Market Morning Briefing

GOOD MORNING!

EQUITIES
A sudden selloff materialized in the Tech space in the US markets with Nasdaq falling by over 3%, the highest since 2011, which pulled all the other markets down too. Many of the markets including Dow has been moving in a broader range and the sentiment is getting whipsawed every other day.

The Dow (16170.22, -1.52%) once again raised suspicion about our bullish stance as the tech selloff affected it in a big way. To avoid getting whipsawed in this most difficult of the times, we better get bullish only on a firm closing above 16600-50 or bearish on a break below 16000-15800.

The Dax (9454.54, -0.54%) is slowly losing any bullish hope as it keeps failing to break above 9730-9800 to signal the next phase of the rise. We watch the support of 9300 now with a neutral bias.

The Asian markets are trading deeply in the red.

The Nikkei (13969.65, -2.31) has broken below the crucial long-term Support at 14200-150 and may drop to 13750 and then 13250 in the coming days.

The Nifty (6796.40, +0.00%) may open lower in sync with the global cue but it will be important to see how the gap down opening is handled by the bulls. The short term bullish momentum remains intact above 6745-35.

COMMODITIES
Gold (1319.215) came off a bit after an intraday high of 1325.2 yesterday. While above 1325 we may see some more scope of rise towards 1340-1375 before falling back to 1310 levels.

Silver (20.013) came off from resistance near 20.40 but may again try to break above 20.4-20.5 zone. The Gold Silver ratio (65.883) is in a near term uptrend and while above 65.5, it may target 66.58-66.75. This may indicate a rise in the metals for a few more sessions.

Copper (3.035) remains ranged in the 3-3.07 region and may continue so for some more time. Unless a break of this range is seen further movements remain indecisive. It has been in a near term uptrend since mid-Mar’14.

Brent (107.52) is testing support on the daily as well the weekly charts indicating near term bullishness. If this holds we may see a rise towards 109-110 while it breaks 108-108.5. But we cannot negate a fall from 108 levels just now.

Nymex WTI (103.26) has come off a bit after testing channel resistance near 103.77-80 on the Daily charts. If this holds near term movements may restrict in the 102-103.8 region for sometime before targeting 104-106.

CURRENCIES
Dollar Index (79.41) bears have the best chance in the last few weeks to push it further down to the major support zone of 79-78, but expect some fight from the bulls from 79.25-79.

The Euro (1.3894) is testing the resistance of 1.3885-1.39 in its best week in the last few months and 1.40 looks possible. From the broader perspective, for major gain it has to break above 1.40 and simultaneously Dollar Index must break below 79.

Dollar-Yen (101.59) has reached a very crucial point as it stands on the lower end of the 10-week channel. Holding above 101.50, a gradual bounce towards 103 is possible but a break below 101.50 may take it to the final medium term support at 100.75-50. Our bias is neutral.

The Euro-Yen Cross (141.15) is testing the support band of 140.50-139.50 and the price action here may determine the medium term trend. The bulls may attempt a comeback from the 139.50 area.

Pound (1.6772) is facing some selling at 1.6780-1.6820 area as expected but after this small correction the major rally may resume towards 1.70-1.7050.

Aussie (0.9384) is facing selling pressure at the higher levels as expected but the uptrend remains intact as long as 0.9325-20 is not broken. Our bias is neutral for the moment.

Dollar-Rupee (60.07) broke above 60.20 but faced selling near 60.30 before returning to the day low. The consolidation mode in Dollar Rupee may run a bit longer than expected, especially in the light of an extended weekend. It may trade inside the range of 58.80-60.30 for another session before making any decisive move.

INTEREST RATES
The US 10 Yr (2.65%) and the 5Yr (1.59%) have dipped further towards support near 2.60% and 1.60%-1.55% and we see a bounce back towards 2.75% and 1.75% respectively.

The German-US 2Yr spread (-0.17%) is up slightly along with the Euro (1.3894) which is testing resistance at current levels and is expected to come down from here. The German-US 10Yr spread (-1.08%) has come up further to test the resistance near -1.05%. The German 10Yr (1.52%) dropped and is near our target of 1.50% and we may see a bounce from here.

The US-Japan 10Yr spread (2.05%) has dipped to the Support at 2.05%. The Dollar-Yen (101.59) also dipped yesterday in perfect co relation to the US-Japan yield spread. A fall below 2.05% for the yield spread and we may see Dollar-Yen to come down further to test support near 101. The Japan 10Yr (0.61%) is down. The 10-5Yr yield differential (0.42%) has broken below support and may now test the support near 0.40%.

The India-US 10Yr spread (6.31%) dropped with a further fall in the 10 Yr GOI yields (9.00%). But it is in an overall uptrend that can test 9.25%. But we need to watch out for the IIP Data today and the CPI next week.

The BOE Meeting yesterday concluded with no change in the Interest rates as expected. The Monetary Policy Committee says that it will look at a range of economic indicators rather than specific indicator like Unemployment and suggested that a possible rate hike may happen in 2015.

DATA TODAY

1:30 GMT or 7:00 IST CN CPI (YoY)
...Expected 2.00 % ...Previous 2.50 % ...Actual 2.40%

7:00 GMT or 12:30 IST IN Trade Bal (MoM)
...Previous - -8.13 $ Bln

12:00 GMT or 17:30 IST IN IIP (Feb'14)
...Previous - 8.10 %

12:30 GMT or 18:00 IST US PPI ex Food & Energy (MoM)
...Expected 0.20 % ...Previous 0.11 %


DATA YESTERDAY

CN Trade Balnce
...Expected 0.90 $ Bln ...Previous -22.98 $ Bln ...Actual 7.71 $ Bln

Australia Labour Force
...Expected 7.30 K ...Previous 48.20 K ...Actual 18.15 K

BOE Mtg
...Expected 0.50 % ...Previous 0.50 % ...Actual 0.50 %