MARKET ALL-TIME HIGH - Kunvarji€¦ · Sensex is trading at record high,first time after May 2019....
Transcript of MARKET ALL-TIME HIGH - Kunvarji€¦ · Sensex is trading at record high,first time after May 2019....
ISSUE DEC. 2019
MARKET ALL-TIME HIGH:MARKET ALL-TIME HIGH:OVER-PERFORMED OUT-PERFORMED?OR
ScopeKaliedo
EDITORIAL
Global equities have outperformed despite the volatility among the macro
numbers during the recent past. Except United States, major countries have
remained worried about their GDP growth outlook. The Brexit and US China
trade related uncertainties remained major worried factors. However ultra-
dovish policies from central bankers helped the emerging markets in terms of
investment flow. Indian equity benchmark again pierce 12000 mark while
Sensex is trading at record high,first time after May 2019. Market approached
all-time high, despite the falling GDP growth numbers, higher inflation,
sluggish consumer demand and weakness from manufacturing acuities.
Higher than expected Q2FY20 bottom line due corporate tax cut and forward
looking approach of market are two major reasons behind the stellar
ISSUE DEC. 2019
INDEX
EQUITY INSIGHT:
BULLION OUTLOOK:
AGRI OUTLOOK:
Nifty Hits 12000 mark: Over-performed or Out-performed?
Highlights of Recent Macro Data....................................................................................................................... 2
Q2FY20 Earnings.................................................................................................................................................. 3
Top Recommendations........................................................................................................................................4
With Focus on Global Macro Events................................................................................................................5-6
Currency Outlook: USDINR..................................................................................................................................7
With Focus on Weather Impact............................................................................................................................8
Soybean Outlook..............................................................................................................................................9-10
HIMANJAL BRAHMBHATT
performance. The financial sector has outperformed versus peers during the rally and pushed the
benchmarks at record high.
On commodity front, the bullion remained volatile on back of mixed news from global markets while base
metals noted recovery from lower levels as the sentiments improved post Britain elections and ongoing
trade talk between US and China. Crude prices gained momentum on back of the ultra-dovish policies
from central bankers and favorable outcome from OPEC members. As part of the deal, members agreed
to cut production of crude by additional 5 lakh barrel per day. Listing premium from world's biggest IPO
added further boost to the Crude prices. On Agri front, Oil and Oil seed complex remained on limelight as
jumped at record levels. Due to the higher prices of Oil complex, the commodities like Soybean and
Mustard seen remained on the focus and prices recovered sharply during the recent past. During the year
Crude palm oil jumped by almost 40 percent on back of lower production from sourcing nations.
During the upcoming month, now financial market likely to face a range bound on back of long holidays
from European and US counterpart. The stock and sector specific momentum likely to be seen before the
announcement of Union Budget 2020. So advisable to go for accumulation approach with recommended
picks as part of balanced investing approach.
Director - Financial Services
NIFTY HITS 12000 MARK: OVER-PERFORMED OR OUT-PERFORMED?
Indian equity indices challenged existing all time
high again during the first week of November.
Sensex also pierced important level of 40k and
made historical life time high at 40,749 on 8th
November. Sensex has overtaken existing high
June 04th high of 40,312. Nifty index pierced the
12,000-mark for the first time since June 03, 2019.
A series of measures taken from the Finance
Minister including corporate tax cut and removal
of additional surcharges, Better-than-expected Q2
results, RBI rate cuts, Ultra Dovish policies from
major central bankers and easing trade war
tensions have boosted overall investor
sentiments.
However, during recent past we had seen
weakness across the Indian macro picture. The
downgrade of outlook from Moody’s, soft auto
sales, lackluster consumer demand, falling GDP
growth numbers, higher input cost, rising fiscal
burden and contraction in manufacturing and
service sector activities are worried factors for
near term. The biggest question on the mind of
investors about out-performance or over-
performance in Indian equity indices.
Major macros announced during recent past
showing clear sign of slowdown and indicates
gloomy picture on future till the effect of recent
measures. The numbers of Industrial Production
and Core Infra output seen at worst levels since
FY2011. The Inflation pressure also started rising
trend as last month retail inflation came at 3.99
percent when index hits fresh high. The current
month retain inflation accelerated by 4.62
percent, highest in last 16 months.
