Category Archives: Market View

Leading Index and Commodity market Tips

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Mcx Gold commodity market was trading good slide in yesterday trade and likely that weakness would continue today following better equity movement in Asia today. However, note that losses especially in gold might remain minimal today as there are no major economic cues to be watched from the US whereas the Greenback has fallen at a good rate and could provide some support to the yellow metal. There are no major changes seen over physical demand side or either the ETF side though it would not be surprising for us if we see some short-covering post the commodity slipped down to fresh 8 month lows in the week. We maintain selling view for small targets today.

Gold continued its downward spiral during the week with the metal trading lower by almost all of the day before managing modest pullback toward the end of the day.

Gold Comex Dec shut shop by 0.7percentage down to $1227 per ounce while also touched a low near $1215 during the day. Subdued US housing data may have prompted buying interest from lower levels though trend still stays down.

MCX Gold October finished lower by 0.9percentage to Rs 26650 per 10 Grams with Rupee likely to put further pressure today.

Global Market Snapshot: Asian equities trade on a mixed to positive note with Japanese Nikkei scaling higher as it currency tumbled to fresh multi-year lows against the USD. Elsewhere in the US and Europe, equities closed firmly in the green tracking continued set of optimism from FED and notwithstanding the subdued housing and permits number from the US. In the global currency space, US Dollar index slipped towards 84.25 marks, a near 0.5percentage correction as GBP stepped up ahead of anticipated positive the outcome of the Scotland-Independence vote. JPY too tumbled towards a 109 level against USD.

Silver commodity market is held in sell view as yesterday though with higher equities, rising in US Dollar and weaker industrial related data from China and EU too supporting bearishness. Likewise we said yesterday, silver may get extended pressure from losses in industrial metals today and thus on one side we maintain selling stance in both bullion commodities, our preferred pick would be silver over gold. Recommend no trade on Ratio in Intraday. On our weekly Ratio buy call, traders might have made moderate profits yesterday. Recommend holding the same with reduced stop loss whereas may look to book minimum profits today as we enter the weekend.

Silver followed Gold movement though weakness in metals and its high beta pushed the commodity further lower against gold yesterday.

Comex Dec contract closed 1.15percentage higher to $18.51 an ounce while in India we saw Silver same month shutting down by 1.1percentage to Rs 40935 per Kg.

Gold and Silver Comex Spot Ratio: No trade on Ratio in Intraday. On our weekly Ratio buy call, traders might have made moderate profits yesterday. Recommend holding the same with reduced stop loss whereas may look to book minimum profits today as we enter the weekend.

Commodity market tips

Sell Gold mcx Oct below 26770 SL 26900 TP 26550

Sell Silver mcx Dec below 41100 SL  41400 TP 40650

Continuing Claims and Commodity Trading Tips

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Crude oil commodity trading  held a cautious approach yesterday wherein we advised traders to look for only momentary trades as on one side largely positive equities, cues from PBOC and OPEC supply cut comments were seen adding fresh increase in the commodity though we were expecting some weakness to be held due to negative expectations over inventory data.

As per the commodity stocks report from the DoE, crude inventories gained 3.67 million barrels against markets forecast of a fall in the range of 1.5 million, though we were anticipating as weaker reading. If we look into products gasoline stocks fell at a decent rate though could not provide any major support to prices which closed weaker by 0.5percentageyesterday. Gasoline inventories fell by 1.6 million barrels while distillate stock increased by 279,000 barrels.

As of early Asian trade, we are looking at a weaker WTI and Brent oil prices where both of them down by over 0.5percentage. For the day, weaker expectations over US housing and manufacturing related data, strong gains in US Dollar and dragging effect of the subdued US stocks report would keep the commodity under pressure wherein we recommend selling the same at the NYMEX and MCX commodity markets for small targets.

Global Market View: Dollar is turning out to be the emperor of the currency markets this year with the Index moving to multi-year highs to 84.65 marks after taking positive cues from the FOMC meeting. Euro fell whereas Japanese Yen too slid to multi-year lows. Though the US FOMC meeting outcome looked a bit hawkish at first glance, the FED continued to claim its commitment towards lower levels of interest rates for the foreseeable future and re-iterated its view over labor market wherein the same still need very good improvement over wages growth front. Asian markets are trading on a mixed to positive note following moderate positivity in US equities which closed higher.

