Market Morning Briefing

GOOD MORNING!

STOCKS
Strong profit-taking in most markets. The Dow (18203.37, -0.47%, -85.26), Dax (11280.36, -1.14%, -130) and Nikkei (18644, -0.91%, -171.29) are all down. The Shanghai (3267) is up a mere 0.14%. We had warned of impending profit-taking in the Dax yesterday itself.

But, we are slightly disappointed that that Dow did not attempt further rise towards 18400 at all. A dip/ break below 18200 could make it vulnerable to a decently deep correction towards 17800-500.

Most major Indices are trading just above very crucial Supports (18550 on the Nikkei, 11200 on Dax, 3225 on the Shanghai). There can be danger of further fall, unless there's a sharp bounce very soon. The Nikkei and Dax appear more vulnerable alongwith the Dow. The Shanghai has deeper Support at 3200 also and might manage to remain ranged rather than falling. 

Indian Nifty (8996.25) may well buck the trend and reach up towards 9100-9200 as the RBI has just cut Repo Rates by 25bp before the market opening today.

COMMODITIES
Copper (2.6640) is almost stable. The weekly resistance near 2.70 and the 21-day MA on the 3-day line charts has held well. But this does not give a clear bear signal as there is crucial support near 2.65. A sustained break below 2.65 will be the first sign of a downmove towards 2.60-2.5. If 2.65 holds, we may see some consolidation in the 2.65-2.70 Near term is bearish.

Nymex WTI (50.64) has held below the 13-day and 21-day MA near current levels while Brent (60.71) is trading above the 21-day MA. Nymex has support near 48 and Brent is trading along the channel support. We may see gradual rise towards 64 (Brent) and 52-53 (WTI) in the near term. Possibility of very narrow moves before a sharp break on either side. 

Gold (1206.47) made an intra-day low of 1195 ( we had mentioned 1190 on the downside) yesterday but came back to levels above 1200 yesterday. The range of 1190-1220 remains intact for the coming sessions. Fluctuation in the said range is possible. No clear direction in the very near term. As said earlier a break below 1190 if seen may take it to lower to 1175. 

Silver (16.36) has held below the channel resistance on the daily charts. See chart:http://www.kshitij.com/graphgallery/silvercandle.shtml#candle
The movement is expected to be very narrow in the next couple of sessions in the 16.5-16 region. A break out on either side of the range is expected in the next week which would determine further direction. This week may see ranged movement. Long term trend is down.

FOREX
Yen and Pound could strengthen in the coming days/ weeks while the Euro and Aussie could weaken afresh. This is something to be watched thematically. Dollar-Rupee could possibly try to break below 61.70 on the back of the RBI's Repo Rate cut today.

The Euro (1.1179) is seeing low and falling volatility within the overall downtrend that still targets 1.1045 while below 1.13. The low volatility is making the time taken to be longer than expected. The previous low near 1.1114 needs to break as confirmation of further decline. 

Dollar-Yen (119.59) can dip some more towards 119.25-15 as it remains subdued after pushed down from 120.25, just below our Range Resistance at 120.35 the day before. Chances of dip to 119.00-118.70 cannot be ruled out. The Euro-Yen (133.67) is trading lower as warned, with danger of further decline towards 133.00.

Support at 1.5335-15 continues to hold on the Pound (1.5357) but a false dip to 1.5280 cannot be ruled out. Would want to approach the market from the Long side while above 1.5250.

The Aussie (0.7819) has not broken below 0.7710 yet. It is seeing sideways time correction below 0.79 and danger of eventual fall towards 0.76-0.75 is still there. The movement in the Aussie and Euroare quite similar at the moment.

INTEREST RATES
The 10Yr GOI (7.7541%) saw a sharp movement yesterday rising initially to 7.7641% during the day before closing at 7.7541%. RBI has cut Repo rate by 25 bps and the GOI yields may open the day lower near 7.5% levels. A rise to 7.81% mentioned yesterday is negated for now. 

US Bond yields are clearly moving up sharply but a short downmove may be expected in the near term before resuming the movement upwards. The 10Yr yield (2.13%) continues to remain in the 1.80-2.30% range and may remain so for some more time.

The Japanese yields are up. The 10Yr (0.26%) yield has risen slightly and may continue to move up towards 0.3-0.33%. But there is still room on the downside towards 0.2% which may be tested after a short rise to 0.33%. The US10-Y10 (1.87%) spread is testing resistance near current levels and may be pushed to 1.80% in the near term. 

DATA TODAY

10:00 GMT or 15:30 IST EU Retail Sales 
...Expected 0.20 % ...Previous 0.30 % 



DATA YESTERDAY:-

RBA Meeting 
...Expected 2.00 % ...Previous 2.25 % ...Actual 2.25 %

CH GDP 
...Expected 0.30 % ...Previous 0.66 % ...Actual 0.60 %

CA GDP 
...Expected 0.20 % ...Previous -0.20 % ...Actual 0.3 %