The past GDP cam at 5.0 percent while Inflation is
almost at the GDP growth levels, indicates
negative sign for the outlook of economy. The
global factor will play an important role during the
upcoming quarters as series of factors expected
to have an impact on economy including Brexit, US
Sino trade uncertainties, Crude Prices and
currency momentum.
IIP (Index of Industrial Production):
The country’s factory output slumped to its lowest
level in nearly eight years, dragged down by sharp
contraction in capital goods, manufacturing,
mining and electricity sectors, and heaping fresh
pressure on authorities to reverse the
slowdown.The index of industrial production
contracted 4.3 percent in September, the second
successive month of decline after the fall of 1.4
percent during August.
Between April and September, the sector grew an
annual 1.3 percent compared to 5.3 percent YoY.
Within the Index, the capital goods sector saw a
contraction of 20.7 percent, compared with
shrinkage of 21 percent in August. The mining
sector contracted by 8.5 percent, compared with
growth of 0.1 percent in August. The
manufacturing sector contracted 3.9 percent in
September, compared with a contraction of 1.2
percent in the previous month. The electricity
sector, too, saw a continued contraction in
September, shrinking 2.6percent, compared with
a contraction of 0.9percent in August. In terms of
industries, seventeen out of 23 industry groups in
the manufacturing sector have shown negative
growth during the month of September 2019 as
compared to the corresponding month of the
previous year.
ISSUE DEC. 20191
2ISSUE DEC. 2019
Manufacturing and Service PMI:
Manufacturing activity in the country continued to
weaken in October, with factory orders and
production rising at the weakest rates in two
years. The cooling of manufacturing sector
conditions in India continued in October, with
both factory orders and production rising at the
weakest rates for two years. The PMI data for
October showed a continuation of manufacturing
sector weakness in India, "with sales growth
softening to the slowest in two years.
India’s service sector activity declined for the
second straight month in October, the first back-
to-back reduction since the second quarter of
2017-18, dragging business confidence to its
lowest level in almost three years. In the service
sector, anecdotal evidence highlighted subdued
demand conditions, competitive pressures and a
fragile economic situation. PMI fell to 49.2 in
October from 48.7 in September. In PMI parlance,
the reading below 50 denotes contraction.
GDP growth data:
The weaker-than-expected economic data
emerging from India points to a deepening
slowdown in Asia’s third-largest economy, where
private consumption, investments and exports
have all taken a hit. Global rating agencies like
World Bank, IMF, S&P and Moody’s cut the GDP
growth forecast of India for FY20 and FY21.
Domestic agencies also joined the economic
growth downgrades for India.
SBI report said the demand slowdown in the
economy is still significant and would take longer
time to recover. SBI slashed the nation's FY20
growth forecast to 5 percent from 6.1 percent.
Nomura massively cut its GDP forecast to a low 4.9
percent for the year from 5.7 percent earlier.
Fiscal Position:
To protect the industries and economy,
government have taken various steps, however
expected to have significant impact on fiscal
prudence of the nation. The GST collection of the
nation remained below 1 lk crore mark during
recent past, indicates the higher possibility of
revenue deficit. Recent slowdown and demand for
stimulus could raise the associated fiscal costs,
should the government need to support some
institutions and increase the risk that growth
remains too low to prevent a rise in the debt
burden.
Agencies like Fitch and Moody’s raised their fiscal
deficit concerns during the latest review of
economy. Fitch raised India's fiscal deficit forecast
to 3.6 percent of the GDP for this fiscal year, from
3.4 percent previously.
In October 2019, India's wholesale inflation
dropped to a 40-month low at 0.16 per cent. The
same month, the retail inflation rose to 4.6 per
cent, the highest in 16 months. The divergence
between the both indices widen on back of
differential among the weightage of articles. The
wholesale price index is measured by changes
happening in three broad sectors - primary
articles, fuel and power and manufactured
products. The CPI product categorization is
sharper and is bracketed under food and
beverages, pan, tobacco and intoxicants, clothing
Inflation:
Most Nifty 50 companies either met or surpassed
estimates in the July-September earnings season
after two straight quarters of muted performance.
