Global and domestic commodity and currency experienced their worst and best performance in 2019. Trade tensions between the US and China, Brexit worries, and geo-political tensions in the Middle East kept currency and commodity markets highly volatile. The US Federal Reserve and other central banks globally cut interest rates and announced QE programs to restore global growth. Further, 2019 was a very challenging year for global economies, and steps taken by global central banks will be visible in 2020.
We expect calendar year 2020 to be better than 2019 for global economies as the US and China will reach the first phase of the trade deal at the start of the year, and more trade negotiations are expected during the year. Brexit will be a reality in 2020 after UK Prime Minister winning Brexit deal vote by in the parliament. Economic growth in China and European Union will also revive in 2020.
At the domestic front, a thumping victory for the BJP in the 2019 parliamentary elections will continue to push economic reforms, which will start delivering results from 2020. Rising crude oil prices and inflation will be key factors watched by Reserve Bank of India, and that will drive the USD-INR pair in the year 2020.
Review of our 2019 picks:
Our top picks of the year 2019, viz. gold, crude oil and coriander hit all the given targets during the year. However, cotton and the USD-INR pair missed the target but gave positive returns from our recommended levels.
Top picks for 2020:
< Silver
< Steel
< Guar Seed
< Turmeric
< USD-INR
Silver
Trend – Will continue to shine in 2020
Precious metals delivered overwhelming returns in the 2019 and gained more than 20%. Safe-haven demand emerged due to geo-political tensions, heightened risk in global economies due to the ongoing trade war between the US and China and Brexit worries. Silver prices gained more than 20% in the last year; amid hopes of a revival in global growth, we expect the positive momentum to continue in 2020.
Silver is more of an industrial metal than a precious metal. Around 50% silver is used in industrial applications. However, in 2019, we witnessed only the precious metal aspect of silver move in 2019. A possible trade deal between the US and China, the Brexit deal, and the extension of the QE program by European Union will support the industrial demand of silver in 2020. China is one of the biggest users of silver, and the latest Chinese industrial output data suggest the revival of the industrial demand in China. On the hope of a revival in global growth, the demand for silver as a precious as well as industrial metal will increase in 2020.
Technically, the above chart is indicating that silver may test the new high of Rs51,200 to Rs53,800 in 2020.
< In the second half of 2019, silver turned bullish and gained more than 25%. It found strong support around Rs34,980 and moved upwards. Silver made a high of Rs.51,487 during 2019, which was the highest level since July 2016.
< A strong breakout after a three-year price consolidation is noted on the technical chart, which suggests that prices are likely to move upwards for at least the next two quarters.
< Silver prices are trading near the long-term trend line resistance of Rs47,700. If there is a breakout above the given trend line resistance, it will open the door for the next rally towards Rs51,200–53,800.
< If prices are unable to break and sustain above trend line of Rs47,700, they could test support levels of Rs41,500–40,000 again and are expected to get support around this level.
< If prices break and sustain below Rs40,000, silver will witness selling pressure and could test Rs.34,800, but chances of this happening are remote.
Outlook: Considering the technical and fundamental factors, we believe that silver is still in a bullish trend. However, it would need to break out above Rs47,700 on a monthly closing basis to test new highs of Rs.51,200–53,800. We suggest buying silver in the price range of Rs44,800–44,500 with a strict stop loss of Rs41,400 on a monthly closing basis for the target of Rs51,200–53,800.
ICEX Steel long
Trend – Upside price breakout expected
2019 was the worst year for steel prices due to the ongoing trade war between the US and China, Brexit worries, and slower global growth. Indian steel demand started to decline from September 2018 onwards when the US imposed tariffs on steel imports. Indian steel exports declined by 32% in 2018 to 11 million tonnes as compared to the previous year. As per data from ICRA ratings, demand for steel declined further in 2019 and witnessed negative growth of 1.8% in the first two months of the last quarter of 2019. Global steel prices declined by 15–20% in 2019, and inventory levels are also rose due to a lack of global demand amid the ongoing trade war between the US and China and Brexit issues. However, recent developments on the US-China trade deal and latest remark of the US Treasury Secretary on signing the first phase of the trade deal and the scrapping of tariffs by China on some of the US products will change global trade sentiments. Further, upbeat data on Chinese industrial output, US unemployment, and ADP non-farm employment suggest that global steel demand will improve and prices will also start rising from the start of 2020. The downward trend of steel prices will stop in 2020 and a gradual upward move is likely to start from January-February 2020. Demand from automobile and real estate sectors will also revive on the prospect of a better domestic Rabi crop production this year. Better crop realization will surely boost steel demand from rural India from March 2020 onwards, we are expecting an upside move of 8–10% in steel prices in 2020.
ICEX steel long has witnessed a strong pullback from the yearly low Rs 24,720, and settled at Rs31, 760 as compared to the previous year’s close of Rs33,340, with the loss of 4.70%
Technically, on the monthly chart, STEEL LONG is trading on the verge of the 61.8% Fibonacci retracement resistance of 2019. Further, a long bullish candlestick pattern on the monthly chart is indicating a bullish outlook. A break and closing above Rs31,560 would open the door for a bullish rally towards the next resistance of Rs34,500–35,600.
On the downside, Rs28,850 will act as a decisive support, and only a break below this level will lead to a correction towards Rs27,000 and Rs24,680.
