GOOD MORNING! STOCKS
Mixed moves in Equities, but some crucial Supports holding on some indices. The Dow and Nifty appear vulnerable to some more near-term weakness.
The Dow (18096.90, -0.60%, -106.50) broke below 18200 and may now be vulnerable to fruther decline towards 17800-500. Tomorrow's NFP will be crucial. While expectations centre around 230-240K, a number weaker than that may be taken badly by Equities.
Surprisingly, the Dax (11390.38, +0.98%, +110.02) has risen strongly after testing the mentioned Support at 11200 (low was 11193.30). We have to wait and see if it manages to break above 11500 now. That would be very bullish, if it happens.
The Nikkei (18753, +0.27%, +50) is holding above the Support at 18550 mentioned yesterday. It could attempt a fresh rise towards 19000 if it manages to remains above 18600 now. The Shanghai (3241, -1.14%, -38) has seen a sharp fall and is likely to test the deeper, crucial Support at 3200 soon now. That needs to hold in order to keep the Shanghai ranged and prevent further bearishness. But, in case the Support at 3200 breaks, we may have to prepare for 3100.
Possibly the market may be a little quiet on the Nifty (8922.65, -0.82%, -73.60) after the huge volatility yesterday. Reasons are, people might be confused and tomorrow is closed for Holi. So, people might prefer to stay out. That said, the market may be vulnerable to a further dip towards stronger Support at 8800 now.
Copper (2.6630) made an intra-day low of 2.6375 and closed at 2.65 yesterday. A sustained break below 2.65 is needed to confirm a sharp fall towards 2.60-2.50. While above 2.65, we may see ranged moves in 2.65-2.70 levels.
Nymex WTI (51.3) has started to rise gradually and is trading higher today moving closer to our expected 52-53-54 levels. The support near 47.8 is holding well for now. While above 48, near term is bullish.
Brent (60.61) is more or less stable and continues to trade above the 21-day MA, along the channel support on the daily charts. See charts : http://www.kshitij.com/graphgallery/brentcrudecandle.shtml#candle
We may see gradual rise towards 64 while above this support in the near term. Possibility of very narrow move before a sharp break on either side.
Gold (1204.11) came off from channel resistance on the daily charts. See chart: http://www.kshitij.com/graphgallery/goldcandle.shtml#candle
While the resistance holds, we may expect a retest of downside support near 1195-1190 levels in the coming sessions. A break below 1190 if seen may take it to lower to 1175 in the medium term.
Silver (16.25) is testing levels just above 16 on the downside since the last 3-sessions. held below the channel resistance on the daily charts. See chart: http://www.kshitij.com/graphgallery/silvercandle.shtml#candle
The 16.5-16 region may hold for some more time. A break out on either side of the range is possible. Long term trend is down.
All-round Dollar strength today. The Euro (1.1071) has broken below its previous low of 1.1114. The Pound (1.5253) has also broken below the support at 1.5335-15 we were looking at. Dollar-Yen (119.80) is also holding well above 119.50-40. The Aussie (0.7817) is stable.
While the decline in the Euro was expected (and further downside towards 1.08 now opens up), the break below 1.5315 in the Pound is a surprise. The medium-term uptrend since the Jan low of 1.4951 is clearly broken and further dip towards 1.5180 may well be seen. The Bank of England meeting is due today.
Dollar-Yen is likely to trade indecisive between 119.25-120.25 for some more days. The Aussie could be coming close to the end of its long sideways consolidation. The overall trend remains bearish for 0.75, possibly lower. But a break below 0.7750 will be needed to confirm the range break, else the range can continue for another 2-4 days. Overall Resistance seen at 0.79.
Dollar-Rupee might move slightly higher (not much) today on the all-round Dollar strength. It had closed near 62.26 yesterday and is shown trading near 62.31 on the Offshore market today. Intra-day Resistance seen at 62.40-50.
Brazil raised interest rates yesterday by 50bps maintaining its pace of monetary tightening to fight inflation amidst the fears of the economy getting into recession.
The 10Yr GOI (7.6855%) opened lower near 7.6% after the RBI cut Reo rates by 25bps but came back to the 7.65-7.75% zone in the second half of the session yesterday as Rupee weakened to close at 62.25. The broad 7.65-7.75% may continue to hold for some more time.
The Spanish 10Yr (1.357%) and Italian10Yr (1.410%) have dropped from 1.375% and 1.419% respectively while the German 10YR (0.381%) and Greek 10Yr (9.42%) are up from 0.376% and 9.317% respectively. The fall in Italian and Spanish yields may be temporary before the ECB meet on 18th March ’15 when the QE programme is expected to begin. URUSD (1.107) has dropped sharply yesterday and while the fall continues, it may extend its fall to 1.08. German yields are expected to rise in the near term; the 10Yr may test 0.5% on the upside.
The US10Yr yield (2.11%) has shown a dip as expected from 2.12% yesterday and may see a short term drop to 2.05-2% on the downside before resuming the rise towards 2.15% and above. Broadly, the 1.80-2.30% may hold in the coming sessions.
The Japanese yields are up. The 10Yr (0.29%) yield has risen by 3bps and may continue to move up towards 0.3-0.33% as mentioned earlier from where we may see a fall to 0.2%. The US10-Y10 (1.82%) has dipped 1bps and is testing resistance near current levels which if holds may push the yield spread to 1.80% in the near term.
0:30 GMT or 6:00 IST Australia Trade Balance
...Expected -0.94 A$ Bln ...Previous -0.50 A$ Bln ...Actual -0.98 A$ Bln
12:00 GMT or 17:30 IST BOE Mtg
...Expected 0.5 % ...Previous 0.5 %
12:45 GMT or 18:15 IST ECB Meeting
...Expected 0.05 % ...Previous 0.05 %
RBI Repo Rate
...Previous 7.75 % ...Actual 7..50 %
EU Retail Sales
...Expected 0.20 % ...Previous 0.30 % ...Actual 1.11 %
US ADP Emp
...Expected 219 K ...Previous 250 K ...Actual 212 K
...Expected 0.75 % ...Previous 0.75 % ...Actual 0.75 %