Operating income of nearly half of the Nifty 50
companies seen improvement. Out of Nifty 50
companies 39 companies either beat or hit
estimates while 11 companies trailed market
estimates. Auto, Financials, Banks and selective
technology sector stocks seen outperformed on
earnings during Q2FY20, however Energy sector
stocks seen underperformed. Hero Motocorp,
M&M, Bajaj Auto, Maruti and Tata Motors beats
market estimates and all five constituents were
from Auto sector. On otherside Grasim, Dr Reddy,
Tata Steel, TCS and Yes Bank trailed market
estimates during the Q2FY20.
October breached the Reserve Bank of India's
medium-term target of 4percent for the first time
since July 2018 due to higher food prices.
Consumer Food price inflation, which amounts to
half of the inflation basket, increased to 7.89
percent compared to 5.1percent in the previous
month. Core inflation which excludes energy and
food items slowed to 94-month low of 3.47
percent in comparison to 4percent a month ago
reflecting the slowdown in the economy.
Meanwhile, pulses inflation shot up to
11.72percent from 8.4percent MoM and vegetable
inflation jumped to 26percent from 11.4percent
MoM.
The macro announcement in near past is a clear
red alarm for the economy, however the equity
indices seen at record high. The major reasons for
the out performance are: the forward looking
approach of market and the positive impact of
corporate tax cut on the Q2FY20 earnings.
Ongoing forward announcement of Q2 GDP
numbers, RBI interest rate decision and
Government reform process are major domestic
factor to consider. On global front the
developments related to US-Sino trade deal, US
macro announcement , Ch inese macro
announcement, Federal Reserve Monetary policy
and Britain elections expected to drive market
sentiments.
Q2 Earnings Heat Map
Nifty50 Companies
Q2FY2020 EARNINGS: TOPLINE
MUTED, MARGINS SEEN
IMPROVEMENT
more than two years. The Nifty companies have
beat estimates on their operating income and
excludes one-offs, including the impact of
corporate tax rate cuts. Net profit grew in double
digits, helped by a cut in corporate tax rate and
buoyed by the financial sector.
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and footwear, housing, fuel and light and a
miscellaneous category.
Most Nifty 50 companies either met or beat
estimates through the second-quarter earnings
season—the best operational performance in
On broader picture,
except Banking and
NBFCs out of sample of
1697 companies failed to
impress the street. The
general trend indicates
the muted topline growth
seen while operational
environment remained
encourag ing dur ing
Q2FY20. Given sluggish
economic indicators
ISSUE DEC. 2019
dramatic revenue recovery is unlikely in the
remainder of the fiscal though operating margins
may improve due to cost cutting and streamlining
of operations.Net profit based on a common
sample of 1,697 companies that have declared
results for each of the 13 quarters to September
2019 — increased by 22.5 per cent, while revenue
fell 0.2 per cent. Excluding banks and financial
services institutions, the growth in net profit
moderated to 11.3 percent while revenues fell by
3.0 percent. For the consumer sector, the
September quarter remained challenging due to
demand slowdown, especially in rural areas on the
back of liquidity crunch, floods, etc. Bottom-line
performance of companies seen better on back of
one-offs, tax write back, lower corporate tax and
cost cut from corporates. Private lenders shown
better performance despite the slower credit cycle
during the quarter. Asset quality from private
lenders seen improvement, however PSU Banks
not able to impress on earnings, except SBIN and
Indian Bank.
Major Hits and Misses during Q2FY20:
Reliance Industries reported 18.3 per cent year-
on-year rise in consolidated net profit at Rs 11,262
crore. Reliance Industries maintained tag of most
profitable Indian company in private sector as
recorded profit of more than 11k crore during the
quarter. Indian telecom companies posted record
loss in the history of Indian corporates on back of
provisions for AGR (Adjusted Gross Revenue)
ruling. Vodafone-Idea hits loss of Rs 50,922 crore
at the net level versus loss of Rs 4,974 crore in the
year-ago quarter while the loss in the June quarter
was Rs 4,874 crore. Idea posted highest quarterly
loss from any Indian company. Airtel has posted
loss of Rs 23,045 crore, the third-biggest loss from
any Indian company. Combined quarterly losses
stands at Rs 74000 crore during Q2FY20.
