Market Morning Briefing

GOOD MORNING!

EQUITIES
This is another day when the ghost of the Chinese economic slowdown keeps the markets nervous as the equities, commodities and EM currencies remain weak.

Nikkei (14908.47, -2.07%) 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 (2010.96, +0.49%) broke below the support of 2020-15 to test the January low. It is facing selling at the 2015-20 area now on bounce as expected and the short term trend may be decided here. A break below 1980 may take it to 1950-45.

Nifty (6511.90, -0.39%) 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 (16351.25, -0.41%) 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 overall up while Crude and Copper trades sharply lower on China concern.

Gold (1356.9) has resumed its rise after pausing for a few sessions targeting 1375-1380 in the near term while above 1360.

Silver (21.075) has also risen from 20.6 levels and may target immediate resistance near 21.48-50. If that holds we may see a little downward correction else; may see a rise to 22 while above 21.5.
Copper (2.95) tumbled further as the Chinese Yuan weakened against the Dollar. Immediate support coming up near 2.85 and further near 2.70 from where a possible bounce may be expected. A break below 2.70 would give us the first signal of a major bear trend.

Brent (108.28) has bounced a bit from the 20-day MA but is likely to consolidate for some more time. Immediate support can be seen near 107 on the downside from where we may see a rise in the coming weeks.

Nymex WTI (99.54) fell sharply on China concern. Bears seem to be more dominant for now but while above 98.63 there is a possibility of an eventual rise to 102 levels.

CURRENCIES
Dollar Index (79.7860) 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 (1.3860) 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 (103.04) 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 (142.78) 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 (1.6626) is in a correction of its major uptrend now which may extend to 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 (0.8963) has broken below the support of 0.90 to nullify the bullish momentum and currently testing the support of 0.8950. A bounce from 0.8950 can still take it to 0.91 but a failure would drag it down to 0.89-0.88.

Dollar-Rupee (60.95) formed a Bullish Hammer pattern in the charts. The same pattern is visible today in Euro Rupee (84.40) and Yen Rupee (58.99) as they bounced from their respective support of 84 and 58.60. A break above 61 may take Dollar Rupee to 61.35 above which it may extend to 61.55-75.

INTEREST RATES
The US 10Yr (2.77%) remained stable yesterday and is on a steady rise towards 2.80%. A move past 2.80% and we may see the yield go up to 2.90% in the days to come. Or else we may see a range of 2.60%-2.80%.

The German 10Yr (1.64%) rose yesterday and is testing the resistance zone near 1.65-1.67%. We may see it dipping further towards 1.55% if the resistance holds. A break above 1.67% will take it higher towards 1.80%.

The Japan 10Yr (0.63%) remained stable after the BOJ Meeting yesterday. It had bounced from 0.59% (05-Mar-14) and has been moving up since then and we may see it testing the channel resistance near 0.65-0.66%. The US-Japan 10Yr spread (2.14%) dipped slightly in line with Dollar-Yen (102.90).

India's 10Yr GOI (8.73%) dropped below our range of 8.75-8.80% and may continue so towards 8.70-8.65% and maybe even 8.60%.

DATA TODAY

9:30 GMT or 15:00 IST UK Trade Balance
...Expected -8.70 £ Bln ...Previous -7.72 £ Bln

10:00 GMT or 15:30 IST EU IND Prodn (MoM)
...Expected 0.50 % ...Previous -0.79 %

10:00 GMT or 15:30 IST EU IND Prodn (YoY)
...Expected 1.90 % ...Previous 1.21 %

12:00 GMT or 17:30 IST IN CPI (Feb'14)
...Previous - 8.79 %

12:00 GMT or 17:30 IST IN IIP (Jan'14)
...Previous - -0.06 %

DATA YESTERDAY

BOJ Meeting
...Previous <0.10 % ...Actual <0.10 % ...Expected <0.10 %

IN Trade Bal (MoM)
...Previous - -9.92 $ Bln ...Actual -8.13 $ Bln