Outlook: Considering the technical and fundamental factors, we believe that demand for steel is expected to revive in 2020 and will support prices. However, a breakout above Rs31,560 on a monthly closing basis would be needed to test new highs of Rs34,500–35,600. We suggest buying in steel long futures in the price range of Rs 28,800–28,850 with a strict stop-loss of Rs26,800 on a monthly closing basis for the target of Rs34,500–35,600.
GUAR SEED
Trend – Bullish trend reversal
2019 was the worst year for industrial commodities due to slower global demand and trade tensions between major global economies. Fear of slow global growth due to the ongoing trade war and Brexit worries impacted demand of industrial commodities during 2019. However, scenario is changing gradually on the eve of year 2020 after recent first phase of trade deal between world’s two biggest economies. We believe that the following major factors will support demand of industrial commodities, especially the guar complex during 2020.
- Easing trade tensions between the US and China: After the first phase of the trade deal between the two countries and a positive remark from the US President and Treasury Secretary about signing the first phase of the trade deal, negotiations for the next phase will start soon and will help to increase demand for crude oil in 2020, and will support prices of the guar complex.
- Tariff waiver on US imports by China: China is one of the biggest consumers and importers of agricultural commodities in the world. Recently, China announced a tariff waiver on some agriculture commodities imported from US, easing trade tensions between the two countries will support Chinese demand in 2020. Chinese industrial growth will support crude oil prices and ultimately support prices of the guar complex.
- Higher crude oil prices: Higher crude oil prices will increase the export demand of guar gum in 2020 and will support guar seed and guar gum prices. Easing geo-political tensions and the extension of deeper oil cuts by OPEC and allied countries will continue to support crude oil prices in 2020 and will also support prices of guar gum.
These are the major factors that will support the export demand of guar gum in 2020 and, in turn, will support prices of guar seed.
Guar seed traded in a small range in 2019 and, after swinging between gains and losses, settled at Rs 4,226levels, down 2.30% as compared to the previous year’s close of Rs4,327 levels. During the year, it scaled a high of Rs4,508 and slipped to a low of Rs3,714.
Further, on observing the chart above, we believe that guar seed may test a new high in 2020. A long-term consolidation is forming a bullish pennant pattern on the monthly chart.
< Guar seed prices are trading on the verge of a long-term trend line resistance of Rs4,450, and a breakout above this level would confirm the upside target of Rs4,750–5,050.
< Cluster of indecisive candlesticks is also indicating that a big move is likely for guar seed.
< Crucial support for the year is seen at Rs3,750 on closing basis, and in case guar seed breaks this support, only then could it test next support of Rs3,450–3,120.
Turmeric Trend – Bullish
Sowing of the turmeric Rabi crop is done in most of the producing states. Turmeric is mainly produced in the state of Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. Due to excess rainfall this year, turmeric sowing is expected to be lower by 15–20% in most of the producing states, and farmers are also keeping away this year from turmeric sowing due to lower prices since the last two years. Total turmeric production in India during last three years has also declined from approximately 4,38,000 metric tons in crop year 2017-18, to 4,20,500 during 2018-19, to 3,63,400 in crop year 2019-20 (estimated) . Sowing in crop year 2020-21 starting from March-April next year is also expected to be lower. As per DGFT data, Indian turmeric export has also declined by around 6% last year. India exported 1,06,571.64 metric tons of turmeric during January to October 2019 as against the export of 1,13,413.76 metric tons in the same period last year. India exported turmeric worth 88,187 metric tons in 2015, 1,14,524 metric tons in 2016, 1,15,186 metric tons in 2017, and 1,29,416 metric tons in 2018. Export declined in the year 2019 due to slower global demand on account of the US-China trade war. But after the first phase of the trade deal between the US and China, we expect exports increased in 2020. Lower production and increased global demand will support turmeric prices in 2020.
Turmeric prices at the NCDEX stalled their bearish trend and recovered from the yearly low of Rs5,556 and settled at Rs 6,560 as compared to the previous year’s close of Rs6,740 levels, with 2.60% yearly loss.
The above technical aspects are indicating a bullish outlook for turmeric prices in 2020. Since March 2016, it has been seen a corrective wave from the peak of Rs10,240, which was completed at Rs5234, the lowest level since June 2016.
Since then, it has been converted into an impulsive wave structure. Now, turmeric prices appear to be ready for an impulsive 3-wave pattern with a projected target of Rs7,800–9350 levels till the first half of 2020. Further, if it continues to trade above its previous wave, there is a strong likelihood for an upside move towards the projected levels.
On the other hand, the maximum upside level is seen at Rs10800 for the year, as it may require a slight correction towards Rs7,000-6,800, that would be wave 4, which would again be an opportunity to go long in turmeric with a stop-loss below Rs5,650.
Outlook: Considering the technical and fundamental factors, we believe that lower production and increased export demand will support turmeric prices. However, it would need to give breakout above R.6,980 on a monthly closing basis to test new highs of Rs7,800–9,350. We suggest buying turmeric futures in the price range of Rs6,400–6,350 with strict stop loss of Rs 5, 650 on a monthly closing basis for the target of Rs7,350–Rs7,800 and Rs9,350.
Dollar/Rupee
Trend – Expected to retreat from 73.50–74.00 levels
The persistent US-China trade tensions, fears of a hard Brexit, and global slowdown fears dominated the value of the USDINR pair for the second consecutive year. The pair made a high a yearly high of 72.40 and settled at 71.385 as compared to the previous year’s close of 69.7690 levels. Concerns over slower global economic growth arose after China lowered its economic growth forecast and announced a major tax cut. Further, Moody's Investors Service trimmed India's outlook to "negative" from "stable", leading to increased demand for the safe-haven dollar, which inched higher towards 72.40 levels. In the meantime, comments from US President Donald Trump and his Chinese counterpart made it roller coaster ride for the dollar the entire year.