Economic data: EU Targeted LTRO Update, US Building Permits, Housing Starts, Philly Fed Manufacturing Index and Weekly Jobless claims data

Natural gas commodity trading market prices continued to track positive short-term developments over warmer weather forecasts in the US West. We held a positive bias yesterday though today have a cautious view as the commodity may see good volatility due stocks report. Early estimates stand for a addition of around 90 BCF, similar a last week though we feel am modest chance for positivism can be there in inventory as US recorded good amount of cooler temperatures lately. For the day, we have a ranged view in the commodity. Still short-term view in the commodity still remains weak.

Commodity Trading Tips

Sell crude Sep mcx below 5755 SL 5810 TP 5680

Sell Silver Dec mcx below 41370 SL 41450 TP 40800

Crude Inventory and Commodity Market Tips

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Crude oil commodity market trading at the NYMEX advanced almost 2percentage yesterday to close firmly over the $94 per barrel mark against our view that the commodity might see bearish momentum continuing due to ease in global supplies and amidst weak demand in the US. OPEC comments of a probable supply cut in 2015 was conjugated with intraday slump in the US Dollar and rising equities which supported the uptick in oil though fundamentally, there has been no major changes seen. OPEC daily output target may fall by 500,000 barrels to 29.5 MBPD in 2015, Abdalla El-Badri said at OPEC’s secretariat in Vienna though curiously Brent November month contract did not gained much.

If we look at the API stocks data, crude stocks increased by 3.3 million barrels last week while gasoline supplies slid by 1.2 million, news reports showed. While Bloomberg survey project fall in both Crude and gasoline stocks for the DoE, there is scope of negativity which might weigh against any major gains in oil from here. However, while looking at broad market dynamics like equities, Chinese cues and moderate correction in USD; we may not see a big fall either.

Global Market View: Yesterday’s trade was filled with high volatility wherein almost all asset classes witnessed mercurial movements. The Dollar Index which is awaiting cues from the US FOMC meeting slipped during intraday trade to record its biggest fall since May month. Markets speculated that the Fed might refrain from providing any major time-line for reducing interest rates in the US and thus volatility in USD was seen. The effect was seen on US equities which advanced whereas in commodities Crude oil and Base metals seconded higher. Bullion registered decent volatility before closing little changed on a day to day comparison. In major developments from Asia, Chinese PBOC is planning to do liquidity injections by around 500 Bln Yuan ($81 Bln) into the nation’s leading banks, according to a government administrator well-known with the matter. This can also be seen as a major aspect behind positive movement in metals and energy prices yesterday.

Economic Support: EU and US CPI, Current Account, NAHB Housing Market Index and lastly but most importantly FOMC Meeting outcome which would be released post our markets closing.

Natural gas commodity trading once again advanced tracking positive developments over warmer weather forecasts in the US West and also some southern parts on the country. While the commodity is gaining for last two sessions and likely that modest positive bias might continue in today’s session as well. Nevertheless note that other weather related developments showed US Great Lakes and northeastern states will see pockets of cooler air over the next week. This might indirectly infused gradual weakening of warmer weather forecast and thus drive away near-term demand for heating which has been driving prices higher in last couple of day. We recommend buying the commodity today, though advice taking only intraday movements.

Commodity Market Tips

Sell Gold mcx Oct below 27015 SL 27110 Tgt 26900

Buy Crude mcx Sep above 5758 SL 5710 Tgt 5860

PPI Final Demand and Commodity Intraday Tips

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Crude oil commodity market prices rebounded smartly from its intraday lows wherein at one point of time, it was down around 2percentage while finally ended the session higher by around 0.7percentage to $92.90 per barrel mark. While there is no specified reason for the commodity to bounce back from its lows other than a probable technical pullback, other indicators continue to cast negative shadow over the black liquid.

We saw the US Industrial production data disappoint heavily meanwhile Chinese cues too continue to support weakness. If we look at other broad fundamental perspective, the commodity is weighed down by ease in global supplies as been the case lately wherein the impact is witnessed in both the Brent and the WTI. If we look at the initial forecasts for the inventory front, DoE data might show fall in crude stockpiles by 1.5 million barrels whereas gasoline stocks too seen falling marginally. Positive expectations over inventory may help the commodity not fall much; however weaker equities, ease in oil supplies and subdued Chinese data points would continue to hold it down. We recommend selling the commodity on pullbacks today for small profits.

