Vikram Murarka
Kshitij Consultancy Services
GOOD MORNING!
STOCKS
Generally bullish outlook for Equities despite the end of QE with the exception of the Dax and Shanghai.
The Dow (16974.31, -0.18%) dipped to an intra-day a low of 16895 on the end of QE, but closed indecisive with minor losses. Current trend remains bullish to 17150, maybe even 17350, while the near-term Support at 16850 holds.
The Dax (9082.81, +14.62, +0.16%) seems hesitant to rise past 9200, which keeps it vulnerable to fresh declines in the medium term, as the big Bear SHS is still in play. A rise past 9200 and 9400 is needed to negate the bearishness.
The Nikkei (15610, +95.71, +0.62%) is holding onto gains of the last few days. A Close above 15600 today will open up chances of 16000 on the upside putting the structural weakness mentioned yesterday on the backburner.
The Shanghai (2377, +0.18%) trades just below crucial Resistance near 2380. Failure to rise past 2380-90 and 2410 could make it vulnerable to fresh profit-taking. Not looking as bullish as the others.
The Nifty (8090, +62.85, +0.78%) finally closed above 8050 yesterday and may well open higher and move up towards 8200 today.
COMMODITIES
Gold (1213.23) dropped sharply as Dollar strengthened after the FED meeting yesterday. As said earlier, there is a possibility of retesting 1200-1180 levels in the near term. Near term is bearish.
Silver (17.20) however continues to remain stable with some bearish possibility coming in. Trading just above crucial levels, a fall below 17 may take it steadily lower to 16.5-14 levels.
Nymex WTI (81.90) showed some positive move yesterday but is yet to break above 84. If the rise continues we may expect a rise towards 84-86 soon. The range of 80-84 holds well for now keeping the near term positive.
Brent (86.98) is also showing some signs of rising but confirmation can only come if it sustains above 88.5. Near term looks positive and we may see a rise towards 90.
Copper (3.0820) dropped from crucial mid-term resistance near 3.1140 after the FED’s decision to end the purchase of bond. However this is a short term correction which may last for a couple of sessions before rising sharply again towards 3.10-3.1140.
FOREX
Strong rise in the Dollar against the Euro (1.2600), the Yen (109.10) and Pound (1.5974) after the FOMC meeting yesterday. While the Dollar has definitely picked up yield advantage, the rise in Dollar-Yen has been aided by the rise in Nikkei as well.
The Euro and Pound could see accelration on the downside on breaks below 1.2565 and 1.5900 respectively, targeting 1.2500 and 1.5800 in the near term. Dollar-Yen looks set to rise towards 110 and possibly higher.
The Aussie (0.8776) had risen to as high as 0.8911 in the US session yesterday, but has fallen sharply after the FOMC. A further dip to 0.8700 is possible on a dip below 0.8750 but the overall outlook may be ranged for a couple of days. The Aussie is not as bearish as the three Majors in the near term.
Decent chances that Dollar-Rupee (61.3550) will move up towards 61.50 today on the overall Dollar strength globally.
The Russian Rouble (43.17) continues to lose big time. It has fallen 23.8% since 33.54 in June.
INTEREST RATES
Apart from ending QE as slated, the FOMC made mention of "“solid job gains and a lower unemployment rate”,
Decent rise in the US 2Yr (0.48%) yesterday from 0.42% the day before after the end of QE. The 5Yr (1.58%) and 10Yr (2.31%) have also risen but may still have Resistance near 1.60% and 2.35-40% respectively. The charts are not unambiguously calling for higher rates yet and overall Curve flattening is still a valid possibility for some more time.
The US-Japan 10Yr spread (1.85%) has moved up slightly. It is now back in bullish territory and could move up towards 1.90% and even higher. The German-US 2Yr Spread (-0.52%) has moved down more and looks further bearish towards -0.55% and lower.
The Indian 10Yr GOI had closed lower at 8.3178% yesterday. Further fall towards 8.25% is possible in case of a break below 8.30%. Interestingly, Brazil has raised interest rates on the other side of the Emerging Markets world. The markets have not taken kindly to the re-election of Dilma Rouseff.
DATA TODAY
9:00 GMT or 14:30 IST EU Biz Climate
...Expected 99.5 ...Previous 99.9
12:30 GMT or 18:00 IST US GDP
...Expected 3.10 % ...Previous 4.50 %
DATA YESTERDAY:-
US FOMC Meeting
...Expected <0.25% ...Previous <0.25 % ...Actual <0.25 %
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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