However, the prospects of a rate cut by the Federal Reserve and a slew of disappointing data from US sent US Treasury yield towards its lowest level since September 2017, which has lifted the weakness in the greenback against the rupee and other major currencies. On the domestic front, the Indian general election in May 2019 lifted some pressure on the USDINR pair from May-June 2019. Further, Brent crude oil prices plunged after a surprise surge in American crude inventories alleviated concerns over a supply crunch, while fears of a full-blown trade war between the US and China weighed on the outlook for demand. Further, the government of India slashed corporate tax and announced various others measures to pump-prime the economy and boost investments in the month of September and a series of economic stimulus announcements globally helped ease concerns over global growth, which also weighed on the sentiment.
Looking ahead, concerns over the US-China trade war and Brexit headlines will continue to drive US dollar movements in the next year. Meanwhile, domestic political and economic indicators will be the challenging factors for the USDINR pair as the WPI inflation in October has crashed to a 40-month low of 0.16 %, which is creating a deflationary pressure. Further, factory output shrank 4.3%—the lowest in almost 8 years, worst performance in the series that began April 2012—highlighting the persistent structural slowdown in the economy and firming up expectations of further monetary easing and more stimulus packages for the economy. In its December 2019 policy, the RBI upwardly revised inflation and downwardly revised growth forecasts for H2FY19. The RBI upwardly revised H2FY19 CPI forecasts to 5.1%–4.7% from 3.5%–3.7% in the October policy, while the GDP growth outlook forecast for H2FY20 is at 4.95.5% as compared to 6.6–7.2% in the October policy.
Further, after an observing the above chart, we believe that the USDINR pair may retreat from the resistance of 73.50–74.00.
< The wave count drawn on the chart is showing an ABC wave structure and any near term bounce back towards 73.00-73.50 will create a probability for a trend reversal and the USDINR pair may retest 68.00 next year.
< The above chart is also showing a long-term consolidation since December 2018, in the range of 72.50–69.50.
< On the higher side, 74.50 will act as a decisive resistance and in case the pair breaks it, there will be a possibility for a bullish move towards 75.50–77.00 in the long term.
< Crucial support for the year is seen at 68.20 and break below it may lead to a new weakness in the pair.
Disclaimer: This document has been prepared by IndiaNivesh Commodities Private Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any commodity. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the commodity and currencies mentioned in the report.
Posted by Mehul Kothari | Published on 08-JAN-2020
ISSUE HIGHLIGHTS
•Initial public offer of up to 2,80,89,887 equity shares comprising a fresh issue of 1,40,44,944 shares and offer for sale of 1,40,44,944 shares•The objects of the offer:(i)Repayment or prepayment of certain outstanding loans of our company(ii)Financing the project cost towards establishment of a new manufacturing facility, either set up directly or indirectly (through a wholly-owned subsidiary that our company may set up in the future)(iii)Upgradation of equipment at manufacturing facilities(iv)General corporate purposes, subject to the applicable lawsCOMPANY HIGHLIGHTS
•Prince Pipes and Fittings (PPF) is recognized as one of the leading polymer pipes and fittings manufacturers in India. PPF markets its products under two brand names: Prince Piping Systems and Trubore.•Due to its comprehensive product range, PPF is positioned as an end-to-end polymer piping systems solution provider.•PPF currently manufactures polymer pipes using four different polymers: UPVC, CPVC, PPR, and HDPE, and fittings using three different polymers: UPVC, CPVC, and PPR•As on October 31, 2019, PPF had a product range of 7,167 SKUs. PPF’s products are used for a variety of applications in plumbing, irrigation, and soil, waste and rain water (SWR) management.•PPF sells its Prince Piping Systems products to distributors, who then resell the products to wholesalers, retailers, and plumbers. As on October 31, 2019, PPF sold its Prince Piping Systems products to 1,151 distributors in India.•PPF sells its Trubore products directly to wholesalers and retailers. As on October 31, 2019, PPF sold its Trubore products to 257 wholesalers and retailers.Manufacturing facilitiesPPF has six strategically located manufacturing plants, which gives it a strong presence in north, west and south India.
Athal (Union Territory of Dadra and Nagar Haveli)Dadra (Union Territory of Dadra and Nagar Haveli)Haridwar (Uttarakhand)Chennai (Tamil Nadu)Kolhapur (Maharashtra)Jobner (Rajasthan) The total installed capacity of six plants is 241,211 tonnes per annum as on October 31, 2019. PPF plans to expand the installed capacity at Jobner (Rajasthan) from 6,221 tonnes per annum as on October 31, 2019 to 17,021 tonnes per annum by December 31, 2019 and to 20,909 tonnes per annum by the end of FY20. PPF plans to set up a new manufacturing plant in Sangareddy (Telangana), with a total estimated installed capacity of 51,943 tonnes per annum and plan to commence production in FY21.Financial performanceBalance sheetValuationThe company’s revenue has compounded at an annual rate of around 12% and net profit at 6% over the last three years. At the upper price band, the offer is at a P/E of 23.4X FY19 EPS. Though the company boast of a healthy return ratio ROE being 20.80%, and operating margin at 11.83%.; the concern being declining operating margin, low single digit PAT margin & high sensitivity to raw materials prices. The issue looks fairly priced. However, the possibility of a 15-20% listing gain cannot be ruled out.
Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document.This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis reportEach of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh KantFollowing table contains the disclosure of interest in order to adhere to utmost transparency in the matter:
INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time. Research Analyst has not served as an officer, director or employee of Subject Company One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart) IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH000000511 Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013. Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007. Tel (Board): 022 6240 6240 | Fax 022 6240 6241 E-mail: research@indianivesh.in | Website: www.indianivesh.in)
Posted by Mehul Kothari | Published on 14-JAN-2020
Technological advancements and digitalisation have changed the online arena for every business, and the online share trading is no exception to the trend. Over the last few years, online trading has become very popular, especially amongst the millennials and generation Y. Prevalence of smartphones, lower costs, opportunity to earn extra income, low entry barriers, ease of access, etc has had a profound impact on online trading.
Even though online stock trading today is huge, and many people are motivated to explore online trading for a rewarding career, by no figment of imagination it should be assumed that it is easy, and they can become financially self-sufficient in a short period.
Here are 5 essential online trading tips to help improve your chances of success in your endeavours as a trader-1. Do the research and gain relevant information about the markets
The economic conditions are constantly changing and it has a significant impact on the stock markets. To be successful in online share trading you have to do your research, collect relevant information and be updated about matters relating to markets. With information being available at the click of a button, it is easy to get access to information from various sources. Keeping your eyes and ears open about the official announcements being made, reading up market-related articles and financial publications can help you ace the game of online stock trading and avoid making whimsical trade calls.
2. Get acquainted with the trading terminologies and tools
Getting yourself familiar with various terminologies and trading tools beforehand is extremely important so that you do not falter when you start trading. Clearing your basics about the important workings, different types of trades, important terms are critical. If you are not clear about the basics, then you may end up placing a wrong order.
Once you are trading online, you are investing real capital and you cannot undo the trade. So, it is essential that you must be familiar with the features and the functions of the trading platform which you are going to use. Practice trading on dummy versions to get a hang of the trading interface before you can start with online trading. Once you have enough practice you will not be flustered and confused at the time of real trading.
3. Start with small capital and practice risk management
There are infinite opportunities in the trading world and you do not want one experience to be the deciding factor for you. As online trading is risky, you should always make a small start in the beginning and invest little capital. Even the most successful traders do not put their entire investible surplus for trading but use only the capital which they have to spare after they have put aside for their long-term goals such as retirement. So, invest only the capital which you can afford to lose and which will not affect your financial planning.
Another important thing to keep in mind at the time of executing trades is that the risk associated with trading is high and hence you should take adequate measures to minimise risk. Setting a stop-loss to your order will automatically stop a trade if the losses hit a particular mark and help minimise your losses.
4. Be patient and disciplined
Online trading is a great way to make an income and many have successfully made a career out of it. If the success stories of other traders have motivated you to take the plunge, then, let’s be honest, online trading is risky and not for the light-hearted. Moreover, it is not something you can master overnight or become rich overnight on a single trade. To be successful, you need to have the right mindset and should be disciplined in your approach. Make a trade plan and stick to it. Trading out of impulse or greed will not help you become successful but following a plan and trading when you see opportunities can help you achieve the desired results.
5. Select the right broker and trading platform
Last but not least, choosing the right broker and opening the best trading account online is important, and hence you should be careful about your selection. Choose a trading platform that best meets your needs and has a user-friendly interface. You should be comfortable using their software. Your success rate would be greatly affected by the timely execution of your orders. Other aspects to consider are a level of customer service and satisfaction, market reputation and competitive fee structure.
Conclusion
With the above essential online trading tips, you can give your income a boost. We at IndiaNivesh have one of the best online trading platforms at the most competitive price and also offer expert advisory and research to meet your investment needs.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing.")
Commodity Market Outlook – Top Picks for 2020
Global and domestic commodity and currency experienced their worst and best performance in 2019. Trade tensions between the US and China, Brexit worries, and geo-political tensions in the Middle East kept currency and commodity markets highly volatile. The US Federal Reserve and other central banks globally cut interest rates and announced QE programs to restore global growth. Further, 2019 was a very challenging year for global economies, and steps taken by global central banks will be visible in 2020.
We expect calendar year 2020 to be better than 2019 for global economies as the US and China will reach the first phase of the trade deal at the start of the year, and more trade negotiations are expected during the year. Brexit will be a reality in 2020 after UK Prime Minister winning Brexit deal vote by in the parliament. Economic growth in China and European Union will also revive in 2020.
At the domestic front, a thumping victory for the BJP in the 2019 parliamentary elections will continue to push economic reforms, which will start delivering results from 2020. Rising crude oil prices and inflation will be key factors watched by Reserve Bank of India, and that will drive the USD-INR pair in the year 2020.
Review of our 2019 picks:
Our top picks of the year 2019, viz. gold, crude oil and coriander hit all the given targets during the year. However, cotton and the USD-INR pair missed the target but gave positive returns from our recommended levels.
Top picks for 2020:
< Silver
< Steel
< Guar Seed
< Turmeric
< USD-INR
Silver
Trend – Will continue to shine in 2020
Precious metals delivered overwhelming returns in the 2019 and gained more than 20%. Safe-haven demand emerged due to geo-political tensions, heightened risk in global economies due to the ongoing trade war between the US and China and Brexit worries. Silver prices gained more than 20% in the last year; amid hopes of a revival in global growth, we expect the positive momentum to continue in 2020.