Q2FY20: Top Portfolio
Recommendations
Earning season Q2FY20 remained supportive for
the market sentiments as major companies have
clear beat on operational margin and net profit.
On back of strong operational efficiency via cost
control and corporate tax cut, listed companies
able to surpass market estimates on bottom line.
However top line remained muted as major
corporates came with tepid growth on back of
economic worries, slowdown in realty and auto
segment, liquidity related concerns and lack of
willingness from Buyers.
Thanks to Finance Minister for corporate tax cut as
companies able to maintain EPS (Earning Per
Share) during Q2FY20. After analysis of major
Indian listed peers, we have prepared portfolio of
stocks. With consideration of future prospects and
current earnings, we recommend Accumulate
mentioned stocks on every dips.
4ISSUE DEC. 2019
COMMODITY OUTLOOK: BULLION
Gold has outperformed on YoY bases on back of
global economic uncertainty and fears over a
trade war have supported the precious metal –
traditionally viewed as a safe haven investment by
the investor community. However some profit
booking seen on back of The gold price continued
to rally, reaching new multi-year highs in
September, Spot gold made $1557 per Ounce and
MCX gold touched 39885 rs per 10 grams. The
International gold price rose by more than 5%
during Q3 and MCX gold 7.90%.
The factors spurred safe heaven prices
The uncertainty over US-China trade talks:
China and the United States have agreed in the
past two weeks to cancel tariffs in different
phases, the Chinese commerce ministry said on
Thursday without giving a timeline. Later on
Friday, President Trump says he has not agreed to
scrap tariffs on Chinese goods, though Beijing
would like him to do so. No clarity on scrap tariffs,
market go through bumpy ride ahead.
Global economic growth: The global economic
growth forecast was revised down to 3.0% for 2019
and to 3.1% for 2020, compared to the previous
forecast of 3.1% and 3.2%, respectively. Ongoing
slowdown in the US and the Euro-zone, lower-
than-expected growth in India in first 6 months in
2019, rising sovereign debt issues in Argentina,
and the continuation of the US-China trade
dispute, among other factors. US economic
growth was revised down to 2.3% for 2019 and
1.9% for 2020. The forecast for Euro-zone growth
in 2019 remains at 1.2%, while 2020 was revised
down to 1.1%.
The yield on the 10-year U.S. Treasury note has
traded below the yield on the 2-year note
September, marking an inversion of the yield
curve. Inversions can stir recession fears, which
would also boost gold's haven appeal.
Rate cut by Central Banks: The US central bank's
FOMC lowered its benchmark funds rate by 25
basis points to a range of 1.5% to 1.75%. It was the
third cut this year as part of what Fed Chairman
Jerome Powell had characterized as a “mid cycle
adjustment” in a maturing economic expansion.
Meanwhile, ECB President had announced that it
will restart its quantitative easing measures and
has cut its bank deposit rate to an all-time low of -
0.5% in a bid to stimulate the flagging eurozone
economy.ECB will resume buying up eurozone
government bonds at a rate of €20 billion as from
November.
5 ISSUE DEC. 2019
Escalating risks: Heightened trade and
geopolitical tensions, including Brexit-related
risks, could further disrupt economic activity, and
derail an already fragile recovery in emerging
market economies and the euro area. On an
annual basis, UK GDP only rose by 1.0% in July-
September compared with Q3 2018. That's the
lowest annual growth rate since the first quarter of
2010. The UK economy expanded by 0.3% in the
third quarter of the year. India's GDP data also
continuously deteriorated till now.
Highlights of World Gold Council (Q3):
Gold-based mutual funds (ETFs) bought 258.2 tons
of gold in the third quarter, raising the amount of
gold in their portfolio to a record 2,855.3 tons.
Central banks continue to play a critical role in the
rise in demand for gold, according to WGC data.
The third quarter of this year saw a 156.2-ton
increase in the central banks' gold reserves. A total
of 547.5 tons of gold has been purchased since the
beginning of the year. Turkey was the largest gold
purchaser in the world with 71.4 tons in the third
quarter. Russia increased its total gold reserves by
34.9 tons to 2,241.9 tons till Q3.
Gold supply rose by 4% to 1,222.3 tons in the third
quarter compared to the same period last year.
