IMPORTANT NEWS & UPDATES - 09 AUG 2016

Why You Should Keep A Close Eye On Bank Nifty?

Bank stocks are turning favourable among the mutual funds (MFs). The MFs have increased their allocation for bank stocks to a record high of nearly Rs. 94,000 crore by June-end. Certainly, strict steps taken by the government and RBI to clean up the banking system are helping the bank stocks. And that can also be seen in the Bank Nifty performance.

In the one-year period, however, the bank sector is yet to show remarkable growth. The above dashboard shows that except four bank stocks, all are in red. The four gainers were Yes Bank, Indus Ind Bank, HDFC Bank  and Kotak Bank. During the period, Bank Nifty is down 0.54%. Meanwhile, three out of the four gainers marked double digit growth in the last year period. Yes Bank leads with gains of 52.06%.

OIL:

Renewed calls by some OPEC members for production cuts helped support crude oil futures on Monday .

 Members of OPEC to freeze production levels in a bid to control output that has been outpacing demand.

Russia, the world’s top oil producer and a non-OPEC member, was quick to dismiss calls for a freeze.

In the U.S., the number of oil rigs drilling in the U.S. rose for the sixth consecutive week to 381. Additionally, hedge funds cut their long bets on Brent crude to the lowest since January, while investors reduced their bullish holdings to U.S. crude oil to its lowest since February.

China’s crude imports stood at about 7.35 million barrels a day in July, the slowest import trend since January, reason may be a fresh sign that the Chinese economy is slowing down.

COPPER:

China’s copper ore and concentrate imports transit the Port of Lianyungang hit a record high of 714,500 tonnes in the first seven months of this year.

The unwrought copper and copper semis imports in China dropped 14.3% MoM to 360,000 tonnes in July. Does this mean domestic demand weakening further and will this drag down copper prices

Our Copper MMI gained just one point. Unlike other base metals, Copper on the London Metal Exchange continues to trade up and down. The metal struggled near $5,000 for the ninth-consecutive month.

Copper Markets In Deficit

According to the International Copper Study Group (ICSG), the refined copper balance for the first four months of 2016 indicates a production deficit of around 119,000 metric tons (and a seasonally adjusted deficit of about 129,000 mt). This compares with a production surplus of around 13,000 mt (a seasonally adjusted surplus of about 12,000 mt) for the same period of 2015.

Chinese Imports Surge

In June, China imported 420,000 mt of unwrought copper and copper products, up 20.3% from June of last year. For the first half of the year, imports increased 21% compared to the same period in 2015. The growth in imports has helped support metal prices, too. However, there are different opinions on whether those imports are actual demand or just stockpiling into warehouses.

An expected, new round of infrastructure spending in China should continue to keep copper demand and China’s imports strong in the second half.

Prices Struggle

So the whole metal complex is performing well. Markets appear to be in deficit (although with high stock levels looming), investors are optimistic that they’ll see more stimulus coming from China and copper imports are strong. This all sounds bullish for copper prices this month, but traders seem unwilling to chase prices much higher than $5,000.

We have yet to see that bullish shift in investor sentiment in copper. Unlike other base metals, it’s still early to call this a bull market.

LME copper will narrowly range USD 4,775-4,815/mt during Asian trading hours Tuesday.

China  Copper imports shot up by 19.5% year-on-year 3.09 million tons during the first  seven months of this year, while its exports were down nearly 7% on a year  earlier at 2.67 million tons, as per the latest data from the General  Administration of Customs.

ALUMINIUM:

China increased its aluminium exports in  July to 390,000 tons of unwrought aluminium and aluminium products , up 2.6  percent from June and 8.3 percent from the same month a year ago. For the first  seven months of the year, China's exports at 2670,000 million tons, down 6.9 %  year-on-year.

China Aluminum International Trading Co. (Chalco Trading) kept aluminum prices unchanged in east and south China markets today, but raised prices in southwest China, it said on its WeChat.

Aluminum futures closed a bit lower this week, declining 0.6% due in part to pressure on the base metals complex from a rise in the value of the U.S. dollar.

Economic Calendar speculated that aluminum upside could be on the horizon with buyers in China locking in prices for October shipments. That is a popular month for the Far East nation to stock up on the metal in time for winter when inclement weather can hinder shipments.

Domestic Construction Spending Hits One-Year Low

With China close to stocking up on aluminum for its upcoming construction projects, theU.S. Commerce Department recently announced domestic construction spending declined 0.6% to its lowest point since June 2015, reports our own Jeff Yoders.

LEAD:

LME lead will narrowly range USD 1,775-1,795/mt during Asian trading hours Tuesday. SMM survey of 30 Chinese lead producers finds that 47% of them are bullish towards lead prices this week.

ZINC:

LME zinc posted a 4-day winning streak last week, challenging USD 2,300/mt. SHFE 1610 zinc rose to RMB 17,500/mt on Monday. China’s July CPI and PPI are expected to weaken compared to June’s

NICKEL:

Output of primary nickel in China dropped with falling output of refined nickel and NPI in July, Shanghai Metals Market reports.

Nickel ore inventories at seven major Chinese ports kept increasing in the week ending Aug. 5, Shanghai Metals Market reported.

Pound Stays Down After Interest Rate Decision

The pound has continued to stay low against the US dollar following last week’s decision by the Bank of England to cut interest rates by 25 basis points to 0.25%, today GMT sterling is trading at $1.3064.

Overall, England’s PMI dropped from 52.5 in June to 47.4, its lowest since April 2009, any PMI reading below the 50 mark, indicates that there has been a contraction in production.

Chinese Data Causes Little Market Volatility

On Tuesday morning Chinese inflation cooled last month as increases in food prices eased. Producer prices, meanwhile, extended their decline, reinforcing economists’ views that more stimulus measures are needed to bolster the nation’s economy. The consumer price index rose 1.8 per cent in July compared with the same month last year, the National Bureau of Statistics said on Tuesday, a figure in line with market expectations. It compares with a 1.9 per cent increase in June.

Low consumer inflation indicates still weak demand in the world’s second-largest economy.The government has set an official inflation target of about 3 per cent for this year.

 CAPITALSTARS