Silver is more of an industrial metal than a precious metal. Around 50% silver is used in industrial applications. However, in 2019, we witnessed only the precious metal aspect of silver move in 2019. A possible trade deal between the US and China, the Brexit deal, and the extension of the QE program by European Union will support the industrial demand of silver in 2020. China is one of the biggest users of silver, and the latest Chinese industrial output data suggest the revival of the industrial demand in China. On the hope of a revival in global growth, the demand for silver as a precious as well as industrial metal will increase in 2020.
Technically, the above chart is indicating that silver may test the new high of Rs51,200 to Rs53,800 in 2020.
< In the second half of 2019, silver turned bullish and gained more than 25%. It found strong support around Rs34,980 and moved upwards. Silver made a high of Rs.51,487 during 2019, which was the highest level since July 2016.
< A strong breakout after a three-year price consolidation is noted on the technical chart, which suggests that prices are likely to move upwards for at least the next two quarters.
< Silver prices are trading near the long-term trend line resistance of Rs47,700. If there is a breakout above the given trend line resistance, it will open the door for the next rally towards Rs51,200–53,800.
< If prices are unable to break and sustain above trend line of Rs47,700, they could test support levels of Rs41,500–40,000 again and are expected to get support around this level.
< If prices break and sustain below Rs40,000, silver will witness selling pressure and could test Rs.34,800, but chances of this happening are remote.
Outlook: Considering the technical and fundamental factors, we believe that silver is still in a bullish trend. However, it would need to break out above Rs47,700 on a monthly closing basis to test new highs of Rs.51,200–53,800. We suggest buying silver in the price range of Rs44,800–44,500 with a strict stop loss of Rs41,400 on a monthly closing basis for the target of Rs51,200–53,800.
ICEX Steel long
Trend – Upside price breakout expected
2019 was the worst year for steel prices due to the ongoing trade war between the US and China, Brexit worries, and slower global growth. Indian steel demand started to decline from September 2018 onwards when the US imposed tariffs on steel imports. Indian steel exports declined by 32% in 2018 to 11 million tonnes as compared to the previous year. As per data from ICRA ratings, demand for steel declined further in 2019 and witnessed negative growth of 1.8% in the first two months of the last quarter of 2019. Global steel prices declined by 15–20% in 2019, and inventory levels are also rose due to a lack of global demand amid the ongoing trade war between the US and China and Brexit issues. However, recent developments on the US-China trade deal and latest remark of the US Treasury Secretary on signing the first phase of the trade deal and the scrapping of tariffs by China on some of the US products will change global trade sentiments. Further, upbeat data on Chinese industrial output, US unemployment, and ADP non-farm employment suggest that global steel demand will improve and prices will also start rising from the start of 2020. The downward trend of steel prices will stop in 2020 and a gradual upward move is likely to start from January-February 2020. Demand from automobile and real estate sectors will also revive on the prospect of a better domestic Rabi crop production this year. Better crop realization will surely boost steel demand from rural India from March 2020 onwards, we are expecting an upside move of 8–10% in steel prices in 2020.
ICEX steel long has witnessed a strong pullback from the yearly low Rs 24,720, and settled at Rs31, 760 as compared to the previous year’s close of Rs33,340, with the loss of 4.70%
Technically, on the monthly chart, STEEL LONG is trading on the verge of the 61.8% Fibonacci retracement resistance of 2019. Further, a long bullish candlestick pattern on the monthly chart is indicating a bullish outlook. A break and closing above Rs31,560 would open the door for a bullish rally towards the next resistance of Rs34,500–35,600.
On the downside, Rs28,850 will act as a decisive support, and only a break below this level will lead to a correction towards Rs27,000 and Rs24,680.
Outlook: Considering the technical and fundamental factors, we believe that demand for steel is expected to revive in 2020 and will support prices. However, a breakout above Rs31,560 on a monthly closing basis would be needed to test new highs of Rs34,500–35,600. We suggest buying in steel long futures in the price range of Rs 28,800–28,850 with a strict stop-loss of Rs26,800 on a monthly closing basis for the target of Rs34,500–35,600.
GUAR SEED
Trend – Bullish trend reversal
2019 was the worst year for industrial commodities due to slower global demand and trade tensions between major global economies. Fear of slow global growth due to the ongoing trade war and Brexit worries impacted demand of industrial commodities during 2019. However, scenario is changing gradually on the eve of year 2020 after recent first phase of trade deal between world’s two biggest economies. We believe that the following major factors will support demand of industrial commodities, especially the guar complex during 2020.
- Easing trade tensions between the US and China: After the first phase of the trade deal between the two countries and a positive remark from the US President and Treasury Secretary about signing the first phase of the trade deal, negotiations for the next phase will start soon and will help to increase demand for crude oil in 2020, and will support prices of the guar complex.
- Tariff waiver on US imports by China: China is one of the biggest consumers and importers of agricultural commodities in the world. Recently, China announced a tariff waiver on some agriculture commodities imported from US, easing trade tensions between the two countries will support Chinese demand in 2020. Chinese industrial growth will support crude oil prices and ultimately support prices of the guar complex.
- Higher crude oil prices: Higher crude oil prices will increase the export demand of guar gum in 2020 and will support guar seed and guar gum prices. Easing geo-political tensions and the extension of deeper oil cuts by OPEC and allied countries will continue to support crude oil prices in 2020 and will also support prices of guar gum.
