Dhanteras & DiwaliDhanteras & DiwaliSPECIAL REPORT ON
11th November, 2020
It’s a time of celebration as the auspicious “Dhanteras” and festivals of lights “Diwali” are on the way to sparkle
blessings on us. These are auspicious occasions are known as to bring prosperity in our lives.
SMC Commodity Research Team has come up with special report on these occasions which will throw light how some
commodities gave good returns despite the hit of all odds and slowdown amid Covid-19 and many geo political issues. We
have calculated the return on commodities from last Diwali to 10th of November.
1
Bullion: Year of 2020 was a very volatile market for commodity and equity markets. Clearly the bullion counter has
emerged as winner with around 33% from last Diwali to 10th of November. Gold this year has touched an all-time high on
both COMEX as well as the domestic market. MCX. The bullion complex gave a massive 30% return this year in just 10
months supported by strong fundamentals. This statistic should put to rest all the noise about plunging gold demand hurting
gold’s prospects in 2020.
Beginning of the year prices climbed as trade war going between US and China, in February end the whole world faced
Corona pandemic. The accommodative stance of the central banks, stimulus measures, excess liquidity, the Covid-19
relief bill and lower bond yields were the other concerns among investors to create safe haven appeals. All these factors,
including the volatility in the rupee, have impacted gold prices on the domestic front. India’s gold demand in the first three
quarters fell 49% from a year earlier to 252.4 tonnes as corona virus-triggered lockdowns hit jewellery demand. While
overall gold consumption fell, demand for coins and bars, known as investment demand, jumped 51 per cent in the third
quarter as rising prices attracted investors, keeping the sentiment high. In coming months bullion prices got supported on
hope of a larger stimulus to bail out the coronavirus-battered US economy after democrat candidate Joe Biden occupies
White House as the country's 46th President.
Healthy sales during a recent festival Dussehra gave confidence to Indian jewellers to continue stocking up, while more
supply started to make its way into Singapore and Hong Kong as dealers navigate around COVID-19-led bottlenecks.
NICKEL 1182.20 1192.80 10.60 1%
ZINC 190.50 210.60 20.10 11%
Y-O-Y DIWALI RETURNS FROM COMMODITIES
Commodity 28th October, 2019 10th November, 2020 Change in Rs. Change in %
Bullion
GOLD 37922.00 50500.00 12578.00 33%
Base Metals
ALUMINIUM 131.50 156.60 25.10 19%
COPPER 442.30 536.05 93.75 21.20%
LEAD 158.80 152.25 -6.55 -4%
SILVER 46034.00 63044.00 17010.00 37%
Energy
CRUDE OIL 3953.00 3058.00 -895.00 -23%
NATURAL GAS 179.50 219.90 40.40 23%
2
Indians jewellers are now awaiting Diwali, Dhanteras and other festivals in November. We can witness an upswing in gold demand
in the fourth quarter on account of these festivals coupled with a busy wedding season amid post-harvest. Notwithstanding high
price and Covid shadow a good monsoon this year will boost sentiment.
On the technical front the gold price continued to rally, reaching new multi-year highs. Now gold prices has been corrected the
Fibonacci retracement of 23.6% from 56191 to 50400 level. More correction can possible if it breaks below the support level of
49200 which will attract to fall towards the Fibonacci retracement level of 38.2% , 46730 levels. The moving average convergence
Divergence (MACD) trading above the resistance line which is signaling for strong buying in medium to long term basis. The
Relative strength Index (RSI) 14 value is trading above 70 which are also signaling for buying for medium to long term basis. In
short term support is seen around 49200, break and sustain below this level can expect more downside movement towards
48000/46730 mark very soon and resistance is seen around 51700, sustainable trade above it can move again upside towards
53500/55500 respectively.
For medium to long term, we recommend buy on dip strategy, investors can make long position between 46000-48000 levels for a
longer horizon.
3
Silver
Silver future at the MCX platform has settled higher at 65635 on the previous week. At present prices are trading above the weekly
50EMA levels of 60500 and also above 200 EMA levels 60000. Buying can be seen in the counter if it continue to trade above
62000 levels, which can take the counter towards 64500/66000 in near-term. If it break below the support level of 60500 levels and
sustain can see further down side movements towards 57500/55000 levels respectively which is the Fibonacci retracement of
50% from the high of 77749.
Energy
This counter reflected the actual health of world economy. Surrounded by all negative news of slowdown, trade wars, political
issues of Middle East and multiple negative numbers by many agencies amid covid-19 led slowdown and increase in production
wiped out the profit of crude prices. It couldn’t stay at higher levels and saw negative return of around 23% from last Diwali to 10th of
November this year. While, from last Diwali to 10th of October this year natural gas posted 23% return supported by lower domestic
production, supply disruption in the Gulf of Mexico, higher US LNG exports and increased heating demand amid cold weather in
some parts of the US.
