Market Morning Briefing

GOOD MORNING!

EQUITIES
Most Equity indices have been seeing a profit-taking fall over the last few days. The overall picture is still bullish but all the Indices need to move up immediately to avoid further fall in the near term which could create doubts about medium term bullishness.

The Nikkei (14340, -266) is seeing a nasty fall that can test crucial long-term Support at 14200-150 over today-tomorrow. The market has taken it badly that the BOJ is not going to ease again soon. A break below 14150, if seen, would require a lot of people to rework their bullish outlook. But, looking at the Weekly Candles, there are chance of a good bounce from here. Some clarification from Kuroda and the market could move up again. Watch the Support today.

The other A-Pac indices are stable/ higher. So no great impact of the Nikkei fall there.

The Dow (16256.14) paused a bit yesterday in a profit-taking fall that started Friday and can extend to 16100-000. Strong bounce is needed from there to prevent danger of dramatic decline below 16000. We remain bullish as of now, but there is a need to be very careful at 16100-00.

The Dax (9490.79, -20.06) fell to an intra-day low of 9391.86 yesterday, but bounced back sharply from there. This is a little encouraging for the overall bullish scenario as the Dax is possibly the weakest of all the Equity indices.

If the Nifty (6695.05 on Monday) moves up today, it will be very bullish with chances of 6900+ over the coming weeks. Failure to rise today can lead to a test of 6600-6580. Such a dip, if seen could lead to bigger doubts about immediate bullishness.

COMMODITIES
Gold (1310.166) is rising after the recent bounce from 1278 levels. Breaking the 1309 level, it may now target 1325 in the near term from where it may fall again towards 1300. Unless a sustained break above 1325-1330 is seen, bearishness would still be on the cards.

Silver (20.046) has been ranged in the 19.6-20.2 region for the last 12 sessions. It is now trying to rise eventually but note that the 20.2-20.5 is a resistance zone and may not allow prices to rise further. Also the movement shows that the bullish momentum has slowed considerably for now.

Copper (3.051) is also trying to rise eventually maintaining the recent up channel. Movements could be restricted within 2.95-3.05 above which it may target 3.10. Till we see some bullish momentum gearing up, the bears would continue to dominate the prices.

Brent (107.72) has risen sharply to target 108 levels. It has broken the channel resistance on the daily and this may be an indication of sharp rise coming in the near term. Need to see if it is able to break 108-108.75 levels above which it may target 110.

Nymex WTI (102.45) has risen breaking the 102.08 level and is targeting the next resistance level near 103.27-103.30. If that holds we may see a fall to 100 before rising again; else it may else further towards 104-106..

CURRENCIES
Dollar Index (79.79) lost its bullishness completely breaking below 80.30-25 and now may move sideways in the range of 79.65-80.50.

The Euro (1.3790) bounced strongly from the support of 1.3675 and now faces the strong resistance at 1.3820-40, which may hold for a session or two.

Dollar-Yen (101.90) 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 (140.50) 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 (1.6744) has achieved all our targets of 1.67-1.6750 and now may face some selling at 1.6780-1.6820 area before extending the rise to 1.70-1.7050.

Aussie (0.9374) has reached our medium term target area of 0.9380-0.9400 and it may be the time for some cautiousness with the longs here as it faces a strong overhead supply zone at 0.94-0.9450.

Dollar-Rupee (60.11) could be affected today by the global Dollar weakness against all other currencies and may dip to 59.95-85 in the early moments. The broader picture remains of a sideways consolidation in the range of 59.50-60.50.

INTEREST RATES
The US 10 Yr (2.69%) and 5Yr (1.67%) fell further, thus flattening the yield curve even further. Contrary to our expectation the yields fell below 2.70% and 1.70%. While below 2.70% and 1.70% we may see the yields target support near 2.60% and 1.60% before we see a bounce towards 2.75% and 1.75% respectively.

The German-US 2Yr spread (-0.23%) has bounced from the support near -0.26%, along with the Euro (1.3790), thus keeping the long term sideways triangle intact. The German-US 10Yr spread (-1.15%) also saw a rise and can come to test the resistance near -1.05%. The German 10Yr (1.56%) remained stable and can target 1.50% while below 1.60%.

The US-Japan 10Yr spread (2.08%) fell further to test the Support near 2.05% and could bounce from here. The Dollar-Yen (101.90) fell sharply and has broken below the support near 102.500 after the BOJ increased the Sales Tax to 8% from 5%. Governor Kuroda said that the BOJ can counter deflation with the positive signs that are coming from the economy and gave no clue as to when any further measure would take place. The Japan 10Yr (0.61%) also dropped. The 10-5Yr yield differential (0.43%) is testing the support near current levels and could bounce from here.

The India-US 10Yr spread (6.38%) has risen further due to the further fall in the US yields and the rise in the GOI yields. The 10Yr GOI (9.10%) has come up to our target of 9.10%. We can expect a further rise towards 9.15% - 9.20%.

DATA TODAY

9:30 GMT or 15:00 IST UK Trade Balance
...Expected -9.30 £ Bln ...Previous -9.79 £ Bln

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