These are the major factors that will support the export demand of guar gum in 2020 and, in turn, will support prices of guar seed.
Guar seed traded in a small range in 2019 and, after swinging between gains and losses, settled at Rs 4,226levels, down 2.30% as compared to the previous year’s close of Rs4,327 levels. During the year, it scaled a high of Rs4,508 and slipped to a low of Rs3,714.
Further, on observing the chart above, we believe that guar seed may test a new high in 2020. A long-term consolidation is forming a bullish pennant pattern on the monthly chart.
< Guar seed prices are trading on the verge of a long-term trend line resistance of Rs4,450, and a breakout above this level would confirm the upside target of Rs4,750–5,050.
< Cluster of indecisive candlesticks is also indicating that a big move is likely for guar seed.
< Crucial support for the year is seen at Rs3,750 on closing basis, and in case guar seed breaks this support, only then could it test next support of Rs3,450–3,120.
Turmeric
Trend – Bullish
Sowing of the turmeric Rabi crop is done in most of the producing states. Turmeric is mainly produced in the state of Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. Due to excess rainfall this year, turmeric sowing is expected to be lower by 15–20% in most of the producing states, and farmers are also keeping away this year from turmeric sowing due to lower prices since the last two years. Total turmeric production in India during last three years has also declined from approximately 4,38,000 metric tons in crop year 2017-18, to 4,20,500 during 2018-19, to 3,63,400 in crop year 2019-20 (estimated) . Sowing in crop year 2020-21 starting from March-April next year is also expected to be lower. As per DGFT data, Indian turmeric export has also declined by around 6% last year. India exported 1,06,571.64 metric tons of turmeric during January to October 2019 as against the export of 1,13,413.76 metric tons in the same period last year. India exported turmeric worth 88,187 metric tons in 2015, 1,14,524 metric tons in 2016, 1,15,186 metric tons in 2017, and 1,29,416 metric tons in 2018. Export declined in the year 2019 due to slower global demand on account of the US-China trade war. But after the first phase of the trade deal between the US and China, we expect exports increased in 2020. Lower production and increased global demand will support turmeric prices in 2020.
Turmeric prices at the NCDEX stalled their bearish trend and recovered from the yearly low of Rs5,556 and settled at Rs 6,560 as compared to the previous year’s close of Rs6,740 levels, with 2.60% yearly loss.
The above technical aspects are indicating a bullish outlook for turmeric prices in 2020. Since March 2016, it has been seen a corrective wave from the peak of Rs10,240, which was completed at Rs5234, the lowest level since June 2016.
Since then, it has been converted into an impulsive wave structure. Now, turmeric prices appear to be ready for an impulsive 3-wave pattern with a projected target of Rs7,800–9350 levels till the first half of 2020. Further, if it continues to trade above its previous wave, there is a strong likelihood for an upside move towards the projected levels.
On the other hand, the maximum upside level is seen at Rs10800 for the year, as it may require a slight correction towards Rs7,000-6,800, that would be wave 4, which would again be an opportunity to go long in turmeric with a stop-loss below Rs5,650.
Outlook: Considering the technical and fundamental factors, we believe that lower production and increased export demand will support turmeric prices. However, it would need to give breakout above R.6,980 on a monthly closing basis to test new highs of Rs7,800–9,350. We suggest buying turmeric futures in the price range of Rs6,400–6,350 with strict stop loss of Rs 5, 650 on a monthly closing basis for the target of Rs7,350–Rs7,800 and Rs9,350.
Dollar/Rupee
Trend – Expected to retreat from 73.50–74.00 levels
The persistent US-China trade tensions, fears of a hard Brexit, and global slowdown fears dominated the value of the USDINR pair for the second consecutive year. The pair made a high a yearly high of 72.40 and settled at 71.385 as compared to the previous year’s close of 69.7690 levels. Concerns over slower global economic growth arose after China lowered its economic growth forecast and announced a major tax cut. Further, Moody's Investors Service trimmed India's outlook to "negative" from "stable", leading to increased demand for the safe-haven dollar, which inched higher towards 72.40 levels. In the meantime, comments from US President Donald Trump and his Chinese counterpart made it roller coaster ride for the dollar the entire year.
However, the prospects of a rate cut by the Federal Reserve and a slew of disappointing data from US sent US Treasury yield towards its lowest level since September 2017, which has lifted the weakness in the greenback against the rupee and other major currencies. On the domestic front, the Indian general election in May 2019 lifted some pressure on the USDINR pair from May-June 2019. Further, Brent crude oil prices plunged after a surprise surge in American crude inventories alleviated concerns over a supply crunch, while fears of a full-blown trade war between the US and China weighed on the outlook for demand. Further, the government of India slashed corporate tax and announced various others measures to pump-prime the economy and boost investments in the month of September and a series of economic stimulus announcements globally helped ease concerns over global growth, which also weighed on the sentiment.
Looking ahead, concerns over the US-China trade war and Brexit headlines will continue to drive US dollar movements in the next year. Meanwhile, domestic political and economic indicators will be the challenging factors for the USDINR pair as the WPI inflation in October has crashed to a 40-month low of 0.16 %, which is creating a deflationary pressure. Further, factory output shrank 4.3%—the lowest in almost 8 years, worst performance in the series that began April 2012—highlighting the persistent structural slowdown in the economy and firming up expectations of further monetary easing and more stimulus packages for the economy. In its December 2019 policy, the RBI upwardly revised inflation and downwardly revised growth forecasts for H2FY19. The RBI upwardly revised H2FY19 CPI forecasts to 5.1%–4.7% from 3.5%–3.7% in the October policy, while the GDP growth outlook forecast for H2FY20 is at 4.95.5% as compared to 6.6–7.2% in the October policy.
