Interest rates

* Aso says China took step in right direction with relaxation of  bank lending rates

RBI NEWS

RBI says receives 87 bids for 46.14 bln Rupees at 2042 bond auction 

US OUTLOOK/OPINION: Jefferies says the data calendar is light next wk, "but will...

US OUTLOOK/OPINION: Jefferies says the data calendar is light next wk, "but will  feature housing, manufacturing, and consumer confidence reports.  There are no  Fed speakers scheduled due to the impending blackout period ahead of the July  30th-31st FOMC meeting.  The NY Fed Open Market Desk will be in with 5 purchases  for as much as $12.5 bln.  Treasury will come with a package $99 bln in 2-, 5-,  and 7-year note supply in addition to the bill calendar." Trading is likely to  be most heavily influenced by technical factors and supply could cause  consession in the belly while Fed buys support bonds. "We like curve  flatteners."

US OUTLOOK/OPINION: We're seeing some notes about the BLS Jun state jobs...

S OUTLOOK/OPINION: We're seeing some notes about the BLS Jun state jobs...

US OUTLOOK/OPINION: We're seeing some notes about the BLS Jun state jobs  breakdown after it was leaked early on Thurs, along the lines that leisure jobs  (+75k in the national number, of which +52k was at restaurants, out of the +195k  Jun gain) had their biggest gains in states in the West where unemployment was  lower than avg. Those states also have big energy operations, "and some have  large trout and steelhead extraction operations as well" a source says. Game  officials are not seeing an upsurge in licensing according to this source, thus  it appears the new jobs are support-jobs for the energy sector; in that sense  they must be considered 'real' rather than an employer ploy to avoid new  insurance rules.

Crude closed

* Brent Crude futures settle at $108.07/bbl, down 63 cents, 0.58 pct

LEAD TIPS

SELL LEAD@121 TARGET 119.30/118

ECB: Current liquidity conditions in the Euro area increased to E315.608bln from...

ECB: Current liquidity conditions in the Euro area increased to E315.608bln from

E306.768bln the night before according to latest ECB figures. Use of ECB deposit  facility fell moderately to E82.864bln from E83.893bln Wednesday, while use of  the ECB's marginal lending facility increased to E17mln from E0mln.

US: Timeline of upcoming key events in the US:...

US: Timeline of upcoming key events in the US:

- Jul 19-20 Tsy Lew attends G20 ministerial in Moscow  - Jul 19 Jun BLS State Unemployment at 1000ET  - Jul 19 Tsy Cpn Purch Aug 15 2020-May 15 2023 $2.75 - $3.50 billion  - Jul 21 Tsy Lew meets Greek PM Samaras and FinMin Stournaras in Athens   - Jul 22 Jun Existing Home Sales at 1000ET  - Jul 22 UST announces 4wk at 1100ET   - Jul 22 Tsy Cpn Purch Feb 15 2036-May 15 2043 $1.25 - $1.75 billion  - Jul 22 UST auctions 3/6mo at 1130ET  - Jul 22 UST allotments at 1500ET  - Jul 23 ICSC Sales 20-Jul at 0745ET  - Jul 23 Redbook 20-Jul at 0855ET  - Jul 23 May FHFA home px Index at 0900ET  - Jul 23 Jul Richmond Fed mfg index at 1000ET  - Jul 23 Jun BLS Mass Layoffs at 1000ET  - Jul 23 Tsy Cpn Purch Apr 30 2019-Jun 30 2020 $3.00 - $3.75 billion

copper levels

support:415/412/409

resistance:419/421/423

natural gas levels

support:227/225/223

resistance:229.60/232/235

crude oil

support:6440/6420/6380

resistance:6480/6520/6550

silver levels

support:40500/40300/40100

resistance:40800/41000/41200

gold levels

support:26630/26530/26480

resistance:26750/26850/26930

Rupee update

* India's central bank says July 18 refinance 254.21 bln Rupees

idfc

buy idfc@128 target 132/136

bank nifty levels

bank nifty support:11140/11055/10955

 resistance:11250/11350/11450

recommendation: buy on dips

Effective news

* Portugal president says parties determined to reach agreement,  but crisis negotiations complex

Rbi bonds failure to sell

The RBI rejected all bids in a $2 billion sale of Treasury bills on Wednesday, highlighting the increased prospect of a clash with investors over the appropriate price for debt securities during a period of surging yields.

 

The failure to sell any of the scheduled 91-day and 182-day treasury bills came after the Reserve Bank of India decided that investors bids for yields were too high, a source familiar with the central bank's thinking told Reuters.

 

Investors fear a similar outcome on Thursday when the RBI gears up to sell another 120 billion rupees worth of government bonds via an open market sale as part of its three-prong plan announced on Monday to drain cash from the market to support the falteringrupee.

 

The plan also includes raising short-term borrowing costs and restricting funds to banks.

 

Bond investors say they need to be properly compensated after the RBI's action sparked a sell-off in debt markets, with the 10-year bond yield rising as much as 58 basis points over Tuesday and Wednesday.

 

Yet the RBI is reluctant to agree to interest payments it considers too high, setting up the prospect that it may resort to additional measures to accomplish its objective of draining liquidity, including raising the cash reserve ratio, a far more drastic move than lifting short-term interest rates.

