Prince Pipes and Fittings Ltd IPO 2019

Monetary Policy: RBI surprises the market; keeps policy rate unchanged at 5.15%RBI TAKES A PAUSE, KEEPS REPO RATE UNCHANGED; AND MAINTAINS MONETARY POLICY STANCE “ACCOMMODATIVE”. GDP GROWTH ESTIMATES FOR FY20 HAVE BEEN SLASHED SHARPLY TO 5.0% FROM 6.1% IN OCT’19  RBI’s monetary policy committee (MPC) left the repo rate unchanged at 5.15%. All members voted in favour of keeping rates unchanged. This was the first pause after five consecutive rate cuts this year (135 bps reduction from Feb to Oct’19) as it expects the past monetary easing and measures taken by the government to gradually help in the economic revival. The MPC also decided to continue with its “accommodative” stance as long as it is necessary to revive economic growth, while ensuring that CPI inflation remains within the target. The MPC recognized that there is space for rate cuts in the future, but given the evolving growth-inflation dynamics, it decided to take a pause at this juncture and maintained that it is prudent to carefully monitor incoming data to gain clarity on the inflation outlook. Inflation has increased sharply in the last two months and may stay high for some time. However, core inflation is expected to remain below 4% as per RBI estimates. The MPC was of the view that the forthcoming union budget will provide better insight into further measures to be undertaken by the government and their impact on growth.The key highlights of the policy:  CPI inflation projection has been revised upwards to 5.1–4.7% for the second H2FY20 and 4.0–3.8 % for H1FY21, with risks broadly balanced. Real GDP growth for FY20 is revised downwards from 6.1% in the October policy to 5%, with a delay in demand revival being the key downside risk to the GDP. Real GDP growth in Q2 was weighed down by a sharp slowdown in gross fixed capital formation (GFCF), cushioned by a jump in government final consumption expenditure (GFCE). Excluding GFCE, GDP growth would have been at 3.1% as per RBI’s assessment. RBI expects stronger monetary policy rate transmission under its external benchmarking regime, which was introduced from October 1.View: RBI’s decision to not lower interest rate has come as a surprise and hereon the emphasis will be on transmission of earlier rate cuts. In the growth-inflation tradeoff, the RBI has clearly leaned towards keeping inflation in check. Revisedprojections of GDP and CPI inflation seem to be realistic. Bond markets had already factored in a rate cut and the yield on the 10-year government bond surged by ~12 basis points to hit 6.58% (one month high) after the monetary policy announcement. Investors in short & medium duration funds should continue to hold till the cycle of rate reduction is complete. We recommend investment in high-quality AAA oriented short-term and banking & PSU debt funds. Fresh investments in short to medium term is recommended with a 1-to-3 year investment horizon. Disclaimer: This document is STRICTLY for authorized recipients only and is prepared for information purposes only. The information provided herein, we believe, is from reliable sources. IndiaNivesh is not liable for the accuracy of the source data as well as the results of the calculations based on the same. We do not claim that the data provided herein is accurate and complete in all respects. This is not an offer or solicitation of any offer to buy or sell securities. No action is intended to be taken by the recipients based on this document. The recipients may take their decisions based on their own judgement and independent advice that they may receive before making any investment or disinvestment decisions. The recipients are advised not to take any decision only on the basis of this document. No portion of this document should be printed, reprinted, redistributed, reproduced, duplicated or sold)

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  Trend – Will continue to shine in 2020Precious 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. 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 longTrend – Upside price breakout expected2019 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. 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 levelsThe 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. 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.)