Friday, December 30, 2011

WTI crude oil failed to sustain gain above 100 level and dropped sharply back below 99. Further loss is seen today after report showed unexpected rise in supplies. Inventories rose 3.9m barrels in the week ended December 23 as reported by the US Energy Department, comparing to consensus of -2.5b fall in stockpiles. Yesterday, API reported 9.5m barrels jump in inventories. Technically, the break of 99.37 minor support in TWI suggests short term topping. More importantly, the development indicates that recent consolidation from 103.37 is still in progress and is starting another falling leg. Thus, we'd probably see WTI crude oil pressured in near term back towards 95 and below. On the other hand, gold also takes out key support of 1535 made back in September on broad based dollar strength. The greenback strengthened strongly across the board today after decent by unimpressive Italian bond auctions. Gold would likely remain pressured in near term on dollar strength. However, technically speaking, it's now staying in key support zone of 1478.3/1577.4. We'd anticipate strong buying below 1500 psychological level to contain downside and bring at least a short term rebound attempt. Italy sold EUR 7.02b of 3- to 10-year bonds today, below maximum target of EUR 8.5b. Sales of 2022 bond hit max target of EUR 2.5b. Yield was just below the unsustainable 7% at 6.98% even though it dropped from November's 7.56%. Yield on the three year bond due in 2014 dropped from November's 7.89% to 5.62%. However, sales of 2014 and 2021 bonds fell short of the maximum target. This week's result so far firstly suggested that short term funding stress was eased for Italy, but investors are still uncertain on the longer term outlook. Secondly, the fact that the three year bond auction sourly missed target raised much concern that the ECB's EUR 489b three year LTRO fund are not channeled back into peripheral bonds markets. Eurozone M3 money supply rose less than expected by 2.0% yoy in November. On the data front, US initial jobless claims rose more than expected to 381k in the week ended December 24, the first rise in a month. Nonetheless, the figure managed to stay below 400k market. Prior week's figure was revised slightly higher to 366k. The four week moving average dropped to 375k, best number since June 2008. Continuing claims also rose 34k to 3.6m in the month ended December 17. Chicago PMI was steady at 62.5 in December. Pending home sales rose strongly by 7.3% mom in November. Natural gas storage dropped -81b. Eurozone M3 money supply rose 2.0% yoy in November.