Note that on a technical perspective too, prices look for some pullback initially after which we might register sell. On that note, we have bought and later sell recommendation in NYMEX markets today. AT MCX though, we advice sell at higher level. We hold our Spread strategy as recommend yesterday. Buy MCX Oct – Sell MCX Sep as weaker demand for the commodity should reduce the backwardation ahead of expiry this week.

Global Market View: Equities in the US finished on a mixed to weaker note though we saw huge slide in the Technology Index, the NASDAQ as probably traders look to book profits ahead of the crucial two day FED meeting starting today. Cautiousness prevails in the Asian equities as well wherein we are seeing moderate drop in all major indices however in currency space, the USDX was marginally lower to 84.15 levels while the Euro currency gained near a similar percentage. As stated earlier, markets focus this week would remain on the FOMC meeting wherein expectations are high that the US central bank would give a time-line for rising interest rates in the country. It is also likely to extend the cut of its bond–purchase program.

Economic Data: German and EU ZEW Economic Sentiment data along with US PPI report. Note after the disappointing IP number from US yesterday, we may see some negative surprise over PPI data.

Natural gas Commodity market climbed yesterday, extending its gains from last week. While we held a range bias in the commodity with negative bias on expectations that the commodity might look for fresh triggers over weather, extended warmer weather outlook in the USC west probably supported the commodity yesterday. While weather related changes are depicting a very high volatility in the US lately, we hold a cautious stand in the commodity though still believe, any major positivism in prices in unlikely. Intraday outlook is seen ranged.

Commodity Intraday tips

Sell crude mcx Sep below 5705 SL 5730 Tgt 5620

Sell Silver mcx Dec below 41600 SL 41850 Tgt 41300

Capacity Utilization and Commodity Trading Tips

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Crude oil commodity trading during the week, global oil prices came under huge pressure tracking developments from the IEA (International Energy Agency) which in its report said global consumption for oil is seen increasing by 1.2 MBPD to 93.8 MBPD in 2015, lower by 165,000 BPD as compared to its own forecast in the previous month. Short-term markets sentiment was further dented by comments that Q2, 2014 consumption for the commodity fell to a near a 2 and ½ year low amidst weakening demand from world’s two largest consumers EU and China. Subdued demand from these regions forced the agency to trim its demand forecast for the current and next year as well.

As per the latest developments in the fresh week, we are seeing good fall in Asian equities along with the industrial commodities which is hurting crude oil prices as well. We saw highly disappointing Chinese Industrial production data during the weekend wherein August IP which grew by just 6.9percentage. WTI oil prices have declined over a per cent today with Chinese data along with dragging concerns over ease in global oil supply taking a toll on oil prices. Last week, already we have seen a fall by around 4percentage in Brent crude and probably some of its effect too could be getting replicated into the US Crude as the WTI in electronic session is lower to by 1.2percentage while today Brent lost around 0.6percentage to trade near two year low. We may see good gap-down opening in Indian crude today, note that Rupee has depreciated in the opening and would be a critical factor to watch during the day. We recommend selling from

Global Market View: Let us begin the week with a little sanguinity to have a good day ahead. We have already seen so much of movement in the early morning. No doubt, the markets are jittery as well as in red. The Asian markets are trading in negative after the Chinese data released over the weekend showed that industrial production in the country rose at an annualized rate of 6.9percentage in August, missing estimates for a gain of 8.8percentage and sharply lower from an increase of 9percentage a month earlier. The consequences are gold and silver fell down early morning while they have revived from the lows and currently trading at $1234 and $18.64. Today would be the day when investors might be little baffled with the trading recommendation though the overall view remains down. Oil prices have declined over a percent and the base metals too have declined with an average loss of more than half per cent.

Economic data: India Trade Balance and Exports /Imports, US Manufacturing Activity in the Empire State and Industrial Production higher levels in oil for the day. However, we need to be little cautious about volatility may remain high in US session.

