Market Morning Briefing

GOOD MORNING!

STOCKS
In the absence of any big event or significant data, all the markets have traded very quietly and the Asian markets this morning are not an exception to that. The Indian market may show some movements ahead of the long weekend and today being the Expiry session of the F&O segment.

Dow (17122.01, +0.09%) took a pause trading inside the range of the previous session. We keep watching the price action at the next resistance area in 17300-400 for short term guidance. Dax (9569.71, -0.19%) may reverse the major downtrend, contrary to our expectation of more fall, if it breaks above 9800. The bears must attack immediately from 9600-800 to survive or else a rise towards a new high, even 10600-700 would emerge.

Nikkei (15458.30, -0.49%) has broken the 4-day narrow range of 15500-650 on the downside and may test 15200-100 in the short term. The Shanghai (2212.23, +0.13%) is trading just in the middle ground of the range of 2170-2270 with immediate support at 2200-2190. Bear domination expected below 2170 and bull domination above 2270. Till a breakout takes place, expect fluctuations in the range of 2170-2270.

Nifty (7936.05, +0.40%) is stuck in the 1.5% range of 7860-7970 for the last six sessions. In today’s expiry session, a decisive move can be expected and a break above this range can take the index to our target level of 8000-20.

COMMODITIES
Gold and Silver looks positive in the near term while Crude market is bearish.Copper is trading low and may remain ranged for now.

Gold (1286.37) has risen from crucial support near 1270 and may continue this rise for a short term targeting 1300-1320. Possibility of about 5-10% rise could be seen against Euro, Dow and Rupee. Also look at Gold-WTI ratio (13.69) which is in a rally upwards and may see levels of 14.5-15. http://www.kshitij.com/graphgallery/crudeandgold.shtml#ma Near term is bullish within an overall downtrend.

Silver (19.518) has been held for now by support near 19.26 and may see a short term bounce from here towards 19.75-20. Gold-Silver ratio (65.842) seems to remain stable for now in the 65.5-66.75 region and may remain sideways ranged in the near term.

Nymex WTI (93.91) is finding it difficult to rise just now above levels of 94-94.5 and while below 95, chances of a fall towards 92-90 remains. It may extend the fall downwards soon after a short term ranged phase.

Brent (102.66) is rising steadily but note that an important resistance is coming up near 104 which if holds may push the Crude to levels of 101-100. 104 and 105 are crucial resistance levels and possibility of these levels to hold look much stronger for now.

Copper (3.1765) is trapped in the 3.10-3.22 region fluctuating between support and resistance. It has fallen from 3.22 and is targeting 3.10 again before rising towards 3.25. Ranged move could be seen in the coming sessions.

FOREX
The Majors like Euro and Sterling have been trying to make a base since Monday. Is it just a pause before resuming the fall or a precursor to a short term reversal attempt? The answer should be clear by the end of this week.

Euro (1.3211) is testing the upper end of the 4-day range of 1.3150-3220 and a break above 1.3220 may extend this small bounce to 1.3260-1.33 levels. That will delay but not negate achieving our medium term target of 1.31.

Dollar-Yen (103.74) is undergoing the expected correction but the intermediate trend remains up above 103. Some more consolidation in 103.50-104.50 is possible before higher levels come. The grinding price action without any kind of directional move in Euro-Yen (137.06) actually shows the relative uniformity between Euro & Yen as both weakened simultaneously. The pair remains weak below 138 and the range of 136-138 may sustain for a few sessions more.

Pound (1.6591) is stuck within a 50 pips range for the last 5 sessions and a break above 1.66 may produce a corrective rally to 1.6650-1.6700 with the major downtrend still in force.

Aussie (0.9357) is testing the August high at 0.9375 levels but the lack of momentum doesn’t promise much more immediate upside. A failure to break above 0.9385-0.9400 may drag it down towards 0.9280-50 levels once again.

Dollar-Rupee (60.4550) remains below our resistance 60.65-70 for the last 3 days and may test the lower end of the range of 60.35-70 today. As mentioned earlier, a break of 60.37-35 opens up the door to 60.00-59.85.

INTEREST RATES
German and US Yield Curve continues to flatten. A low interest rate environment seems to prevail generally. But, the KSHITIJ E-4 Composite Yield hits a Support.

The German-US 2Yr Spread (-0.54%) has moved up 1bp from -0.55% earlier. The Support near -0.60% mentioned yesterday may hold for the next few weeks, or at least till next Thursday's ECB Meeting.

The German 10Yr (0.91%) has been trading well below 1% for a week now and has further room to fall towards 0.80% and even 0.70%, leading to Curve flattening. The French 10Yr (1.25%) looks set to nosedive towards 1.0%, maybe lower.

WARNING, however, the KSHITIJ Euro-4 Composite 10Yr Yield (1.1525%) has hit a long-term trendline Support and as such, we should also be careful about a possible bounce. The Euro-4 include Germany, France, Spain and Italy.

The US 2Yr (0.51%) has also dipped by 1bp as the Resistance near 0.53% mentioned yesterday holds well. A dip towards 0.45%, if not not 0.40% might be possible. The US 30--5 Yr and 10-5 Yr Spreads (1.46% and 0.71% respectively) continue to decline and seem to have further room to fall. The 30-10Yr Spread (0.75%) is also in a downtrend with chances of seeing 0.70% ahead.

In India, the 10Yr GOI (8.5558%) remain relatively high, but we think there are chances of seeing lower levels while the market remains below 8.60-65%

DATA TODAY

9:00 GMT or 14:30 IST EU Biz Climate
...Previous 102.0

12:30 GMT or 18:00 IST US GDP
...Expected 3.90 % ...Previous 3.90 %


DATA YESTERDAY
No major data release yesterday.