Saturday, December 10, 2011

Nifty is holding onto strong support levels of 4840 and 4782. On the Monthly chart which shows a descending triangle on the Nifty reducing volumes which will eventually lead to a breakout eitherways on a date assumed in between January and April 2012. Retracement levels of Nifty are as follows R1 6340 R2 5721 R3 5458 R4 5332 R5 5225 R6 5150 PIVOT 4724 S1 4694 S2 4486 S3 4398 S4 4208 S5 3984 S6 3900 We are currently looking forward to a bounce back on the Nifty towards 5150 (R6) levels mentioned maintaining a stop loss of 4700, However buying is only recommended above 4784 levels. --------------------------------------------------------------
The next key event would be the EU summit,The RBA lowered the cash rate for a second consecutive month, by -25 bps to 4.25%, amid worries that the financial turmoil in Eurozone would further drag down economic conditions in Australia. Policymakers revealed their concerns about the sovereign debt crisis in the 17-nation Eurozone as the problems are 'likely to weigh on economic activity there over the period ahead'. Deteriorating financial market conditions and 'precautionary behavior by firms and households' will likely result in material slowdown in global economic growth. emerging markets were also affected by economic and debt problems occurred mainly in the Western hemisphere. Growth deterioration made China cut the reserve requirement ratio (RRR) for all depository financial institutions by -50 bps, effective December 5, 2011 as reduction in inflationary pressure has lowered the need for tightening monetary policy. crude Oil: Oil prices traded steadily for most of the week but plummeted Thursday as the ECB meeting disappointed. WTI-Brent crude spread remained steady at around $9/bbl. The gap has been moving at levels of $20/bbl or above for first 10 months of the year, only to narrow sharply in mid-November due to the acquisition of 50% of the Seaway pipeline by Enbridge and the announcement of a reversal in crude oil flows at the pipeline. The reversal, to be started in 2Q12, would divert crude oil out of Cushing and into the Gulf Coast with initial capacity of 150K bpd. The planned expansion will bring total capacity to 400K bpd by early 2013. The ease of supply bottleneck at Cushing after the reversal would reduce the huge stockpile in the area and support WTI crude oil prices. China, as the world's biggest growth driver and the second largest oil consumer, is facing economic slowdown as shown by recent economic data. The moderated oil demand in the country should have much impact on the world market. According to the IEA, China monthly apparent demand climbed only +1.90% y/y in September while that growth in August was revised down slightly to +5.60%. Consumption in September was driven by higher demand in gasoline, jet/kerosene and gasoil. the Chinese government has started to unwind the tightening monetary policy adopted earlier in the year, seeing moderation in inflation and weakening in manufacturing activities. The PBOC lowered requirement ratios for banks in early December and is expected to focus its strategy in stimulating economic growth. In 2012, China's oil demand would be strengthened by not only commercial demand but also SRP purchases. It is expected that China will resume strategic restocking for its Phase 2 tanks (with capacity of 20M barrels) in Dushanzi. Natural gas remained under pressure. The DOE/EIA reported that gas inventory dropped -20 bcf to 3831 bcf in the week ended December 2. Stocks were +102 bcf above the same period last year and +307 bcf, or 8.7%, above the 5-year average of 3524 bcf. Separately, Baker Hughes reported that the number of gas rigs fell -36 units to 820 in the week ended December 6. Oil rigs added +29 units to 1161 and miscellaneous rigs added +1 unit to 5, sending the total number of rigs to 1987 units. Directionally oriented combined oil, gas, and miscellaneous rigs stayed flat at 217units while horizontal rigs decreased -5 units to 1151 and vertical slipped -1 unit to 619 during the week. Precious Metals: Gold continued its directionless movement last week. Gold's trading pattern in this wave of sovereign debt crisis was quite different from those in 2009 and 2010, During the heights of debt problems in the Eurozone in the past 2 years, gold surged in tandem with the strength of the US dollar amid risk aversion. However, gold moved more in line with other commodities this time, i.e. fell as USD rose. The relentless rise of gold price since the beginning of the year and an eventual reach of a record high of 1923.7 in September has sent the metal to an overvalued territory. CME's margin hike attempting to reduce market volatility also hurt appetite. Yet, we maintain our bullish outlook on gold as long as global central bankers continued to keep interest rates low and opt for easing monetary policies. Low interest rates reduce the opportunity cost of holding gold and money printing measures implemented by central banks is equivalent to currency depreciation. These factors would trigger investors to flee to gold investment.

Thursday, December 8, 2011

9 December 2011

ECB lowers interest rates down to 25 basis points to 1.0% vs 1.25% Previous Inflation is likely to stay above 2% for several months to come, before declining to below 2%. The intensified financial market tensions are continuing to dampen economic activity in the euro area and the outlook remains subject to high uncertainty and substantial downside risks. In such an environment, cost, wage and price pressures in the euro area should remain modest over the policy-relevant horizon. At the same time, the underlying pace of monetary expansion remains moderate. Overall, it is essential for monetary policy to maintain price stability over the medium term, thereby ensuring a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. TECHNICAL ANALYSIS (NIFTY) after a steep fall of over a 150 points of the Nifty, our recommendation :- is building long positions with maintaining a stop loss of 4934 targeting 4980 23.6% Fibonacci retracement and 5008 38.2% Reversal levels. A breach of the 5050 level in the Nifty will bring way towards 5150, pivot level lies at 5032. Technical Analysis and Stock picks for the 9th December 2011 1) Buy Reliance Industries Above Rs.778, with targets of Rs.800. Maintain a Stop loss of Rs.777. 2) Buy Dish TV with targets of Rs.68 (December Futures only) 3) Buy Dabur with targets of Rs.101, Maintain Stop loss of 96 4) Sell Reliance Infra below 394 with targets of 385. ------------------------------------------------------------------------------------------------------------------

Wednesday, October 26, 2011

NIFTY MUHURAT TRADING DIWALI OCTOBER 26 2011

After the announcement of The EU Summit being cancelled, Traders panicked due to which Eur/USD and Dow Jones tanked.