Natural gas commodity trading  was advancing in first half last week on anticipation of cooling demand in the US though the commodity plunged in second half following warmer weather forecasts in near–term and also appended by disappointing inventory report. US EIA showed, NG stocks jumped by 92 BCF higher than expand prior figures. Currently cooler weather has receded and is likely to be taken over by normal temperatures in East while moderately hot climate in West and North-West region. Above weather related cues may keep NG volatile in a small range. With broader view continuing to be negative side, we keep up selling bias with small possibility and profit potential for the day. Locally, Rupee movement would be watched.

Commodity Trading Tips

Sell Silver mcx Dec Below at 41650 SL 41830 Tgt 41300

Sell Crude mcx oil Sep below at 5630 SL 5665 TP 5560

Initial Jobless Claims and Commodity Trading

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Gold Commodity Intraday trading has no major changes in Bullion fundamentals as markets continue to wait for fresh triggers in a week which lacks any major economic cues. We feel there is a possibility of good move in next two days as there are few economic readings from the US and also a number of US FED Managers are going to speak at different events. Hopes of earlier than estimated rise in interest rates is one of the major reasons behind continued weakness in Gold lately. While, we look at the volume and open interests along with price performance both the variables are supportive of the bearish trend so we recommend selling from higher levels. ThoughSPDR ETF holdings rose by 3MT yesterday, they largely remain unsupportive. We recommend selling from higher levels today.

Global Market View: Major global equity markets ended last day with a minute change while Asian markets are trading slightly positive today. Therefore, we may see the local unit opening higher against the USD while we believe during the day it may again depreciate a tad. From the global currency front, markets are more or less stable. The USD index is trading at 84.24, euro is at $1.2915and the pound sterling is at $1.6198.Now, we move on to commodities, both gold and silver which fell again last day are seen trading steady at $1249 and$18.96. The Oil is trading at $91.75 and the base metals are trading steady from the previous day’s close.

Gold extended another day of range bound trade in the international markets though bias remained weaker both at the Commodity and MCX. Gold Commodity Dec contract fell 0.25percentage to $1245 an ounce whereas at MCX, October expiry metal fell 0.3percentage to Rs 27180 per 10 Gms.

Economic data: German CPI at 11: 30 AM IST, US Weekly Jobless Claims numbers at 6 PM IST and the Monthly budget statement.

Silver Commodity trading has no major changes in silver commodity as also been the case with gold as stated above. We continue to hold a bearish bias in the two metals. Re-iterating our yesterday’s view silver is managing better performance than gold in last two-three days which is not significant though makes us cautious as either there is some internal positivity which is not updated in markets or otherwise we should see strong sell-off in the commodity sooner. We hold sell stance in Intra-day whereas continue to be on the sidelines on our view over Ratio.

Silver was no different in terms of intraday performance yesterday though the whitish metal continue to manage tads better performance as compared to gold, as been the case during most of this week. Commodity December Silver closed unchanged yesterday at $18.92 an ounce whereas Indian Silver for same month’s settlement too closed flat to Rs 41950 per Kg.

Commodity Trading Tips

Sell Silver mcx Dec below 42070 SL  41300 Tgt 41700

Sell Gold mcx Oct below 27280 SL  27370 Tgt – 27100

May WPI Inflation

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May WPI Inflation at 4.7% Vs 4.89% (MoM)

May WPI Core Inflation at 2.4% Vs 2.8% (MoM)

March WPI Inflation Rate Revised To 5.65% Vs 5.96%

Primary Articles Inflation at 6.65% Vs 5.75% (MoM)

Primary Articles Index up 0.6% (MoM)

Manufactured Pdts Inflation at 3.11% Vs 3.41% (MoM)

Manufactured Products Index up 0.3% (MoM)

Fuel & Power Group Inflation at 7.32% Vs 8.84% (MoM)

Fuel & Power Group Index down 1.3% (MoM)

Food Articles Inflation at 8.25% Vs 6.08% (MoM)

Food Articles Index up 1.5% (MoM)

Non-food Articles Index down 0.6% (MoM)

All Commodities Index up 0.1% (MoM)

Minerals Group Index down 2.4% (MoM)

