Market Morning Briefing

GOOD MORNING!

STOCKS
The stand-off between USA and Russia keeps going on and affects the wheat price to the higher side. The global equity markets ex-Japan are not taking these developments in a positive light.

The Dow (16501.65, +0.00%) is trading sideways close to 16600 levels after bouncing back from 16000 levels for the third time in the last 9 weeks. But the bulls still need a new high above 16630 to confirm the resumption of the uptrend.

The Dax (9548.68, +0.05%) is not finding it an easy task to break above 9720 as it displays nice volatility near it. It must break above 9720 for a target of 9970-10000. Weakness may set in below 9400.

In the Asia-pac, Shanghai (2059.58, +0.12%) has found support for the second time in 2050-35 as expected and has been trading sideways between 2050-35 on the downside and 2100-15 on the upside for the last few sessions in line with our estimates.

The Nikkei (14495.57, +0.63%) is facing selling pressure from the strong resistance of 14675-700 with the Yen weakening a bit more. The trend remains weak below 14675-700 and we may see 14200 again. But a break above 14700 will take it higher to 15000. Bias is neutral now.

The Nifty (6840.80, +0.37%) has signaled its intention to go higher towards 6950-7000. Any correction on the way to the higher levels should be limited to 6800-6780 now. A sharper correction would bring the possibility of a sideways move between 6650-6850 for the next few days, which can’t be ruled out in the light of the upcoming General Election result. Today may be the day to ascertain the real strength.

COMMODITIES
Copper and Gold is trading higher while Silver may consolidate. Oil market is potentially strong.

Gold (1292.41) bounced from support near 1270 levels just as expected and may now rise towards 1300-1310 while still within the overall downtrend.

Silver (19.57) fluctuated highly in the 19.91-18.93 region taking support near 18.93 but may consolidate sideways for a few more sessions in the 19.0-20.0 regions while in an overall downtrend. Gold-Silver ratio (66.02) has bounced from support near 65.5 and may target 67 in the coming sessions.

Copper (3.1160) as expected, has shown its first break out above 3.10 since the last one month and if this sustains it may target resistance near 3.15-3.17 in the coming sessions. A rise above 3.17 would initiate a fresh uptrend.

Brent (110.34) has resumed its rally towards resistance near 112 while WTI Crude (101.97) may now rise towards 104-105 while above 100.76. Overall both are in an uptrend.

FOREX
The currencies continue to trade in a very narrow range for this entire week and therefore absolutely no change is visible in except Aussie and Dollar Rupee.

Dollar Index (79.7560) has been struggling near 80.00-80.10 as expected. The broad range of 79.25-80.50 may remain in force for some more time. Only on a break above 80.55-60, the trend will reverse from down to up.

The Euro (1.3835) is trying to bounce from our support zone of 1.3790-60 and rally higher above 1.3865. From the broader perspective, for major gain it has to break above 1.40 and simultaneously Dollar Index must break below 79.

Dollar-Yen (102.42) has been pushed down a bit by the resistance at 102.75-103.00 as expected but without any serious momentum. It has managed to hold above 101.50-20 so far to remain in the 10 week long broad range of 101-104. We keep watching the long term support at 100.75-50 for major moves.

The Euro-Yen Cross (141.70) is testing our resistance of 141.65-90 after finding buying support from 140.50-139.50 as expected. Now a break above 141.65-142.00 may take it higher towards the major resistance of 143.50.

Pound (1.6806) has finished the small correction and resumed its major uptrend in line with our expectation. It may reach 1.7000-50 in the next 1-2 weeks as the short term momentum remains intact above 1.6730-10.

Aussie (0.9271) broke below 0.9300 to test 0.9250 levels and may face selling pressure on all rallies now till it manages to break above 0.9380-0.9400. Major supports are at 0.9200 and then 0.91340-30.

Dollar-Rupee (61.07) reached our target of 61.20. The trend remains firmly up above 60.95. Next target comes at 61.35-50.Use any dip to get into longs till 60.60-40.

INTEREST RATES
The US 10-5Yr yield spread (0.95%) has fallen below the support contrary to our expectation as the US 10Yr yield (2.69%) dropped further while the 5Yr yield (1.74%) moved up slightly. A break above the resistance at 1.75% and the 5Yr can rise further towards 1.85%. The 10Yr on the other hand is vulnerable to a fall towards 2.65% while below 2.70%.

The German-US 2Yr spread (-0.25%) and the 10Yr spread (-1.15%) saw a rise as the Euro (1.3835) rose further. The German 10Yr yield (1.53%) has also seen a slight rise. A break beyond 1.55% and the 10Yr can target 1.60%.

The US-Japan 10Yr spread (2.06%) has come down to test the support at current levels and can bounce from here along with the Dollar-Yen (102.41) which dipped slightly and can see a bounce from the support zone of 102-102.50. The Japan 10Yr yield (0.62%) is up and is testing resistance at current levels. A break above the current resistance can take it towards 0.65%.

The Indo- US 10Yr spread (6.15%) remained unchanged and is testing support at current levels from where we may see a bounce. The Indian 10 Yr GOI yield (8.85%) is stable but can drop further to test the support near 8.75% before a bounce back to 9.00% and beyond.

DATA TODAY

No major data release today.

DATA YESTERDAY

Mumbai Election - - -

GER IFO Business Climate
...Expected 110.50 ...Previous 110.70 ...Actual 111.20

GER IFO Business Situations
...Expected 115.70 ...Previous 115.20 ...Actual 115.30

GER IFO Business Expectations
...Expected 105.90 ...Previous 106.40 ...Actual 107.30

US Durable Goods Orders
...Expected 2.00 % ...Previous 2.07 % ...Actual 2.60 %