Market Morning Briefing

GOOD MORNING!

EQUITIES
The global markets are trading mostly flat ahead of a batch of key Chinese economic data including industrial output. The Indian markets are expected to benefit from the better than expected CPI and IIP data.

Nikkei (14899.83, +0.47%) has found selling at our target resistance of 15200-300 as expected and turned range bound once again inside the broader range of 14600-15300 in line with our expectation. A break below 14600 may drag it down to 14400-14000.

Shanghai (2021.24, +1.18%) broke below the support of 2020-15 to test the January low. The bears dominate firmly as long as it stays below 2040-50 and reversal will come only on a break above 2080. A break below 1980-75 may take it to 1950-45.

Nifty (6516.90, +0.08%) consolidated at the higher levels for another day after the sharp rally. The bullish momentum remains intact above 6340-60 and we may expect further rally to 6650-6700 in the coming days with some consolidation in between.

Dow (16340.08, -0.07%) has not managed to break above our supply zone of 16400-600 till now but the correction seems to be a mild one till now with not much weakness visible. Till 16200-150 is broken, the upside possibility towards 17000 will get more weightage.

COMMODITIES
Precious metals are trading up while the oil market is under the control of the bears.

Gold (1372.41) has risen sharply and is targeting resistance near 1375-1380 from where we may see a downward correction before again resuming its further rise. A break above 1380 would take it higher towards 1400-1425.

Silver (21.38 is trading high but has come off from resistance near 21.48-50. It may either pause here for a few sessions or rise to 22.5 levels if it breaks 21.50.

Copper (2.9615) has bounced from 2.90 levels but while below 3 we may still expect the bears to dominate the prices. Only a break above 3 would give a signal of upward correction.

Brent (108.31) remains stable and may continue so in the 108-109 region. We may see an eventual rise towards 110 in the coming weeks.

Nymex WTI (98.12) traded near the lowest price in more than a month breaking below 98.63 after the U.S. announced a test sale of oil from the Strategic Petroleum Reserve and data showed Crude stockpiles rose. Immediate support near 97.20 is seen. The Brent-Nymex spread (10.13) is trading just below channel resistance and may come off to 8 if this holds. This may indicate a pause in WTI or possibly an upward correction soon.

CURRENCIES
Dollar Index (79.59) is trading below the support zone of 79.80-70 and the door to 79.10-78.60 or even 78 has opened now. Every corrective rally till 80.30-55 may face selling pressure. The long term trend may get severely bearish below 79.10.

The Euro (1.3908) is trading above the major resistance band of 1.3850-85 and it may rise to 1.3950-1.4050 now. Above 1.4050-1.41, the long term trend will turn firmly bullish.

Dollar-Yen (102.75) has broke above the broader range of 101-103 and reached the 2013 top at 103.75 before coming off the highs a bit. Staying above 102.70-80 will keep the trend up but for rising higher towards 105, a break above 103.75-90 is required.

The Euro-Yen Cross (142.86) broke out of the range of 138.80-141.30 to reach 143. The long term uptrend may have resumed and it may rise further towards 145.50-146 now.

Pound (1.6625) is in a correction of its major uptrend now which may extend to 1.6550-1.65 only if breaks the support of 1.66-1.6580. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.6440-30 may be bought into.

Aussie (0.9070) has bounced towards 0.91 from our support around 0.8950 as expected. A break above 0.91 may extend the rally to 0.9165 and 0.9250.
Dollar-Rupee (61.22) rallied to make a high at 61.26 in line with our expectation but yet to break above 61.35. It may correct the rally now with support coming at 61 and then 60.90-80.

Dollar-Rupee (61.22) rallied to make a high at 61.26 in line with our expectation but yet to break above 61.35. It may correct the rally now with support coming at 61 and then 60.90-80.

INTEREST RATES
The US 10Yr (2.74%) saw a drop yesterday, but is still maintain our range of 2.60-2.80%. It has come down to test the support on the weekly. The 10-5Yr yield differential (1.14%) is also just above the support at current levels. With the 10Yr and the 10-5Yr yield differential trading just above support we may see the 10Yr bounce from here if the supports hold.

The German 10Yr (1.59%) dropped from the resistance zone near 1.65-1.67%. We may now see it dipping further towards 1.55% and further while below 1.60%. The 10Yr Bund-Bond Spread (-1.09%) has risen as the Euro (1.3908) continues to trade higher.

The Japan 10Yr (0.64%) has seen a rise and can now testing the channel resistance near 0.65-0.66%. The US-Japan 10Yr spread (2.09%) has dipped further and can target 2.00%.

India's 10Yr GOI (8.72%) remained stable waiting for the IIP and CPI data which came out after market hours yesterday. The IIP came in at 0.10% and the CPI at 8.10%. With better than expected results we may see the yields going up. But that needs to be watched.

DATA TODAY

0:30 GMT or 6:00 IST Australia Labour Force
...Expected 15.30 K ...Previous 18.0 K ...Actual 47.3 K

12:30 GMT or 18:00 IST US Retail Sales
...Expected 1.87 % ...Previous 2.21 %

DATA YESTERDAY

EU IND Prodn (MoM)
...Expected 0.50 % ...Previous -0.30 % ...Actual -0.20 %

EU IND Prodn (YoY)
...Expected 1.90 % ...Previous 1.61 % ...Actual 1.61 %

IN CPI (Feb'14)
...Previous 8.79 % ...Expected 8.10 % ...Actual 8.10 %

IN IIP (Jan'14)
...Previous - 0.20 % ...Expected -1.10 % ...Actual 0.10 %