Energy sector: Crude Oil Vs. Natural Gas

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Energy Sector - Crude Vs. Natural GasThe relation between the two major components of the Energy sector: Crude oil & Natural gas is currently perched above 25. A slow recovery in the ratio was seen, backed by simultaneous gains in crude oil and fall in natural gas prices. On the other hand, at MCX the ratio has declined from yearly high of 30 in February, as gains in natural gas prices (YTD 18%) are comparatively higher than crude oil future prices (YTD 11%). Climate conditions in the US, concerns of supply disturbances in the Middle-East and improving demand from the world’s major energy consumers have hold up the gain in crude oil and natural gas prices in the current year. A refuse in the storage level, combined with a slower pace of drilling activity in the US played a positive role for gas prices. Investors also took advantage of lower fuel prices and, gas prices slowly reached 3 years high.

In the petite run, we anticipate the demand for gasoline to increase during the summer driving season in the US. Recent economic indicators indicate improvement in the US economy which may lead to a rise in utilization, counting fuel. In May, US consumers bought 1.4 million vehicles, up by 8% from the same month a year ago. Consequently, an augment in the usage of gasoline will drive crude oil demand and support prices to remain high. At current, gasoline demand in the US is at 8.7 million barrels per day and may reach a high above Nine million barrels in the summer driving season.

The hurricane season in the US starts from June and ends in November. The National Oceanic and Atmospheric Administration’s (NOAA) estimated a 70% likelihood that 13 to 20 named storms will form within the Atlantic Basin over the next six months, including 7-11 hurricanes; 3 to 6 of which will be forceful. The tropical Storm Andrea, the first named storm of the season appeared in early June, although the first storm typically forms in July. According to the US Energy department analysis, there is a 58% probability of production shut-in volumes being equal to or larger than the production shut in during the 2012 hurricane season, which overall 14.3 million bbl of crude oil and 32.1 Bcf of natural gas. In 2013, storm-related production commotion in the Gulf of Mexico during the 2013 hurricane season is 19.3 million barrels (bbl) of crude oil and 46.4 billion cubic feet. (Bcf) of natural gas. For that reason, concerns of supply disturbances may continue to keep crude and natural gas prices higher.

Therefore, gains in gas prices may be limited in the short run as the demand for space cooling is expected to decline. According to the Energy Information Administration, the number of cooling degree days (CDD) are likely below last year’s summer season’s CDD. The summer 2013 average US residential electric bill will total $395 over the 3 months period of June, July, and August, which is $10 (2.5 %) lower than the average U.S. bill during the summer of 2012. Natural gas accounts for more than 29% of total uses in electric power generation and 34% each in residential and commercial purposes. Consequently, if weather conditions remain mild, the usage is expected to remain lower and may limit gains in gas prices. If we study the storage level, the working gas storage level is at present at 2252 Billion Cubic Feet (BCF); 69BCF lower from the last 5 years average at the same time. April to October is considered to be injection period in the US. With the rise in drilling activities, production may rise and result in a higher level of storage in the near term. This may act as negative factor for gas prices.

As a result, we anticipate the gains in crude oil prices to exceed natural gas in the short run, which will result in a rise in the ratio. For the short run, we suggest entering long positions in crude oil futures while taking short positions in natural gas contracts.

Akshya Tritya – Buy Gold & Bring Home Propsperity

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Akshaya means imperishable, that which has no end and is present in great quantity. Tritiya means the 3 day, since the festival falls on the 3 day of Amavaasai of the month Vaisakh.

There are various ways to celebrate Akshaya Tritiya. This favorable day is celebrated all across the country in India.  According to the Indian scriptures, one should celebrate the day by doing the following things to bring prosperity and happiness:

  • Donate money to orphanage
  • Perform Annadanam, Food to Hungry Poor People
  • Donate old clothes, umbrellas and slippers to any ashram
  • Begin any new project, for example, conducting marriages, construction of a house, joining any new course, starting film poojas, etc.
  • Buy gold and silver ornaments. If you cannot buy in sovereigns, at least buy in grams
  • Buy your monthly house hold provisions

Akshaya Tritiya cascade on Monday, 13 May’2013. We also suggest respecting the above rituals. On the other hand, we would like to point out the Five to you for this year. As stated above, buying gold and silver ornaments or coins is one such ritual practiced by most Indians. Therefore, we shall highlight bullion as an investment avenue that should be invested in on this auspicious day.

