Currency market:
USD/INR has nicely traded end-to-end between set "sell zone" of 54.85-55.10 and "buy zone" of 54.10-54.35. MARKET PULSE urged (and cautioned) not to stay "long dollars" at/above 55.10 and excessive weakness into 55.25 was seen good to sell 3M dollars at/above 56 (high of 56.15) and 12M dollars at/above 58.50 (high of 58.50). We have already seen sharp reversal from 55.25 to 54.30 (into take profit zone of 54.20-54.35) to provide exit to "short dollar" book and we stay square now in anticipation of the next big move. Now, given the mixed cues (conflicts from downside pressure on growth, upside risks on trade/current account deficit, upside risks in commodity prices, bullish EUR/USD into 1.35 and bullish NIFTY into 6180), rupee should ideally get into immediate term consolidation at 54.10-54.60, extension limited to 53.85-54.85. It will be good to trade end-to-end by selling in 2 lots at 54.55 and 54.80 and buying in 2 lots at 54.15 and 53.90 with tight stop. There is no clarity now to take firm view on USD/INR beyond 1-3 months but carry higher risk of break-up of 53.85-54.85 range into 55.25-55.50 within the set short term range of 53.50-55.50.
EUR/USD is seen to be in consolidation mode at 1.32-1.35 with bias into higher end. There may not be strong momentum to break either-way. The trading strategy is to buy in 2 lots at 1.3240 and 1.3190 (for 1.3350 followed by 1.3475) with tight/affordable stop.
USD/JPY now should find solid support at 86.25-86.75 for extended gains into 88-90. The trading strategy is to retain "long" book, add at 86.75-86.25 with stop below 86 for first objective at 87.90. Thereafter, would prefer consolidation at 86-88 before shifting into higher range play at 88-90/95.
Equity market:
The strategy to stay "long" in NIFTY at 5880/5840 (did not get opportunity to add at 5800) has worked well and move above 6000 is bullish. However, it may not be one-way rally till we get clarity on domestic economic woes and timing of rate cut from RBI. The immediate resistance is at 6020-6035 followed by 6100-6115 which may not be easy to pass through to test the 2011 high of 6181. The trading strategy is to retain "long book", add at 5985-5935 if seen with stop below 5930 for part take profit at 6100.
Interest rate market
10Y Bond yield hit the first objective for 2013 at 7.97-8.0% on the first trading day itself. The undertone is bullish despite concerns on twin deficits which will provide strong headwinds to soft landing of headline inflation. The strategy is to retain "long book", add at 8.0-8.03% for next objective at 7.90%. The short term range is at 7.60-8.10%; the move from 8.10% has already begun with first "wave" of 8.10 to 7.98%, correction should stay below 8.03% for 7.90%.
OIS rates eased and met first objective at 7.60% (1Y) and 7.10% (5Y). While 1Y OIS will stay soft in anticipation of easing in the benchmark to 7.5% by March 2013, need to build steepness in the 1X5 curve will provide strong headwind to bearish momentum in the 5Y tracking easing of bond yields. The strategy is to stay received in 1Y at 7.60-7.63% for 7.45-7.48 and in 5Y at 7.13-7.18% for 6.98-7.03%. There is no clarity as yet to build strategic paid book on the 5Y below 7% as risk of easing in overnight MIBOR below 7% (into the lower end of LAF corridor) in FY14 will come into play if dilution in growth-inflation dynamics.
Good luck..................Moses Harding
USD/INR has nicely traded end-to-end between set "sell zone" of 54.85-55.10 and "buy zone" of 54.10-54.35. MARKET PULSE urged (and cautioned) not to stay "long dollars" at/above 55.10 and excessive weakness into 55.25 was seen good to sell 3M dollars at/above 56 (high of 56.15) and 12M dollars at/above 58.50 (high of 58.50). We have already seen sharp reversal from 55.25 to 54.30 (into take profit zone of 54.20-54.35) to provide exit to "short dollar" book and we stay square now in anticipation of the next big move. Now, given the mixed cues (conflicts from downside pressure on growth, upside risks on trade/current account deficit, upside risks in commodity prices, bullish EUR/USD into 1.35 and bullish NIFTY into 6180), rupee should ideally get into immediate term consolidation at 54.10-54.60, extension limited to 53.85-54.85. It will be good to trade end-to-end by selling in 2 lots at 54.55 and 54.80 and buying in 2 lots at 54.15 and 53.90 with tight stop. There is no clarity now to take firm view on USD/INR beyond 1-3 months but carry higher risk of break-up of 53.85-54.85 range into 55.25-55.50 within the set short term range of 53.50-55.50.
EUR/USD is seen to be in consolidation mode at 1.32-1.35 with bias into higher end. There may not be strong momentum to break either-way. The trading strategy is to buy in 2 lots at 1.3240 and 1.3190 (for 1.3350 followed by 1.3475) with tight/affordable stop.
USD/JPY now should find solid support at 86.25-86.75 for extended gains into 88-90. The trading strategy is to retain "long" book, add at 86.75-86.25 with stop below 86 for first objective at 87.90. Thereafter, would prefer consolidation at 86-88 before shifting into higher range play at 88-90/95.
Equity market:
The strategy to stay "long" in NIFTY at 5880/5840 (did not get opportunity to add at 5800) has worked well and move above 6000 is bullish. However, it may not be one-way rally till we get clarity on domestic economic woes and timing of rate cut from RBI. The immediate resistance is at 6020-6035 followed by 6100-6115 which may not be easy to pass through to test the 2011 high of 6181. The trading strategy is to retain "long book", add at 5985-5935 if seen with stop below 5930 for part take profit at 6100.
Interest rate market
10Y Bond yield hit the first objective for 2013 at 7.97-8.0% on the first trading day itself. The undertone is bullish despite concerns on twin deficits which will provide strong headwinds to soft landing of headline inflation. The strategy is to retain "long book", add at 8.0-8.03% for next objective at 7.90%. The short term range is at 7.60-8.10%; the move from 8.10% has already begun with first "wave" of 8.10 to 7.98%, correction should stay below 8.03% for 7.90%.
OIS rates eased and met first objective at 7.60% (1Y) and 7.10% (5Y). While 1Y OIS will stay soft in anticipation of easing in the benchmark to 7.5% by March 2013, need to build steepness in the 1X5 curve will provide strong headwind to bearish momentum in the 5Y tracking easing of bond yields. The strategy is to stay received in 1Y at 7.60-7.63% for 7.45-7.48 and in 5Y at 7.13-7.18% for 6.98-7.03%. There is no clarity as yet to build strategic paid book on the 5Y below 7% as risk of easing in overnight MIBOR below 7% (into the lower end of LAF corridor) in FY14 will come into play if dilution in growth-inflation dynamics.
Good luck..................Moses Harding
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