Long Term Outlook
Crude Oil may trade in the range as oil prices are gaining after Joe Biden clinched the U.S. presidency and buoyed risk appetites,
offsetting worries about the impact on demand from a worsening coronavirus pandemic. Weakness in dollar index may also
support the oil prices as the dollar hit a 10-week low as investors heralded Biden’s election as U.S. president by buying trade-
exposed currencies on expectations that a calmer White House could boost world commerce and that monetary policy will remain
easy. However, both brent and WTI benchmarks could see headwinds in November as the latest news from the pandemic front is
unlikely to give much hope to those waiting for a price recovery. Considering the perilous situation because of the resurgence in Covid-
19 cases, Saudi Arabia, Iraq, Russia, and Algeria had backed an extension of the current rate of production cuts, standing at 7.7 million
bpd. Beside this, U.S. oil production is set to climb as producers are tapping into a backlog of drilled wells left uncompleted to boost
output. On other side, U.S. President-elect Biden and his team are working on tackling the worsening health crisis. Promising news
on Pfizer’s COVID-19 vaccine which would help people resume normal life and boost oil demand and prices.
4
Crude oil Future at the MCX platform has settled higher at 2766 on last week, from the previous closing price of 2642. The Crude oil
prices have been trading above the 18 days moving averages of 2870. The short term channel resistance of 2950 is already
breached on previous week and now well sustained above the 18 days moving averages of 2870. Now the next immediate
resistance is seen at 3070, sustainable trade above it will see the good move towards 3300/3500 and if it breaks the immediate
support line of 2650 will see the downside move towards 2450/2250 respectively. Overall the commodity is expected to move
higher from its support level.
Natural Gas
Natural gas Future at the MCX platform has settled lower at 214.70 on last week, from the previous closing price of 247.70. Now the
next immediate resistance is seen at 235, sustainable trade above it will see the good move towards 250/275 and if it breaks the
immediate support line of 205 will see the downside move towards 190/175 respectively. Overall the commodity is expected to
move higher from its support level.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related
activities. SMC is a registered member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited, MSEI (Metropolitan Stock Exchange of India Ltd.) and M/s SMC Comtrade Ltd is a registered
member of National Commodity and Derivative Exchange Limited and Multi Commodity Exchanges of India and other commodity exchanges in India. SMC is also registered as a Depository Participant with CDSL
and NSDL. SMC’s other associates are registered as Merchant Bankers, Portfolio Managers, NBFC with SEBI and Reserve Bank of India. It also has registration with AMFI as a Mutual Fund Distributor.
SMC is a SEBI registered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in
securities/commodities market.
The views expressed by the Research Analyst in this Report are based solely on information available publicly available/internal data/ other reliable sources believed to be true. SMC does not represent/ provide any
warranty expressly or impliedly to the accuracy, contents or views expressed herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision.
The research analysts who have prepared this Report hereby certify that the views /opinions expressed in this Report are their personal independent views/opinions in respect of the subject commodity.
DISCLAMIER: This Research Report is for the personal information of the authorized recipient and doesn't construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of this Research Report. The Research Report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this Research Report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions.
Please note that SMC its affiliates, Research Analyst, officers, directors, and employees, including persons involved in the preparation or issuance if this Research Report: (a) from time to time, may have long or short positions in, and buy or sell the commodity thereof, mentioned here in or (b) be engaged in any other transaction involving such commodities and earn brokerage or other compensation or act as a market maker in the commodities discussed herein(c) may have any other potential conflict of interest with respect to any recommendation and related information and opinions. All disputes shall be subject to the exclusive jurisdiction of Delhi High court.All disputes shall be subject to the exclusive jurisdiction of Delhi High court.
www.smcindiaonline.com
Corporate Office:
11/6B, Shanti Chamber,
Pusa Road, New Delhi - 110005
Tel: +91-11-30111000
Lotus Corporate Park, A Wing 401 / 402 , 4th Floor ,
Graham Firth Steel Compound, Off Western Express Highway, Jay Coach Signal, Goreagon (East) Mumbai - 400063
Tel: 91-22-67341600, Fax: 91-22-67341697
Mumbai Office: Kolkata Office:
18, Rabindra Sarani, Poddar Court, Gate No-4,
5th Floor, Kolkata-700001
Tel.: 033 6612 7000/033 4058 7000
Fax: 033 6612 7004/033 4058 7004
E-mail: [email protected]
5
Subhranil Dey Sr. Research Analyst (Agro) Boardline : 011-30111000 Extn: 674 [email protected]
Dilip Nath Research Associate Boardline : 011-30111000 Extn: 630 [email protected]
Ravinder Kumar Research Associate Boardline : 011-30111000 Extn: 684 [email protected]
Shivanand Upadhay Research Associate Boardline : 011-30111000 Extn: 646 [email protected]
Vandana Bharti (AVP - Commodity Research) Boardline : 011-30111000 Extn: 625 [email protected]