Usually, Akshaya Tritiya falls between the months of April and May every year. In 2012, it was held on April 24th while in 2011, 2010 and 2009, it was celebrated on 6th May, 15th May and 27th April respectively. The performance of gold prices portrayed in the table below during the above mentioned period is as follows:-

The table below that the Y/Y performance is very irregular in nature and that although India is the largest consumer of gold, it has a lower impact on gold prices during the Akshaya Tritiya. Though, it is treated as a benchmark period for the Indian investors’ asset allocation phase. Nevertheless, other domestic and global factors do play a major role in deciding the gold trend. We shall discuss how gold should be traded in the year 2013. We shall explain the likely future trend of gold in the year ahead.

Year

Akshaya Tritya

Gold Rate In Rupees

Performance

2009

27 Apr

14,622.00

4%

2010

15 May

18,164.00

24%

2011

6 May

21,846.00

20%

2012

24 Apr

28,873.00

32%

2013

13 May

26,965.00

-7% As on 11 May

India imported 200 tons of gold from January to March’2013, down 23.67% from the same period last year. In April 2013, the import was down approximately 25%, lower than the 71 tons shipped in the same month last year. Imports are slowing down after the government raised import duty by 50% to curb imports. From the global and domestic fronts, gold has fallen over 15%. Therefore the already stocked gold is still held up with Indian importers. Looking at the global scenario, investors’ moving to other asset classes may keep gold prices under pressure in the near term. Hence, we expect gold prices to remain weak. However, we believe the weakness may continue until the current quarter and thereafter, a recovery should be seen as the year progresses. Since Akshaya Tritiya falls on Monday, 13th May this year and gold is already down over 15% YTD, we recommend buying gold bullion in a spread out manner.

TATA CONSULTANCY SERVICES (TCS) – Multibagger Stock Tip

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TATA CONSULTANCY SERVICES {TCS}:

Company Overview:

Tata Consultancy Services [TCS] is an IT Services & IT Consulting Company Founded in 1968 by the Founder J.R.D Tata and the company quarters situated in Mumbai and TCS had 183 offices across 43 countries and 117 delivery centers across Twenty One countries. At the same date TCS had a total of Fifty Eight subsidiary companies. The Key Persons were Mr. Cyrus Mistry, Chairman and Mr. N. Chandra sekaran, C.E.O & Managing Director.

Company Revenue Back-Ground:

Tata Consultancy Services has for the first time crossed the USD 3 billion mark in its quarterly revenues and the growth has been pretty extensive based.

Tata Consultancy Services has position decent numbers for the quarter ending by March 2013. The Revenues from operations on consolidated basis increased by around 24% at Rs.16431 crores vs Rs.13259.33 crores YoY. A huge chunk of growth is driven by Sale of tackle and software licenses which grew sharply by 61% at Rs.580 cr from Rs.361 cr YoY. Tcs has spectator strong volume growth of 4.4% q-o-q. Operating profit jumped 17.66% at about Rs.4618 crores as against Rs.4661 crores in the like period last year. Tata Consultancy Services has reported 25% rise in its net profit at Rs.3616 crore for the quarter as compared to Rs. 2895 crore for the same quarter in the previous year. EPS stood at Rs.18.47. On the margin front; in service profit margin has dipped by 150 bps at 28.10% from 29.60% YoY due to two headwinds. One is the one-time-settlement costing Rs.1.61 billion and the other is currency headwind which is roughly about Rs.1 billion.

On the geographical revenues front; TCS has delivered strong growth in India as well as in US. India grew sharply at 17.2% and North America revenues rose 1.4% and Latin America by 9.1% qo- q. Continental Europe too has been standing out at 2.5% Deal wins has been very good during this quarter. It has win 11 deals across the geographies and industry segments and added 52 new customers.

Company Valuation:

By way of healthy deal pipeline, increasing discretionary spends management positive outlook, low attrition, stable pricing environment and strong growth in all business verticals across geographies; Tata Consultancy Services growth prospects looks promising. We suppose TCS Ltd. is trading at an attractive valuation at 17.65x and 15.86x of FY14EPS of Rs.80.37 and FY15EPS of Rs.89.43. We Bet to Grab Share Near Rs. 1425 for Target of Rs. 1700 in Time Period of 6-9 Months.