Further, after an observing the above chart, we believe that the USDINR pair may retreat from the resistance of 73.50–74.00.
< The wave count drawn on the chart is showing an ABC wave structure and any near term bounce back towards 73.00-73.50 will create a probability for a trend reversal and the USDINR pair may retest 68.00 next year.
< The above chart is also showing a long-term consolidation since December 2018, in the range of 72.50–69.50.
< On the higher side, 74.50 will act as a decisive resistance and in case the pair breaks it, there will be a possibility for a bullish move towards 75.50–77.00 in the long term.
< Crucial support for the year is seen at 68.20 and break below it may lead to a new weakness in the pair.
Disclaimer: This document has been prepared by IndiaNivesh Commodities Private Limited (IndiaNivesh), for use by the recipient as information only and is not for circulation or public distribution. This document is not to be reproduced, copied, redistributed or published or made available to others, in whole or in part without prior permission from us. This document is not to be construed as an offer to sell or the solicitation of an offer to buy any commodity. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. The information contained in this document has been obtained from sources that are considered as reliable though its accuracy or completeness has not been verified by IndiaNivesh independently and cannot be guaranteed. Neither IndiaNivesh nor any of its affiliates, its directors or its employees accepts any responsibility or whatever nature for the information, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this material only. IndiaNivesh directors and its clients may have holdings in the commodity and currencies mentioned in the report.
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Prince Pipes and Fittings Ltd IPO 2019
ISSUE HIGHLIGHTS •Initial public offer of up to 2,80,89,887 equity shares comprising a fresh issue of 1,40,44,944 shares and offer for sale of 1,40,44,944 shares•The objects of the offer:(i)Repayment or prepayment of certain outstanding loans of our company(ii)Financing the project cost towards establishment of a new manufacturing facility, either set up directly or indirectly (through a wholly-owned subsidiary that our company may set up in the future)(iii)Upgradation of equipment at manufacturing facilities(iv)General corporate purposes, subject to the applicable lawsCOMPANY HIGHLIGHTS •Prince Pipes and Fittings (PPF) is recognized as one of the leading polymer pipes and fittings manufacturers in India. PPF markets its products under two brand names: Prince Piping Systems and Trubore.•Due to its comprehensive product range, PPF is positioned as an end-to-end polymer piping systems solution provider.•PPF currently manufactures polymer pipes using four different polymers: UPVC, CPVC, PPR, and HDPE, and fittings using three different polymers: UPVC, CPVC, and PPR•As on October 31, 2019, PPF had a product range of 7,167 SKUs. PPF’s products are used for a variety of applications in plumbing, irrigation, and soil, waste and rain water (SWR) management.•PPF sells its Prince Piping Systems products to distributors, who then resell the products to wholesalers, retailers, and plumbers. As on October 31, 2019, PPF sold its Prince Piping Systems products to 1,151 distributors in India.•PPF sells its Trubore products directly to wholesalers and retailers. As on October 31, 2019, PPF sold its Trubore products to 257 wholesalers and retailers.Manufacturing facilitiesPPF has six strategically located manufacturing plants, which gives it a strong presence in north, west and south India. Athal (Union Territory of Dadra and Nagar Haveli)Dadra (Union Territory of Dadra and Nagar Haveli)Haridwar (Uttarakhand)Chennai (Tamil Nadu)Kolhapur (Maharashtra)Jobner (Rajasthan) The total installed capacity of six plants is 241,211 tonnes per annum as on October 31, 2019. PPF plans to expand the installed capacity at Jobner (Rajasthan) from 6,221 tonnes per annum as on October 31, 2019 to 17,021 tonnes per annum by December 31, 2019 and to 20,909 tonnes per annum by the end of FY20. PPF plans to set up a new manufacturing plant in Sangareddy (Telangana), with a total estimated installed capacity of 51,943 tonnes per annum and plan to commence production in FY21.Financial performanceBalance sheetValuationThe company’s revenue has compounded at an annual rate of around 12% and net profit at 6% over the last three years. At the upper price band, the offer is at a P/E of 23.4X FY19 EPS. Though the company boast of a healthy return ratio ROE being 20.80%, and operating margin at 11.83%.; the concern being declining operating margin, low single digit PAT margin & high sensitivity to raw materials prices. The issue looks fairly priced. However, the possibility of a 15-20% listing gain cannot be ruled out. Disclaimer: This document has been prepared by IndiaNivesh Securities Limited (“INSL”), for use by the recipient as information only and is not for circulation or public distribution. INSL includes subsidiaries, group and associate companies, promoters, employees and affiliates. INSL researches, aggregates and faithfully reproduces information available in public domain and other sources, considered to be reliable and makes them available for the recipient, though its accuracy or completeness has not been verified by INSL independently and cannot be guaranteed. The third party research material included in this document does not represent the views of INSL and/or its officers, employees and the recipient must exercise independent judgement with regard to such content. This document has been published in accordance with the provisions of Regulation 18 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is not to be altered, transmitted, reproduced, copied, redistributed, uploaded or published or made available to others, in any form, in whole or in part, for any purpose without prior written permission from INSL. This document is solely for information purpose and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. Recipients of this document should be aware that past performance is not necessarily a guide for future performance and price and value of investments can go up or down. The suitability or otherwise of any investments will depend upon the recipients particular circumstances. INSL does not take responsibility thereof. The research analysts of INSL have adhered to the code of conduct under Regulation 24 (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. This document is based on technical and derivative analysis center on studying charts of a stock’s price movement, outstanding positions and trading volume, as opposed to focusing on a company’s fundamentals and, as such, may not match with a report on a company’s fundamentals. Nothing in this document constitutes investment, legal, accounting and/or tax advice or a representation that any investment or strategy is suitable or appropriate