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Tuesday, 19 February 2019

MCX UPDATES

BULLION - MCX Gold and Silver may note some gains tracking cues from international exchange. COMEX gold trades higher near $1348/oz and has tested the highest level since April 2018. Gold has benefitted from general correction in US dollar index as market players position for FOMC minutes and US-China trade talks. FOMC minutes due today will reflect on Fed�s stance on rate hikes as well as bond reduction plan. Disappointing US economic data and global economic challenges indicate that Fed may maintain patient rate hike stance. Meanwhile, minutes may show that there were discussions on ending bond reduction plan. US-China negotiations resume Tuesday and are scheduled to continue through Friday. Meanwhile, he US is asking China to keep its currency stable as part of the negotiations. It is likely that we may not see a major breakthrough this week amid possibility of US extending the March 1 deadline and amid possibility of a meeting between US and Chinese President. Gold and other precious metals have also benefitted from rally in palladium price which has hit record high level today on supply tightness concerns. ETF outflows however show weaker investor interest in gold at higher price. Gold holdings with SPDR ETF fell by 0.58 ton to 792.446 tonnes. Gold has rallied sharply after breaking past the $1330/oz level and the rally will sustain only if we see further signs of dovish tilt in Fed�s monetary policy stance.

ENERGY- Crude Oil- MCX Crude may note choppy trade tracking cues from international exchange but overall bias is still on the upside. NYMEX crude trades in a narrow range above $56 per barrel holding on to recent gains. Supporting crude price is supply disruption at Saudi�s Safaniyah oilfield and Saudi Arabia�s pledge to deepen production cuts as part of OPEC-non OPEC production cut deal. Meanwhile, reports noted that Russian President Vladimir Putin and Saudi King Salman Bin Abdulaziz agreed to extend their joint cooperation on the global oil market. This will ease market concerns that Russia�s hesitance on continuing with production cuts. However, weighing on crude price is higher US output. As per US EIA latest drilling report, crude production from shale resources is expected to rise by another 1% in March. Also weighing on price is expectations of another increase in US crude oil stocks. Amid other factors, crude remains in a range as market players focus on US-China trade talks. US-China negotiations resume Tuesday and are scheduled to continue through Friday. As per reports, the US is asking China to keep its currency stable as part of the negotiations. Weakness in US dollar ahead of FOMC minutes has also lent some support to commodities at large. Crude may witness choppy trade amid positioning near contract expiry but buying on dips is recommended as supply concerns persist and US-China trade talks continue to progress.

Natural Gas- MCX Natural gas may note mixed trade in line with international market but selling could be considered at higher levels. NYMEX natural gas trades marginally lower near $2.65/mmBtu after a 1.4% gain in previous session. Forecast of cold weather in some parts of US and expectations of a bigger than average decline in gas stocks has lent some support to price. The sharp rise in crude oil price has also lent some support to gas price. However, weighing on price is nearing end of high demand winter season and higher US output. Mixed factors may keep gas in a range however selling could be considered at higher levels as ending winter season may keep a check on demand expectations.

BASE METAL - Base metals on LME trade sideways to higher today after most metal ended in green yesterday. LME Nickel was the best performer with 1.65% gains followed by 0.7% rise in Copper and Zinc prices. In other metals however Aluminium ended unchanged while Lead closed 0.4% lower.


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Monday, 18 February 2019


 
BULLION - MCX Gold and Silver may witness choppy trade in line with international market but buying could be considered at lower levels. COMEX gold trades near $1328/oz after testing the highest level since April 2018. Gold has benefitted from correction in US dollar index from recent highs as market players await more clarity on US-China trade and Fed monetary policy stance. US-China trade talks will continue in Washington this week and while talks are progressing well there has been no concrete announcement yet. Also market players are assessing the possibility of US extending the March 1 deadline and potential of a meeting between US and Chinese President. Meanwhile trade worries rose as US investigators submitted report on the effect of imports of automobiles and automobile parts on the national security of the US increasing possibility of auto tariffs. European Union vowed prompt retaliation if the US imposes tariffs on imported vehicles. FOMC minutes due this week will reflect central bank stance on rate hikes as well as balance sheet reduction plan. Amid other factors, ETF outflows show weaker investor interest however this may change if price holds near $1330/oz levels. Gold may witness choppy trade awaiting fresh cues however overall bias is still positive given increasing global uncertainty and dovish tilt of major central banks.