This was due to a 10% increase in recycling. Gold
production in mines declined to 877.8 tons in the
third quarter from 883.3 tons in the same period
last year. The amount of gold recycled has reached
963.1 tons since the beginning of the year.
Jewellery demand was down 16% to 460.9t in Q3.
Weak consumer sentiment due to continued
geopolitical and economic uncertainty, coupled
with substantially higher gold prices, dented
jewellery purchases in all major markets.
India imported 26 tonnes of gold in September,
down from 81.71 tonnes a year ago. India's gold
imports plunged 68% year on year in September
to their lowest in more than three years as record
domestic gold prices curbed retail buying.
Highlights of World Gold Council (Q3):
Macroeconomic backdrop wi l l become
increasingly favorable for investment in gold in the
coming months. This includes an end to sustained
US dollar strength, further rate cuts by the Fed (
Fed is already cut three times rate cut), more
accommodative monetary policies from other
major central banks(Eur, China, India), and the
continued rise of negative-yielding debt. Further,
in spite of growing risk aversion this year, equities
have remained near all-time highs (India, Japan,
US) and, seemingly, most investors are still not
betting on a sustained correction. However,
investor's sentiment will eventually change in
favor of defensive assets, including gold, if unlikely
equity market correct.
Support: 37,100/36,750
Resistance: 38,280/38,600
Technically, MCX December future prices have
corrected sharply after it made a high of 39,885
rs/10 grams in September. Price almost slipped
5% from high but on YTD it gained 18% and from
low to high it climbed 27.50%. In last week, it came
out from triangle pattern and also closed below
trend line on weekly basis. We assume prices to
take support 100 days EMA on daily chart at 36,922
and 38.2% Fibonacci retracement of its rally from
low of 31,232 till high of 39885, which is placed at
36,580 levels. For medium to long term, we
recommend buy on dip, make long position
between 36,650-36,700 levels for target of 38,680
with stop loss of 36,000.
6ISSUE DEC. 2019
CURRENCY OUTLOOK: USDINR
In 2019, INR traveled in six phases. In this it saw
bear, bull and sideway all in one year. Journey
starts with appreciation due to sharp correction in
International crude oil prices, in 3rd phase most ot
the Pundits expect that NDA government again
came in power and pre budget sentiments
support for appreciation. In budget, Finance
Minister Sitharaman announced higher surcharge
on FPIs, who have sold Indian stocks (net) worth
over $3 billion within two months and Indian
equity markets were down about 10% from their
June highs. Due to this our rupee sharply
depreciated and Chinese Yuan also depreciated
due to escalation of trade war and cancel the
meet. On 23rd August FM announced the abolition
of tax surcharge on foreign portfolio investors
(FPIs) as well as domestic investors. Before this,
our currency lost almost 5.50% against the USD.
In between RBI continued rate cut to support the
growth as inflation are in control. In last meet, the
central bank revised its growth forecast for the
current financial sharply, from 6.9% projected in
the August policy, to 6.1%. Growth forecast for the
first quarter of the next financial year was also
trimmed to 7.2% from 7.4%. Meanwhile,
The Indian rupee's recovery in September was
partly driven by concessions made by both US and
China on trade, but gains were capped by a less
dovish Fed, start of policy easing by the ECB,
Trump impeachment risks, and increase in oil
prices on geopolitical risks in the Middle East. In
between our government continued to introduce
more stimulus measures in September as clear
signs of an economic slowdown, including
corporate tax cuts, a new tax refund programme,
and a funding window for affordable housing. It all
covered in phase 5. Meanwhile, India's gross
domestic product (GDP) grew 5 percent in April-
June 2019 v/s 8 percent in the same quarter of
2018-19 and Gross value added grew 4.9 percent
in April-June 2019 v/s 7.7 percent in the same
period last year and 5.7 percent in January-March
this year.
The World Bank, on 13 October, had cut India's
GDP growth for 2019-20 to 6% in its South Asia
Economic Focus report. Followed by the IMF, it
also cut its estimate for India's growth this year to
6.1% from 7% projected in July on 15 October,
calling on the country to use monetary policy and
broad-based structural reforms to address cyclical
weakness and strengthen confidence. Last week,
Moody's changed its outlook for India from 'stable'
to 'negative'. Though, it has retained its 'Baa2'
rating for the country's foreign and local currency.