Muhurat Trading markets will open in positive since European markets have shown signs of stability despite procrastinating talks on EURO zone debt crisis.

However we should watch out for data during 5:30 PM and 6:00 PM which will bring in negative news for the markets since Data from New Zealand (Business Confidence Index) is assumed at 13.5 VS 30 MoM. Whereas Australian Consumer Confidence Index does not show much of a positive outcome. Therefore,

Our Nifty Levels are

5230 Resistance
5200 Pivot
5169 Support

Recommendation : Buy Nifty 5100 Call
Buy Nifty 5200 Put
Nifty should close around 5169.

Monday, October 24, 2011

Nifty Strategy for Expiry October 26th 2011.


Above is a Point and figure chart of Nifty. Nifty shows signs moving towards 6000 levels with short term resistance of 5200 and 5420. However these levels will act as strong resistance, Following a breakout would lead to the level of 6000.


Nifty Strategy For expiry october 25th 2011 :-

Nifty resistance lies at 5169, Once this level is broken we would see 5220 in the near term.
Nifty Closed at 5098, Our strategy for the 25th of October 2011 is to hold on to long positions keeping a strict stop loss of 5038 in Mind.

Buy Nifty 5000 (CE) call
Sell Nifty 5300 (CE) Call

Market Firm Until EU Summit on the 26th Oct 2011

Market sentiment remained firm on Monday as investors awaited the EU summit on October 26. There has been much speculation of measures to be announced to contain the intensifying sovereign debt crisis. While the advance in financial markets signaled optimism over the outcome, we would like to advise on the possibly of disappointment as it appears that policymakers remained divided.

Major issues to be discussed during the summit include the offer of the 6th tranche of the Greek rescue fund, the plan of EFSF leverage and recapitalization of European banks. Greece will likely be granted the 6th tranche of funding by the EU/ECB/IMF troika. The overhang is whether to extend the private sector involvement, currently at 20%, into the second Greek program. There have been talks that the EU will use 10-30% of the 400B euro EFSF for first-loss guarantees. Moreover, the fund will be leveraged up to to 2 trillion euro. Concerning bank recapitalization, it's possible that banks will be given 6-9 months for increasing their Tier 1 capital ratio to 9% after a Greek debt haircut. Countries such as Spain, Italy and Portugal may be offered support from the EFSF regarding bank capitalization. Policymakers may consider pooling capitals for funding banks in the medium-term.

In the US, Fed's Vice Chairman Janet Yellen mentioned about QE3 in a speech, citing 'securities purchases across a wide spectrum of maturities might become appropriate if evolving economic conditions called for significantly greater monetary accommodation'. Yellen remained concerned about the country's economy. She stated that the recovery is 'disappointingly slow' and the growth in job market will remain 'tepid in the coming months. Particularly, European debt problems are 'worrisome' and 'the potential for such adverse financial developments to derail the recovery creates… significant downside risks to the outlook'.

Commitments of Traders

Speculators were bullish on the energy complex in the week ended October 18. Net length for crude oil futures climbed +23 310 contracts to 144 371. Net lengths for heating oil and gasoline rose +12 635 contracts to 14 729 and +7 043 contracts to 52 000, respectively, during the week. Net short for natural gas futures decreased to 168 643 contracts.

Speculators were bearish on the gold and silver but bullish on PGMs. Net length for gold futures dropped -7 524 contracts to 126 978 while that for silver slipped -1 596 contracts to 10 352. For PGMs, net lengths for platinum added -503 contracts to 20 180 while that for palladium futures gained +209 contracts to 7 162.