DAILY MARKET COMMENTARY 08 th December, 2014
Domestic and International Highlights Indian rupee opened at 61.97 after closing the previous session at 61.77 levels. The intra-day range is seen between 61.80-62.10 levels. US Dollar near its five and half year high after strong non-farm pay roll The US dollar index surged to its 5 and? year high levels at 89.46 after the release of the US jobs data. The US economy added 321k jobs against expectation of 231k, near its highest in last three years, whereas the unemployment rate remained at 5.8% for second consecutive month. The US economy had added 243K jobs previous month. Earlier this month US fed members have hinted a rate hike if the economy continues to provide robust economic data. A few of the banks has already cut the deposit rates by 50 basis points, which will reduce the cost of funds further. Bank will cut the deposit rates once before adjusting the base rate to downside. Government to invest $400 Bn to ensure 24*7 power supply Government of India has launched Deendayal Upadhyaya Gram Jyoti Yojana to ensure the 24*7 power supply. The scheme will empower the different arms of the value chains, the government will investment $50 Bn in transmission and distribution channels in next five year. Government will also ensure production of 100 GW solar energy to achieve 15% renewable energy mix by 2020 Bank to lower base rate before RBI cuts policy rate Banks may revise their base rate on a lower end before rate cut announcement by the Reserve Bank of India. The cost of funds for the bank has reduced significantly as the 10 year government bond yield is trading under 8% (at 7.94%) and RBI has maintained sufficient liquidity in call money market to keep the short term rates under check. Indian bond yields closed at 7.94% as against the previous level of 7.97%. The US 10 year treasury yield is trading at 2.32% against the previous level of 2.25%. Outlook Trend: The USDINR pair is hovering at the support level of 61.80. The pair is expected to remain in a bullish phase and an uptick can stem further upside momentum towards 62.40 levels. Exporters were suggested to start covering partially close to 62.20 levels and are suggested to wait for further depreciation in the rupee for bigger covers. (They are suggested to discuss their positions with their respective RM's). Importers are suggested to cover on dips close to 61.80 levels. (They are suggested to discuss their positions with their respective RM's). Short term range (7-15 days): 61.50-62.40 Medium term range (3-6 months): 60.80-63.70
Key Indices Asian Currencies Benchmark Indices Closing Change % Change Sensex 28409.61-48.49-0.17 Nifty 8522.95-15.35-0.18 Hang Seng 24087.96 85.32 0.36 Nikkei 17931.1 10.65 0.06 Dow Jones 17958.79 58.69 0.33 Nasdaq 4780.755 11.319 0.24 Dax 10087.12 235.77 2.39 Asian Currencies Singaporean Dollar Korean Won Philippines Peso Indonesian Rupiah Indian Rupee Chinese Yuan Malaysian Ringgit Thailand Baht Value (US $) % Change 1.3229-0.0151 1117.56-0.3221 44.54 0.0831 12355-0.4533 61.915-0.21 6.1559-0.0585 3.504-0.9332 33.084-0.1632 FII flows in India 30000 25000 20000 Debt ($ mn) Equity ($ mn) 25595.5 16533.20 15000 10000 5000 0 275.43 1129.42 103.13 254.43 4th Dec Dec month Year so far Source: Bloomberg
USDINR: Daily Chart USDINR pair has breached a key resistance at 61.80 levels on weekly basis. The pair is still trading in upward momentum. The immediate resistance for the pair would be upward sloping trend line at 62.40 levels. Source: Bloomberg
EUR/USD Euro was seen breaking the 1.23 sentiment levels and making a new two year low against the US dollar on a strong US Non-Farm Payroll numbers. The positive US job data hinted FED to raise interest rates sooner than anticipated. GBP/USD The British Pound was seen extending its losses against the US dollar on strong US data numbers. Investors will be looking for UK manufacturing production numbers scheduled to be released tomorrow. AUD/USD The Australian dollar made a new four and a half year low on strong US Unemployment numbers. The pressure is now seen surmounting on the Reserve Bank of Australia to cut official interest rates to help stimulate growth which can further depreciate the currency. USD/JPY The Japanese Yen was seen losing further against the US dollar after weaker than expected GDP data but a wider current account surplus. GDP of Japan came in at -0.5% against the forecast of -0.1%.
Gold The gold price continues to move in the southward direction after a strong Nonfarm Payroll data from US which strengthened their domestic currency. The precious metal is expected to remain under pressure as Inflation is expected to remain under control. Crude Oil The crude oil prices continued to fall after hitting a 5 year low. As the supply is higher than demand and US is expanding its output, prices are expected to continue its down move. Dollar index The US dollar hit an 8 year high after a strong set of data from US. The Non Farm Payroll data came at unexpected 321k and the Chinese Trade Balance data, are supporting the US Dollar.. Economic Calendar Date Description Actual Forecast Previous Dec 09 Tue GBP Manufacturing Production m/m - 0.2% 0.4% Dec 10 Wed CNY CPI m/m - 1.6% 1.6% Dec 11 Thu EUR Targeted LTRO - - 82.6B Dec 11 Thu USD Retail Sales m/m - 0.3% 0.3% Dec 11 Thu USD Unemployment Claim - 299K 297K Dec 12 Fri CNY Industrial Production y/y - 7.6% 7.7%
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