Strategy: Buy at 71.16 TGT 72.45 SL 70.40
Support: 71.16/70.50 Resistance: 71.94/72.50
7
All the above scenarios are indicating that short-
term depreciation is not ruled out as US-China
trade war threatens global growth, political
instability in Maharashtra, Brexit issue, Crude Oil
prices, fall in GDP and Manufacturing data and
traders should maintain a negative bias, we would
advise traders to go for long.
ISSUE DEC. 2019
AGRI COMMODITIES OUTLOOK
The Weather Disturbances form in the Indian Seas
which subsequently become Cyclones. These
disturbances can come up at any point of time, but
since cyclones are mostly in Pre and Post Monsoon
seasons, other times, they just manage to remain
as smaller systems.
The conversion rate from disturbance to a
Cyclone is 80 percent in the Pre and Post
Monsoon season. Which is April and May as well as
October-December.
Meanwhile, for 2019, there was a formation of 9
disturbances, out of which, seven ended up
becoming Cyclones, making the year with the
highest conversion rate.
This year, there has been some exception with
Arabian Sea seeing two storms namely Vayu and
Hikaa in the Monsoon season. Meanwhile, two
more storms came up in the Post Monsoon season
namely Kyarr and Maha. Bay of Bengal saw Pabuk
at the beginning of the year, Fani in the Pre
Monsoon season, and Bulbul in the Post Monsoon
season.
Kharif Crops outlook with focus of weather disruption
In Arabian Sea most of storms weaken Out of the
four that formed in the Arabian Sea this year, three
did not even make a landfall. Only Hikka made a
landfall: It was only Hikaa which made a landfall as
a Severe Cyclonic Storms. Other three storms
failed to make a landfall, Vayu weakened off
Gujarat Coast as a Depression, Kyarr, which was a
Super Cyclone dissipated close to the coast of
Somalia, Maha also weakened before it could hit
the Gujarat Coast. The frequency of storms has
been high this time, but majority did not hit the
coast. Bay of Bengal had three storms, Pabuk
which came from Thailand in January, entering
Andaman Sea did not make landfall. The recent
Bay Cyclone Bulbul was also strong enough and
only weakened from a Very Severe Cyclone to a
Severe Cyclone at the time of landfall.
The maximum crop damage was reported from
Western Madhya Pradesh, which received 61 per
cent surplus rains. While 40 to 50 per cent of
soybean crop has been hit in Madhya Pradesh,
which is the biggest producer of the oilseed, 30 to
40 per cent of groundnut and up to 30 per cent of
cotton crops have been affected in Gujarat.
Sugarcane, cotton, rice, soybean, tur dal,
groundnut were among the worst hit. The sowing
was delayed in the State to mid-July. Heavy rains
after sowing hindered germination. The rains in
early August adversely affected the crop at the
early vegetative state. Excess rains in the period
between September 7 and 13 caused severe
damage to the crops by inducing flower shedding
and impacting seed setting.
As many as six States – Madhya Pradesh,
Maharashtra, Gujarat, Rajasthan, Karnataka and
Bihar – suffered severe floods, while eight others,
including Assam, Andhra Pradesh, Kerala, Odisha
and Punjab, experienced moderate floods during
this southwest monsoon season, which witnessed
development of two cyclones, one deep
depression, one depression and 10 low pressure
areas.
Saurashtra and Kutch regions in Gujarat received a
surplus of 66 per cent, the highest since 2010. The
districts most severely hit are Bharuch, Chhota
Udaipur, Narmada, Botad, Dwarka, Jamnagar,
8ISSUE DEC. 2019
Junagadh, Kutch, Morbi, and Surendranagar.
Widespread damage to the groundnut and cotton
crops has been reported from most of these
districts.
Excess rains in late September when the
groundnut crop was mature and ready to be
harvested have infused fungal infection in the
crop which has adversely impacted both the yield
and the quality. The excess rains have caused
inundation in the fields and harvesting has been
delayed by 15-20 days.