to recipients’ specific circumstances. INSL does not accept any responsibility or whatever nature for the information, assurances, statements and opinion given, made available or expressed herein or for any omission or for any liability arising from the use of this document. Opinions expressed are our current opinions as of the date appearing on this document only. The opinions are subject to change without any notice. INSL directors/employees and its clients may have holdings in the stocks mentioned in the document.This report is based / focused on fundamentals of the Company and forward-looking statements as such, may not match with a report on a company’s technical analysis reportEach of the analysts named below hereby certifies that, with respect to each subject company and its securities for which the analyst is responsible in this report, (1) all of the views expressed in this report accurately reflect his or her personal views about the subject companies and securities, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report: Dharmesh KantFollowing table contains the disclosure of interest in order to adhere to utmost transparency in the matter: INSL, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. This information is subject to change, as per applicable law, without any prior notice. INSL reserves the right to make modifications and alternations to this statement, as may be required, from time to time. Research Analyst has not served as an officer, director or employee of Subject Company One year Price history of the daily closing price of the securities covered in this note is available at www.nseindia.com and www.economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 1 year in icon YTD in the price chart) IndiaNivesh Securities Limited Research Analyst SEBI Registration No. INH000000511 Corporate Office: Lodha Supremus, 17th Floor, Senapati Bapat Marg, Lower Parel (West), Mumbai - 400 013. Registered Office: 601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai - 400 007. Tel (Board): 022 6240 6240 | Fax 022 6240 6241 E-mail: research@indianivesh.in | Website: www.indianivesh.in)
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Online Trading – 5 Essential Tips for Trading Online in 2020
Technological advancements and digitalisation have changed the online arena for every business, and the online share trading is no exception to the trend. Over the last few years, online trading has become very popular, especially amongst the millennials and generation Y. Prevalence of smartphones, lower costs, opportunity to earn extra income, low entry barriers, ease of access, etc has had a profound impact on online trading. Even though online stock trading today is huge, and many people are motivated to explore online trading for a rewarding career, by no figment of imagination it should be assumed that it is easy, and they can become financially self-sufficient in a short period. Here are 5 essential online trading tips to help improve your chances of success in your endeavours as a trader-1. Do the research and gain relevant information about the markets The economic conditions are constantly changing and it has a significant impact on the stock markets. To be successful in online share trading you have to do your research, collect relevant information and be updated about matters relating to markets. With information being available at the click of a button, it is easy to get access to information from various sources. Keeping your eyes and ears open about the official announcements being made, reading up market-related articles and financial publications can help you ace the game of online stock trading and avoid making whimsical trade calls. 2. Get acquainted with the trading terminologies and tools Getting yourself familiar with various terminologies and trading tools beforehand is extremely important so that you do not falter when you start trading. Clearing your basics about the important workings, different types of trades, important terms are critical. If you are not clear about the basics, then you may end up placing a wrong order. Once you are trading online, you are investing real capital and you cannot undo the trade. So, it is essential that you must be familiar with the features and the functions of the trading platform which you are going to use. Practice trading on dummy versions to get a hang of the trading interface before you can start with online trading. Once you have enough practice you will not be flustered and confused at the time of real trading. 3. Start with small capital and practice risk management There are infinite opportunities in the trading world and you do not want one experience to be the deciding factor for you. As online trading is risky, you should always make a small start in the beginning and invest little capital. Even the most successful traders do not put their entire investible surplus for trading but use only the capital which they have to spare after they have put aside for their long-term goals such as retirement. So, invest only the capital which you can afford to lose and which will not affect your financial planning. Another important thing to keep in mind at the time of executing trades is that the risk associated with trading is high and hence you should take adequate measures to minimise risk. Setting a stop-loss to your order will automatically stop a trade if the losses hit a particular mark and help minimise your losses. 4. Be patient and disciplined Online trading is a great way to make an income and many have successfully made a career out of it. If the success stories of other traders have motivated you to take the plunge, then, let’s be honest, online trading is risky and not for the light-hearted. Moreover, it is not something you can master overnight or become rich overnight on a single trade. To be successful, you need to have the right mindset and should be disciplined in your approach. Make a trade plan and stick to it. Trading out of impulse or greed will not help you become successful but following a plan and trading when you see opportunities can help you achieve the desired results. 5. Select the right broker and trading platform Last but not least, choosing the right broker and opening the best trading account online is important, and hence you should be careful about your selection. Choose a trading platform that best meets your needs and has a user-friendly interface. You should be comfortable using their software. Your success rate would be greatly affected by the timely execution of your orders. Other aspects to consider are a level of customer service and satisfaction, market reputation and competitive fee structure. Conclusion With the above essential online trading tips, you can give your income a boost. We at IndiaNivesh have one of the best online trading platforms at the most competitive price and also offer expert advisory and research to meet your investment needs.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing.")