ENERGY- Crude Oil- MCX Crude may witness choppy trade in line with international market but overall bias is still positive. NYMEX crude trades near $55.75/bbl after hitting a November 2018 high of $56.06/bbl earlier this week. Brent crude trades weaker near $66/bbl after yesterday modest gain. Crude rallied sharply last week as rally in US equity market was coupled with Saudi�s pledge to deepen production cuts and supply disruption at Saudi�s Safaniyah oilfield, world's largest offshore oilfield. The rally came to a halt as market players assess US-China trade talks as well as longevity of supply outage in Saudi Arabia. Talks between US and China are progressing however there has been no concrete announcement yet while there is a possibility that US may extend the March 1 deadline. Tensions between US and European Union rose after EU vowed prompt retaliation if the US imposes tariffs on imported vehicles. On supply side, there is not much clarity on how long the supply disruption in Saudi will continue. OPEC has achieved 70% compliance with production cut deal that will run from January to June and Saudi has indicated that it is willing to deepen cuts. In further signs of falling supply from Saudi, reports noted that Saudi exports fell 6.7% to 7.687 million barrels per day in December. Crude�s rally is also challenged by rising US crude stocks, record high US crude production and Russia�s hesitance in extending cooperation with OPEC. Crude has rallied sharply in last few days and lack of fresh factors could result in some profit taking but overall bias is still positive given progress in US-China trade talks and OPEC�s production cuts.

Natural Gas- MCX Natural gas may note mixed trade in line with international market but sell on rise is suggested.
NYMEX natural gas trades mixed near $2.63/mmBtu holding on to last week�s minor gain. Natural gas has seen some buying interest after recent drop to 1-year low. US weather forecasts are mixed as cold snap is forecasted in western and Midwest US while warmer weather is seen in East Coast. On supply front, production remains high while smaller than average decline in gas stocks has eased tightness concerns. Drop in rig count however questions the sustainability of production growth. Natural gas may witness choppy trade unless there is clarity on weather front but overall bias remains weak as winter is nearing an end and US supply is not as tight.

BASE METAL - Base metals on LME trade sideways to lower today following mixed movement yesterday. LME Lead was the worst performer with 2.3% drop followed by 0.6% slide in Zinc prices and modest 0.2% decline in Aluminium prices. In other metals however Copper prices ended with 1.4% gains while Nickel ended 0.4% higher.



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Soybean futures (Mar) is likely to witness sell on rise from 3775 & is expected to test 3700 levels on the downside. 


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The initial estimates coming from the Soybean Processors’ Association (SOPA) shows that in the upcoming Kharif season output is likely to rise by a staggering 38% on a sharp increase in average yield across the country. India’s soybean output at 11.48 million tonnes this year compared to 8.3 million tonnes in the previous year on favourable climatic condition. This increase in production is being attributed to the major producing state in Madhya Pradesh wherein the yield is estimated to rise by 30.5% to 1,094 kg per ha for the current season from 838 kg from the previous season. The survey also highlighted that in Maharashtra output is estimated to rise by 32% to 3.84 million tonnes for this year from 2.91 million ha last year. Soy oil futures (Mar) is expected to face resistance near 770 levels & trade with a downside bias. Demand in the physical market is subdued from millers and crushers with ongoing lean season for soybean and oil market. CPO futures (Mar) is expected to plunge further & test 555 levels on reports of higher imports. The latest statistics show that imports of palm oils including RBD Palmolein and CPO touched 23.18 lakh tonnes (lt), up from 22.74 lt reported in the same period last year. Mustard futures (Apr) will possibly remain stable in the range of 3900-3940 levels. The changing weather patterns causing rainfall over the major growing regions where the crops are in the fields are bringing concerns over the production scenario.


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Cotton futures (Feb) is expected to bounce back amid short covering and lower level buying taking support near 19990.


On the spot markets, cotton prices are expected to remain firm this year due to lower production in the country, apart from rising consumption. In the international markets, the traders are keeping an eye on what's going on over in Beijing for some positive news. High-level officials from the US and China are in talks as a critical trade war deadline is getting closer since March 1 marks the deadline for the current 90-day pause in the trade war. Chana futures (Mar) is expected to intensify its rally & test 4350 levels. Dal mills have kicked off stocking to build inventory after a jump in arrival of pulses from fresh harvest that is likely to double up in coming weeks. Dal mills purchase raw pulses from market and then process it into dal of various grades. On processing 60% comes out as dal, while 25% goes as cattle feed. The rest is wasted. Another reason for the upside momentum is being attributed to the market talks that Nafed will not sell chana in open markets and will go to build buffer stock around 10 lakh tonnes. The trend of mentha oil (Feb) is bullish & may take support near 1590 levels. Weather disturbances in the major growing areas are giving signals of delayed sowing in the key growing areas of Uttar Pradesh. Moreover, demand from both domestic and export fronts are emerging at existing price levels. Export demand has started to pick up from China. 

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The upside in turmeric futures (Apr) may remain restricted near 6400 levels. 

