaseShiller 20 MM SA Nov 0.4% Percent

29 Jan 2019 19:30 US CaseShiller 20 YY Nov 5.0% Percent

29 Jan 2019 20:30 US Consumer Confidence Jan 125.0 128.1 Index

30 Jan 2019 15:00 UK BOE Consumer Credit Dec 0.800B 0.924B GBP

30 Jan 2019 15:00 UK Mortgage Lending Dec 3.400B 3.453B GBP

30 Jan 2019 15:00 UK Mortgage Approvals Dec 63.050k 63.728k Number of

30 Jan 2019 15:30 EU Business Climate Jan 0.73 0.82 Indicator

30 Jan 2019 15:30 EU Economic Sentiment Jan 106.7 107.3 Index

30 Jan 2019 15:30 EU Industrial Sentiment Jan 0.6 1.1 Net balance

30 Jan 2019 15:30 EU Services Sentiment Jan 11.2 12.0 Net balance

30 Jan 2019 15:30 EU Consumer Confid. Final Jan -7.9 -7.9 Net balance

30 Jan 2019 18:45 US ADP National Employment Jan 178k 271k Person

30 Jan 2019 19:00 US GDP Advance Q4 2.5% 3.4% Percent

30 Jan 2019 19:00 US Core PCE Prices Advance Q4 1.6% Percent

30 Jan 2019 20:30 US Pending Sales Change MM Dec -0.7% Percent

31 Jan 2019 00:30 US Fed Funds Target Rate 30 Jan 2.25-2.5 2.25-2.5 Percent

31 Jan 2019 05:31 UK GfK Consumer Confidence Jan -15 -14 Net balance

31 Jan 2019 06:30 CHINA NBS Manufacturing PMI Jan 49.3 49.4 Index (diffusion)

31 Jan 2019 12:30 UK Nationwide house price mm Jan 0.2% -0.7% Percent

31 Jan 2019 12:30 UK Nationwide house price yy Jan 0.0% 0.5% Percent

31 Jan 2019 15:30 EU GDP Flash Prelim YY Q4 1.2% 1.6% Percent

31 Jan 2019 15:30 EU GDP Flash Prelim QQ Q4 0.2% 0.2% Percent

31 Jan 2019 15:30 EU Unemployment Rate Dec 7.9% 7.9% Percent

31 Jan 2019 19:00 US Personal Consump Real MM Dec 0.3% Percent

31 Jan 2019 19:00 US Personal Income MM Dec 0.4% 0.2% Percent

31 Jan 2019 19:00 US Consumption, Adjusted MM Dec 0.3% 0.4% Percent

31 Jan 2019 19:00 US Core PCE Price Index MM Dec 0.2% 0.1% Percent

31 Jan 2019 19:00 US Initial Jobless Claims 26 Jan, w/e 211k 199k Person

31 Jan 2019 19:00 US Continued Jobless Claims 19 Jan, w/e 1.713M Person

31 Jan 2019 19:00 US Employment Costs Q4 0.8% 0.8% Percent

31 Jan 2019 20:15 US Chicago PMI Jan 62.0 65.4 Index

1 Feb 2019 07:15 CHINA Caixin Mfg PMI Final Jan 49.5 49.7 Index (diffusion)

1 Feb 2019 10:30 IND Nikkei Markit Mfg PMI Jan 53.2 Index (diffusion)

1 Feb 2019 14:30 EU Markit Mfg Final PMI Jan 50.5 50.5 Index (diffusion)

1 Feb 2019 15:00 UK Markit/CIPS Mfg PMI Jan 53.5 54.2 Index (diffusion)

1 Feb 2019 15:30 EU HICP Flash YY Jan 1.4% 1.6% Percent

1 Feb 2019 15:30 EU HICP-X F&E Flash YY Jan 1.1% 1.1% Percent

1 Feb 2019 19:00 US Non-Farm Payrolls Jan 168k 312k Person

1 Feb 2019 19:00 US Private Payrolls Jan 170k 301k Person

1 Feb 2019 19:00 US Unemployment Rate Jan 3.9% 3.9% Percent

1 Feb 2019 19:00 US Average Earnings MM Jan 0.3% 0.4% Percent

1 Feb 2019 19:00 US Average Earnings YY Jan 3.2% 3.2% Percent

1 Feb 2019 19:00 US Average Workweek Hrs Jan 34.5 34.5 Hour

1 Feb 2019 20:15 US Markit Mfg PMI Final Jan 54.9 Index (diffusion)

1 Feb 2019 20:30 US Construction Spending MM Dec 0.2% Percent

1 Feb 2019 20:30 US ISM Manufacturing PMI Jan 54.3 54.1 Index

1 Feb 2019 20:30 US ISM Mfg Prices Paid Jan 54.9 Index

1 Feb 2019 20:30 US U Mich Sentiment Final Jan 90.7 90.7 Index

CURRENCY


Press Release of Investment Strategy Report-2019

Documents

RULE THE MARKET - Karvy Onlinecontent.karvyonline.com/contents/kstreetissue021.pdf · Ravikanth Pedapati Bharath Sunnam: Anup B.P Amit Kumar: Vinod Jaya Kumar Karvy Head Office: Karvy