Market Morning Briefing

EQUITIES

MSCI World index bounced well from the support level mentioned yesterday to 1207 (+3.5pts). We expect it to move to 1210-15 with a Support at 1200. The global equities rallied on announcement by Draghi that his strategy of liquidity infusion into the economies has started working to contain the area debt crisis.
In Euro Area, STOXX50 inched up to 2345 (6.34pts), remained below the resistance mentioned earlier at 2400, a break above this will indicate some bullishness.

The US markets has also rallied to 12471 (+21.6pts), the major concern is 12500 continue to be a significant resistance and break above it is required for bringing back the bullish sentiment. The US Retail Sales growth (0.1%) was below market expectation; it an important indicator in determining the unemployment level.
In Asia, Nikkei is trading high on global cues at 8473 (+88pts). Note that Nikkei has a major Resistance at 8500. Sensex closed low yesterday at 16037 (-138pts). However, it can spike up to test its Resistance at 16500

COMMODITIES

Nymex Crude (99.58) fell sharply yesterday on reports that the proposed EU embargo on imports from Iran. However, the important Support at 98 is still holding and while above 98 the chance of seeing 110+ levels is still alive.

Gold (1643) has risen further and is heading towards its important Resistance at 1680. Whether 1680 holds or breaks will determine the further direction of move.

Silver (30.07) has come off from its high of 30.67, but is managing to trade above 30. Only a strong rise past 31 will ease the downside pressure going forward. We will have to wait and see.

Copper (3.62) has seen a decisive break above its 3.50-55 Resistance region thereby proving our bearish view for a fall to 2.80-60 to be wrong. A strong close above 3.55 today would be very bullish and 3.90-4.00 can be seen on the upside.

CURRENCIES

The ECB's statement yesterday that the 489 billion Euro loans to the banks have prevented a serious credit contraction and tentative signs of the economy getting stabilized followed by the weak US Retail Sales data release has weakened the Dollar yesterday.

The Euro (1.2821) is trading above 1.2800 and has immediate Resistance at 1.2830 a break above which can take it further up towards 1.2900-30. Dollar-Yen (76.75) is continuing to find Resistance at 77 and can test 76.10-00 on the downside on a break below its Support in 76.60-55 region. The Euro-Yen Cross (98.39) is trading near the upper end of its 97.30-98.50 sideways range. A breakout of this range would determine the further direction of move.

Dollar-Swiss (0.9446) looks weak for a test of 0.9350 with a Double-Top pattern on the 4-hr chart.Resistance for the pair will be at 0.9470. Cable (0.9340) is bearish for a fall to 1.5150-00 with strong Support-turned-Resistance in 1.5375-400 region. Aussie (1.0311) is still not gaining strength to rise past its 1.0380-400 Resistance region and remains ranged between 1.0250-400 over the last few days.
In Asia, the Korean-Won is trading near 1151 and the Sing-Dollar is trading near 1.2880. Dollar-Rupee had closed lower yesterday at 51.60/61 and has high chance of to break and dip below its Support at 51.60 towards 51.20-15 today.

INTEREST RATES

In Euro Area, the borrowing cost of Italy and Spain had come off yesterday as reflected by the bond yields. 10Y Italian and Spanish yields slide significantly during the trading hours to 6.6% (-32bps) and 5.13 (-19bps) respectively. German yields inched up across all tenors, 2Y closed at 0.16% (+3bps) and 10Y at 1.83(+3bps). However we still expect that 10Y German yields to come off to 1.70% by next fortnight or so.
In the US, treasuries yields remained stable for 2Y and 5Y, 2Y at 0.22% and 5Y at 0.82% against 10Y marginally up at 1.92 (+2bps).

In India, 10Y GOI came off slightly to 8.23 (-2bps) and we expect further dips to come going further.