 

"No bank is going to particularly accept a low yield," said Abheek Barua, chief economist at HDFC Bank in New Delhi.

 

"Whatever bids are likely to be successful would be at fairly high levels," he warned, adding higher bids could in turn push up yields further across maturities.

 

India's benchmark 10-year bond yields fell 8 bps to 8.05% from the day's highs after the results of the treasury bills were announced.

 

The 10-year bond prices have wiped out all their gains for the year, with yields at their highest since late December.

 

The RBI's open market operation (OMO) of Rs 12000 crores on Thursday will be followed by another 150 billion auction on Friday. OMOs are bond purchases or sales by the central bank from its own stock to add or drain cash, while it sells bonds for the government, being its debt manager.

 

India is due to sell Rs 3,90,000  crores of bonds in the remainder of the fiscal year ending in March 2014, with issuance especially heavy in July and August as the government needs to borrow enough to maintain its fiscal deficit target of 4.8%.

 

Although the RBI's measures to prop up short-term interest rates are expected to be temporary and are intended to shore up the rupee, they nonetheless are creating uncertainty about the pricing of debt by sparking doubt about how long the central bank will maintain a tightening stance.

 

The central bank is still seen as unlikely to resort to an actual hike in the repo rate, or India's key lending rate, after cutting it by 125 bps since April 2012, but analysts say it could opt to hike the cash reserve ratio - or the amount of cash banks have to park with the central bank.

 

Some analysts said such an increase, which would reverse the 200 bps in cuts of the CRR over the last two years, could send a more certain signal than focusing on short-term interest rates.

 

"I still think what they are trying to do is better done through the cash reserve ratio," said Arvind Chari, a bond dealer with Quantum Asset Management.

 

natural gas tip

natural gas positional 1st target achieved almost

gold tips

sell gold tip @ 26560 target 26400/26300

lead tips

sell lead @120.30-50 target 119/118.50

GDP news

* India GDP to grow 5.6 pct in FY 2013/14, 6.5 pct in  FY 2014/15 (vs 6.0, 6.9 pct in April poll)

nse tips

kotak bank all targets achieved

crude oil

crude oil inventory call hit  full target @80 points

bank nifty tips

buy bank nifty@11020 target 11220/11345/11456

gold tips

gold 2nd target achieved@26300

gold tips

gold 1st target achieved@26500

crude oil tip

inventory special call given  for paid clients for good profit

gold tips

sell gold @26700 target 26500/26300/26100

news

 global investment trends see funds flowing out of emerging markets, rendering those with high current account deficits, like India, particularly vulnerable

leadtips

lead book partial profit@121.30

nse tips

financial techonlogies 3rd target achieved

News

<p>Quotes from Standard Chartered:</p>
<p>-In our view, institutional fund flows will be critical in determining the future direction of the EM fixed income asset class. Recent market volatility has focused investor attention on the potential end of the bull run in fixed income, and is likely to result in a potential reallocation of funds away from EM debt as well.</p>
<p>-Deeply negative YTD returns and meagre expected returns (we expect UST yields to be closer to 3.5% in 12 months' time) coupled with weaker fundamentals for emerging economies over the next couple of years may also drive this reallocation away from EM credit. At the very least, these factors are likely to slow the pace of institutional inflows to emerging markets, weighing on EM credit performance over the next year or so. </p>

bank nifty tips

buy bank nifty@11100 target 11240/11350

nse tips

sell kotak bank 710-720 target 695/685

nse tips

buy McLeod rusel@278 target 285/296

crude oil tips

crude oil 2nd target achieved

crude oil tip

crude oil 1st target achieved@6280

crude oil tips

sell crude oil@6320 target 6280/6250

Rupee up date

* India Central bank to sell 120  bln Rupees of govt bonds on July 18 via open market operation under multiple-price method-rbi

gold tips

gold 1st target achieved

gold tips

gold tip hold with stop loss cost to cost

gold tips

buy gold @26440-26470  target 26600/26650

news

       Weak US retail sales data kept the dollar confined in a short-term holding pattern as we await Chairman Bernanke's semi-annual congressional testimony tomorrow. We do not expect any additional dovish surprises from Bernanke. The Fed's policy will be data dependent. We believe that the US recovery is real, and this will lead to the tapering of asset purchases beginning in September.     

lead tips

sell lead 120.75 2nd lot @122.50 target 118/113

nse tips

financial technologies 2 nd target achieved

bank nifty

bank nifty crash our clients got good profit 

crude oil tips

crude oil 1st target achieved

silver tips

silver 1st target achieved almost

gold tips

gold 2nd target achieved

gold tips

gold 1st target achieved

silver tips

sell silver@41450 target 41000/40800

crude oil tip

sell crude 6325-6340 target 6280/6250/6220

crude oil

crude oil 2nd target achieved almost

gold tips

sell gold 26730-26750 target 26600/26550

crudeoil tips

crude oil 1st target achieved@6300

natural gas tips

buy natural gas@221 target 224/228

crudeoil tips

sell crudeoil 6340-6360 target 6300/6280

nse tips

financial technologies 1st target achieved@738

bank nifty

sell bank nifty 11760-11800 target 11620/11520

Data

* India's core wholesale price inflation seen at around 2.1 pct in June vs around 2.4 pct in may-analysts