Simultaneously, excess rains have induced flower
shedding in the late sown cotton crop and
damaged the quality of the opened ball. Yield has
been adversely impacted and the quality also
suffered. Around 30-40 per cent of the groundnut
crop and 20-30 per cent of the cotton crop have
been completely damaged.
On Maharashtra Unseasonal rain in O c t o b e r a n d N o v e m b e r h a s ruined kharif crops on over 54 lakh hectare of the 140 lakh hectare under c u l t i v a t i o n .
Agriculture minister of Maharashtra one-third of the total area under cultivation or crops on over 54 lakh hectare have been affected by the unseasonal rainfall. Cotton and soybean crops on 17 lakh hectare each have taken the biggest hit. Other crops lost include jowar, bajra, maize, vegetable and fruits. The otherwise drought-prone Aurangabad division is the worst-hit, with over 60% or 22 lakh hectare of the cultivated area damaged.
There was delay in arrival of rains this year, which affected sowing in many areas, and now, farmers are facing huge losses due to unseasonal rain.
COMMODITY OUTLOOK: SOYBEANPositive trends are featured in Soybean complex
during last two months amid mixed sentiments in
the market. Expectation of lower production due
to unseasonal rain and slow arrivals in mandi keep
price supportive. Stockiest are building
inventories because of lower output projections.
Already unseasonal rains impacted soybean crop
in Madhya Pradesh badly and India's 2019-20
soybean output is feared to fall 17.7% at 90 lakh
tons, said SOPA.
As per recent updates of SOPA, India may harvest
17.7% lower Soybean crop to 89.9 lakh tonnes in
2019 against 109.3 lakh tonnes in 2018 on account
of heavy rainfall at maturity period of time. The
major growing Soybean states like Gujarat,
Karnataka, Madhya Pradesh may harvest lower
Soya crop by 30% to 0.86 lakh tonnes, 7.1% to 2.69
lakh tonnes,31.1% to 40.10 lakh tonnes
respectively against last year record. However,
Farmer may get 5.7% higher Soybean to 36.29 lakh
tonnes in Maharashtra in the current season. The
association has projected India's soybean output
in 2019-20 at 89.84 lakh ton, along with a carryover
stock of 1.70 lakh tons and imports of 3 lakh tons.
Hence, total availability of soybean in 2019-20 is
pegged at 94.54 lakh tons, of which 12 lakh tons
would be retained for sowing by farmers and
82.54 lakh tons for crushing, direct use and
exports. SOPA said.
India's export of soymeal during 2019-20 (Oct-Sep)
is likely to fall sharply to 10 lakh tons from 21.79
lakh tons in the year ago period, according to data
released by the SOPA. The fall in exports during
October could be because the government has
stopped giving Merchandise Export Incentive
Scheme (MEIS) benefits on overseas sale of
soymeal with effect from August 1. SOPA has
raised this matter with the Commerce and
Industry Minister Piyush Goyal stating that
suspension of MEIS benefits would hit exports and
affect the industry.
9 ISSUE DEC. 2019
On international front CBOT Soybean future prices
traded higher side recover from recent low as
China offered to exempt some U.S. shipments
from import tariffs. China offered 10 million
tonnes of tariff-free quota to major Chinese and
international soybean crushers to import
soybeans from the United States.
Soybean harvesting Now Supplies are remained
higher side due to good pace of harvesting of
Soybean crops. Farmers in MP have harvested
almost 80% of Soybean crop of this season and
stockiest are very active at the current level. While,
in Rajasthan, 30 to 40% harvesting has been
completed so far. In Maharashtra, harvesting pace
is slow due to election activities and late sowing
varieties of soybean crop. However, NAFED
procurement process of Soybean and lower crop
estimates of this season may support Soybean
prices from any major fall. NCDEX future prices of
Soybean traded higher side due to buyers'
interests in the market. CBOT prices increased as
China offered to exempt some U.S. shipments
from import tariffs.
Soybean Indore plant prices Positive trend as
expectation of fall in production late in arrivals in
major mandi and steady demand from millers
keep supportive for Price. After heavy supplies in
the market and. Prices may decline later on in
expectation of heavy new crop supplies in coming
week. Prices are likely to trade in the range of 3750
to 4000 in next Months. The market sentiments
SOYABEAN Technical Outlook:
Soybean Near month future trend positive price
rose rich at4100 from last few session as
speculators are moderate bullish on future
market as supportive fundamental over fall in
production as unfavorable weather at time of
maturing and harvesting crops. Over all soybeans
future price may trade in upper range of 3750 to
4100 if it crosses above 4100 next resistance at
4250. On down side below 3750 level next support
at 3660.
