Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
EQUITIES
Nearly all the markets are trading flat as the Bank of Japan meet came to a conclusion just now with no changes in the monetary policy in line with the consensus.
Nikkei (15231.47, +0.74%) has found selling at our target resistance of 15200-300 as expected and may turn range bound once again inside the broader range of 14600-15300.
Shanghai (2003.32, +0.21%) broke below the support of 2020-15 to test the January low. It may find selling at the 2015-20 area now on any bounce where the short term trend may be decided. A break below 1980 may take it to 1950-45.
Nifty (6537.25, +0.16%) consolidated at the higher levels for a 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 (16418.68, -0.21%) is consolidating in the band of 16400-600 and it requires a successful break above 16400-600 to rise towards 17000 soon.
COMMODITIES
Gold (1339.4) is ranged for now and may consolidate within the 1324-1354 region for a few sessions before heading towards resistance near1360. Overall the recent uptrend remains intact.
Silver (20.821) fell further below support near 20.98-99 and may test immediate support zone of 20.49-20.59. Gold-Silver ratio (64.3) rallied to current levels from 60.2 levels in the past three weeks and may pause for some time now. A rise above 64.5 will signal sharp fall in Silver prices.
Copper (3.0385) continues to trade low testing long term support near 3.00. If this holds, it may again bounce back towards 3.15-3.20. While the bears are still on the cards, a rise may be difficult for now with lower momentum.
Brent (108.07) and Nymex WTI (101.16) are both trading lower. No major movement expected for now but if the bears maintain their force we may see a further slide in prices. Need to wait and watch for further direction.
CURRENCIES
Dollar Index (79.80) 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 (1.3867) is trading in the major resistance band of 1.3850-85 and if it manages to break above this, it can rise further to 1.3950-1.4050. Above 1.4050-1.41, the long term trend will turn firmly bullish. But, the Bund-Bond Yield Spread is not supportive. So, this needs to be watched.
Dollar-Yen (103.36) 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 (143.32) 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 (1.6639) is in a correction of its major uptrend now which may extend to 1.6540-1.65 only if breaks the support of 1.66. It may reach 1.69-1.7050 after the current correction finishes. All the dips till 1.6470-80 may be bought into.
Aussie (0.9035) is testing the support of 0.9050 now after breaking out of the range of 0.89-0.91 on the upside and opened the possibility of a rally towards 0.93 or even more. Only a break below 0.90 will make this false breakout and nullify the bullish scenario.
Dollar-Rupee (60.85) failed to break above our initial reversal level of 61.35 mentioned yesterday and crashed to the all important support band of 60.80-70. Holding this zone may produce a bounce to 61-61.15 but the reversal level remains the same at 61.35. A break below 60.70 may drag it down to 60.50-45 and then 60.25-15.
INTEREST RATES
The US 10Yr (2.78%) is rising steadily towards the upper boundary of our range of 2.60-2.80%. A move past 2.80% and we may see the yield go up to 2.90% in the days to come.
The German 10Yr (1.62%) has dipped. With the 10-5Yr yield spread (0.97%) falling (1.01% on 20-Feb-14) we may see the 10Yr Bund yields dipping further. The 10Yr Bund-Bond Spread (-1.13%) remained stable. The 2Yr Bund-Bond Spread (-0.19%) also remained stable and can target -0.10%.
The Japan 10Yr (0.63%) saw a slight rise ahead of the BOJ Meeting today. There were no changes in the monetary policy statement. The US-Japan 10Yr spread (2.15%) also remained unchanged.
India's 10Yr GOI (8.78%) dipped yesterday. We see the yield ranged between 8.75-8.80% for now. A move beyond this range will give us further direction.
DATA TODAY
3:00 GMT or 8:30 IST BOJ Meeting
...Previous - <0.10 %
7:00 GMT or 12:30 IST IN Trade Bal (MoM)
...Previous - -9.92 $ Bln
DATA YESTERDAY
JP GDP
...Expected 0.20% ...Previous 0.30% ...Actual 0.20 %
The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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