Tuesday January 29, 2013 - 03:40:51 GMT
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Morning Briefing : 29-Jan-2013 -0338 GMT
GOOD MORNING!
EQUITIES
Minor profit-taking in the Dow (13881.93, -14.05, -0.10%) last night after the solid rise last week. Overall very bullish, with the rise past 13750 being significant. Some Resistance at 14000, though.
A-Pac largely positive ranging from -0.09% (Hong Kong) to +0.98% (Australia). Nikkei (10893, +0.63%) continues to look bullish. Some Resistance at 11000, though. Failure to break that this week can lead to range trade between 10400-11000 for a couple of weeks.
Shanghai (2348, +0.08%) trades just below important Resistance region of 2350-60. Eventual rise looks likely, maybe preceded by 5-10 days of sideways consolidation.
The Nifty (6074.80) looks potentially bullish, although the Resistance at 6100 is intact for now. Some more Resistance is seen at 6125. Need a break of that to produce the next surge. The market waits for the RBI rate decision today, of course. A 25bp Repo rate cut is built into the price. The Nifty could fall if the RBI disappoints.
Overall, most indices continue to look bullish, but might want to pause and rest for a couple of weeks after their strong rise over the last couple of months.
COMMODITIES
Crude is looking strong. Gold and Silver are weak while Copper is mixed.
Nymex Crude (96.66) remains higher and is consolidating between 95 and 97 over the last few days. A break above 97 can take it up to 10-103 in the coming days.
Brent Crude (113.57) is bullish for a rise to 116-118 with Support near 111. However, Brent is not looking as strong as the Nymex.
Gold (1658) has come down and looks weak in the near term for a test of 1625-1600 and may be even lower levels.
The Gold/Crude ratio (17.16) has broken its important Support near 17.30 and look weak for a fall to 16 suggesting a stronger Crude and weaker Gold going forward. Please take a look at the chart in the link given below:
http://www.kshitij.com/graphgallery/crudeandgold.shtml#ma
Silver (30.98) has come down further and can test 30.50-30.00 on the downside in the coming days.
Copper (3.66) remains lower below 3.70 but is not showing strength to fall sharply. It has Support in 3.63-62 region which needs to hold to prevent a fall to 3.50. We will have to wait and see.
CURRENCIES
Euro remains higher but flat. Yen and Pound are weak while the Aussie and Dollar-Swiss looks mixed/ranged. The Dollar-Index (79.76) is holding above 79.50 but looks vulnerable to test 79.30. The outcome of the US Fed meeting tomorrow could be a trigger for the market to find a specific direction of move. We will have to wait and see.
The Euro (1.3451) is ranged below its 1.3490 (Fibonacci) Resistance and looks mixed. As mentioned yesterday the upside could be capped to 1.3560 for a while. Dollar-Yen (90.80) is strong for a rise to 92.00-20, but can consolidate between 90 and 91 before the rise. The Euro-Yen Cross (122.12) remains higher but will need a strong break above 123.10 to rise further and prevent a corrective fall to 120-118.
Dollar-Swiss (0.9264) looks mixed and could be ranged between 0.9200 and 0.9350. The Pound (1.5703) has come off further and remains weak for a test of 1.5650 and even 1.5550. Aussie (1.0445) is bouncing back from its 1.0400-370 Support region and can test 1.0500 once again. It could remain ranged between 1.0370 and 1.0600 for some time.
The Sing dollar (1.2370) is trading weak and can weaken further in the coming days while it remains above 1.2320. The Brazilian Real is trading stronger at 1.9942 following its Central Bank's comments that it would prefer stronger currency to fight inflation. Dollar-Rupee (53.91/92) traded flat in a narrow range yesterday as the market awaits for the outcome of the RBI's monetary policy today.
INTEREST RATES
The US 10-Yr (1.97%) rose briefly above 2.0% yesterday. If this trend continues, we could see 2.10-15% in the weeks ahead. The 30-Yr (3.15%) could also move up towards 3.25%.
German yields continue to rise strongly. The Germany-US 2-Yr Spread (+0.02%) has finally moved above Zero for the first time since Dec-11. Further increase is possible after some consolidation, which should keep the Euro supported. But, keep an eye on the Spain 10-Yr (5.25%) which has risen strongly past 5.10%, breaking the downtrend since August. It could rise towards 5.50% before stabilising sideways.
All eyes are on the RBI today. The market is thirsting for a 25bp Repo rate cut from 8.0% to 7.75%, but the RBI cannot be taken for granted. The CRR (4.25%) has a good chance of being reduced to 4.0%.
Thereafter, we have the FOMC tomorrow.
DATA TODAY
4:30 GMT or 11:00 IST RBI Repo Rate
...Expected 7.75% ...Previous 8.00%
4:30 GMT or 11:00 IST RBI Reverse Repo Rate
...Previous 7.00%
4:30 GMT or 11:00 IST RBI CRR
...Expected 4.00% ...Previous 4.25%
13:00 GMT or 19:30 IST US Case Schiller
...Expected 5.7% ...Previous 4.3%
14:00 GMT or 20:30 IST US Cons Conf
...Expected 64.5 ...Previous 65.1
DATA YESTERDAY
US Durable Goods Orders
...Actual 4.55% ...Previous 0.68%
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