Market Morning Briefing

GOOD MORNING!

STOCKS
Middle East violence has caused risk-off mode to prevail, resulting in some muted performance by the global markets. But none of them (ex-China) are showing any signs of deeper correction yet.

Dow (16818.13, -0.70%) came down from the higher end of its range as it is stuck in the range of roughly 16700-17000 (+/- 50) for the last 3 weeks. Only a break below 16700-600 may signal a deeper correction towards 16300. The Dax (9938.08, +0.17%) keeps trading in the range of 9800-10050 but another push up to 10300-400 remains on cards as long as it stays above 9800-700.

Nikkei (15318.20, -0.38%) may rally towards 15900 levels if it can hold above 15200 and breaks above 15450. But the risk of selling pressure form 15400-700 may make the life tough for the bulls. The Shanghai (2025.19, -0.43%) has bounced exactly from our 2010 levels to keep the broader sideways movement intact which may continue as long as the price holds above 2010-1990.

Nifty (7580.20, +1.16%) achieved all our targets at 7560-90 and confirmed the bottom at 7442 as expected and now a natural pause can be expected after this sharp 2 day rally. As long as any correction is limited to 7540-20, we may see 7630 coming in a day or two, above which 7900-8000 comes into the picture.

COMMODITIES
Silver (20.826) made an intra-day high of 21.5 (crucial resistance) yesterday from where it came off slightly. It may consolidate sideways for a few session before retesting 21.5, else may be pushed to 20.5. Gold-Silver ratio (63.123) has paused after a long downfall from 66.9, bouncing up from support near 62.5. It may now remain in the 62.5-63.5 zone for a few sessions and then start moving upwards to 64-64.5 in the near term.

Gold (1315.03) is trading on a higher note and looks positive. It may range in the 1300-1330 region for some time now. Note that it has come off a bit from the weekly resistance and if that holds, we may see a fall to 1250-1200 in the near term.

Nymex WTI (106.8) has been whipsawing in the 105-107 range for a few sessions now making it difficult to determine further moves. Unless a break on either side of the range is seen we may expect it to continue whipsawing in the said range. Also note that it has bounced from 105.5 as expected and the mid-term trend is up. The Gold-WTI spread is near the channel resistance at 12.5 and may now come off to 12-11.8 levels indicating a rise of WTI against Gold.

Brent (114.18) is trading below crucial resistance near 115.6 levels but may retest 115.6 in the coming sessions. But while below 115.7 we cannot negate a fall to 112.67 before bouncing back towards 115.

Copper (3.1465) has risen a bit and may retest 3.15 in the coming sessions. A break above 3.15 may take it higher towards 3.20-3.22 in the near term else may come off to 3.10-3.07.

FOREX

The sudden dovish tone from the earlier hawkish one by BOE is reflecting the same mood as the US Fed now. Does the BOE wants the Pound below 1.70 just like the ECB wants to keep the Euro below 1.40? We will see.

Euro (1.3602) is trading in a very narrow contracting range of 1.3550-1.3650 but it needs to confirm any bullishness by a break above 1.3680-90, which may lead to rallies towards 1.38 or more.

Dollar-Yen (101.89) is stuck in the range of 101.50-102.75 for the nearly two weeks as expected. Now only a break above 102.70 or below 101.50 may bring any directional move. The Euro-Yen (138.59) has been following the same route as Yen with its complete lack of movement. It still runs the downside risk of testing 137 but there is a bullish reversal possibility, suggested by indicators, to be confirmed only on a break above 139.50-60.

Pound (1.6975) is correcting the last sharp rise and may test 1.6925-1.6900 now but this correction should be limited to 1.69 to keep the bullish momentum intact.

A breakout in a low volatility environment is very difficult and Aussie (0.9360) showed that by failing to break above 0.9440-60 and back into the range of 0.9200-0.9450 which may continue for a few sessions more.

The range has contracted in 60.00-25 for the last 2-3 days but Dollar-Rupee (60.13) may continue trading in the broader range of 60.00-50 for some more even if the noise increases a bit. Trade this range with strict stoploss beyond the boundaries.

INTEREST RATES
The US 10-5Yr yield differential (0.91%) is stable though in a near term down trend. It may target 0.87-0.85% in the near term indicating a further fall in the US yields. The US 10 Yr yields (2.58%) has fallen as expected, ahead of the US GDP due today. The US 5 yr yield (1.67%) and the US 30 Yr yield (3.40%) are also lower.

The German 5Yr (0.39%) is stable, above crucial support at 0.37% and may rise a bit towards 0.40-0.45% in the coming weeks. The German 10Yr (1.32%) is also stable and may head towards upcoming support at 1.2%.

The Resistance on the US-Japan 10Yr spread (2.0%) has been holding for a few sessions now and the spread has come off slightly from 2.04% yesterday.

The Indian 10Yr GOI (8.72%) fell sharply yesterday and as said earlier, the broad 8.5%-9.10% zone may hold for some more time in the near term while the rates may fluctuate in the said region.

DATA TODAY

12:30 GMT or 18:00 IST US Durable Goods Orders
...Expected -0.1 % ...Previous 0.62 %

12:30 GMT or 18:00 IST US GDP
...Expected -1.70 % ...Previous -1.00 %


DATA YESTERDAY

GER IFO Business Climate
...Expected 110.20 ...Previous 110.40 ...Actual 109.70

GER IFO Business Situations
...Expected 115.00 ...Previous 114.80 ...Actual 114.80

GER IFO Business Expectations
...Expected 105.90 ...Previous 106.20 ...Actual 104.80

US New Home Sales
...Expected 442 K ... Previous 433 K ...Actual 504 K

US Cons Conf
...Expected 83.60 ...Previous 82.20 ...Actual 85.2

US Case Schiller
...Expected 11.70 % ...Previous 12.40 % ...Actual 10.80 %