10ISSUE DEC. 2019
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Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or
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are now depending on the surplus bean stocks to
be carried over to the next marketing year, Kharif
harvesting pace, millers demand & weather
condition and Kharif crop size estimates. Over all
outlooks moderate positive.
ECONOMIC CALENDER
th16 December (Monday)07.30: CN Industrial Production (YoY) (Nov)
07.30: CN Chinese Industrial Production YTD
(YoY) (Nov)
20.15: US Manufacturing PMI (Dec)
th17 December (Tuesday)15.00: US Employment Change 3M/3M
(MoM) (Oct)
19.00: US Building Permits (Nov)
19.00: US Housing Starts (Nov)
20.30: US JOLTs Job Openings (Oct)
th18 December (Wednesday)05.20: JP Trade Balance
15.30: EU CPI (YoY) (Nov)
21.00: US Crude Oil Inventory Report
th19 December (Thursday)08.30: JP BoJ Interest Rate Decision
15.00: UK Retail Sales (MoM) (Nov)
17.00: IN RBI MPC Meeting Minutes 17.30:
UK BoE Interest Rate Decision (D)
19.00: US Philadelphia Fed Mfg Index
20.30: US Existing Home Sales (Nov)
th20 December (Friday)07.00: CN PBoC Loan Prime Rate 19.00: US
GDP (QoQ) (Q3)
19.00: US Personal Spending (MoM)
(Nov)
20.30: US Michigan Consumer Sentiment
(Dec)
rd23 December (Monday)10.00: JP All Industrial Activities
20.30: US New Home Sales (MoM) (Nov)
20.30: US New Home Sales (Nov)
th24 December (Tuesday)19.00: US Core Durable Goods Orders (MoM)
(Nov)
19.00: US Durable Goods Orders (MoM)
(Nov)
th25 December (Wednesday)Christmas Day Holiday
US, UK, India
th 26 December (Thursday)06.30: UK UK - Boxing Day
19.00: US Unemployment Claims
21.00: US Natural Gas Storage
21.30: US Crude Oil Inventory Report
th 27 December (Friday)05.20: JP Industrial Production (MoM) (Nov)
14.30: EU ECB Economic Bulletin
20.30: US Revised UoM Consumer Sentiment
th 30 December (Monday)19.00: US Goods Trade Balance
20.30: US Pending Home Sales
st 31 December (Tuesday)06.30: CN Manufacturing PMI
06.30: CN Non-Manufacturing PMI
19.30: US HPI m/m
20.30: US CB Consumer Confidence (Dec)
st 01 January (Wednesday)
New Year's Holiday
Japan, China, UK
nd 02 January (Thursday)07.15: CNY Caixin Manufacturing PMI (Dec)
14.30: EU Manufacturing PMI (Dec) 15.00: UK Manufacturing PMI (Dec)
18.45: US ADP Non-Farm Employment Change
20.15: US Manufacturing PMI (Dec)
rd 03 January (Friday)00.30: US FOMC Meeting Minutes 19.00: US
Average Hourly Earnings m/m
19.00: US Non-Farm Employment Change
19.00: US Unemployment Rate
19.00: US ISM Manufacturing PMI
th06 January (Monday)14.25: EU German Final Services PMI
20.30: US ISM Non-Manufacturing PMI
th07 January (Tuesday)19.00: US Trade Balance
19.00: US Factory Orders m/m
th08 January (Wednesday)12.30: EU German Factory Orders m/m
18.45: GBP Halifax House Price Index m/m
21.00: US Crude Oil Inventory Report
th09 January (Thursday)12.30: EU German Trade Balance
18.00: EU ECB Monetary Policy Meeting
Accounts
21.00: US Natural Gas Storage
th10 January (Friday)20.30: US Prelim UoM Consumer Sentiment
Ravi Diyora - Head of Research | Somil Gandhi - Asst. Manager | Ronak Bhavsar- Asst. Manager
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