Thenew crop arriving in the key producing regions of Tamil Nadu and Telangana in addition with expectation of a higher crop may keep the upside capped. The deficiency of cultivation area in Telangana & Tamil Nadu has been covered up by Maharashtra, where the area under turmeric has increased substantially this year and hence they are expecting an increase of 15 per cent in turmeric production in 2018-19. Also, the demand is sluggish mainly due to the higher moisture content in the produce being brought by farmers to the markets. According to the marketparticipants this season there is hardly any demand, whereas normally, it comes in from January 15 and peaks during March. Jeera futures (Mar) is seen taking a Uturn upside towards 15880-16000, forming a base near 15400 levels. Taking advantage of lower level buying the market participants have started taking long positions as this season India has become the sole supplier of jeera to the world. The competitive producers Syria & Turkey are getting washed out of trade & uncompetitive in the export market. The exporters are getting ready to begin their buying spree quality of this year crop is expected to be good. With arrivals of the new crop expected by mid-February and prices already moving higher, the sentiments are turning to be bullish. Coriander futures (Apr) will possibly trade range bound within 6065-6320 levels. The downside may remain capped as the spot markets in in Rajasthan, Gujarat and Madhya Pradesh are sending positive signals since the farmers are not interested in bringing their produce in mandis at existing lower prices. 

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Nifty likely to open higher.

The Nifty50 is likely to open higher on Tuesday following positive trend seen in other Asian markets. The index closed 83 points lower at 10,640 on Monday. Trends on SGX Nifty indicate a positive opening for the broader index in India, a rise of 28.5 points or 0.27 percent. Nifty futures were trading around 10,681 -level on the Singaporean Exchange. Asian shares hovered near a four-month peak on Tuesday, supported by hopes that Sino-US trade talks were making positive progress and expectations of policy stimulus from central banks, said a Reuters report. US oil prices hit a three-month high on Tuesday, buoyed by production cuts led by the Organization of the Petroleum Exporting Countries.

Global Market:
Asian Markets: Asian markets are higher today as Chinese and Hong Kong shares show gains. The Shanghai Composite is up 0.80% while the Hang Seng is up 0.37%. The Nikkei 225 is not trading..
US Markets: North and South American markets finished mixed as of the most recent closing prices. The S&P 500 gained 1.09%, while the Bovespa led the IPC lower. They fell 1.04% and 0.02% respectively.
European Markets: European markets finished mixed as of the most recent closing prices. The CAC 40 gained 0.30%, while London's FTSE 100 was off 0.24%. Shares in Germany were unchanged with the DAX at 11,299.20.

Major Headlines of the day:

Rupee opens at 71.48 per dollar.

India's Ambuja Cements Ltd on Monday posted a 58.8 percent jump in fourth-quarter profit, exceeding analysts' estimates, as it logged higher cement sales and a tax benefit. Standalone profit, which includes a joint operation accounted on a proportionate basis, came in at 5.37 billion rupees ($75.22 million) for the quarter ended December 31, from 3.38 billion rupees a year earlier, the company said.

Grasim Industries signed a definitive agreement to acquire the Chlor-Alkali Business (CAB) of KPR Industries (India) Ltd (KPR) by way of a slump sale, for a cash consideration of Rs253cr. The transaction will be funded through internal accruals. KPR would in turn utilize Rs253cr towards a full and final settlement of the lenders' dues under a One-Time Settlement. The transaction is subject to regulatory approvals, the company said in the regulatory filing on Monday.

Cipla to acquire 11.71% stake in Wellthy Therapeutics The acquisition will be done for a cash consideration of Rs10.5cr, the company said in a press note.

Earnings Reaction To Watch
LINDEINDIA

Trend in FII flows:- The FIIs were Net Value of Rs -1239.79 segment while the DIIs were Net Value of 2336.74 the provisional figures.

Securities in Ban For Trade Date 19-FEB-2019
1. ADANIENT
2. JISLJALEQS
3. JETAIRWAYS
4. RPOWER
5. PCJEWELLER
6. CGPOWER 
7. RELINFRA
8. IDBI



Investment  trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance. CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
 

For more details call on 9977499927 or visit our website www.capitalstars.com


DAILY NIFTY SMART MOVERS 
SCRIPTS PRICE VOLUME (IN 000�S) PRE. CLOSE CHANGE (%) CHANGE (Rs.)
Bharti Infratel 314.00 119.90 307.00 2.28 7.00
Zee Entertainment 437.65 248.46 429.85 1.81 7.80
Britannia Inds 2907.50 31.65 2860.85 1.63 46.65
ONGC 137.10 464.54 135.10 1.48 2.00
Tata Motors 163.00 1406.31 161.10 1.18 1.90


DAILY NIFTY TOP LAGGARDS

SCRIPTS PRICE VOLUME (000�S) PRE. CLOSE CHANGE (%) CHANGE (Rs.)
Tata Power 65.40 401.68 69.25 -5.56 -3.85
Crompt.Greaves Cons. 193.55 33.62 202.00 -4.18 -8.45
Bajaj Hold & Invest 3039.00 1.23 3153.10 -3.62 -114.10
Ambuja Cement 197.85 398.40 204.95 -3.46 -7.10
Cummins India 662.20 34.74 685.00 -3.33 -22.80


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Investment  trading in securities market is always subjected to market risks, past performance is not a guarantee of future performance. CapitalStars Investment Adviser: SEBI Registration Number: INA000001647
 

For more details call on 9977499927 or visit our website www.capitalstars.com