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October 28, 2011

Commodities rally on positive announcements from Europe
“We have a statement of ambition but markets will now want to know how will we get there. The jury is still out. It will take several weeks before we have a clearer picture”. William De Vijlder, the global chief investment officer of Paris-based BNP Paribas Investment Partners, on European plans ‘‘Both stainless steel demand and the substitution between nickel pig iron and primary nickel suggest that there will be higher prices for nickel”. Jeremy Friesen, a commodity strategist at Societe Generale in Hong Kong Commodities—Rally on European plans • All the commodities except natural gas sharply up • EFSF size to be increased to 1 Trillion Euro • Banks agree on 50% haircut • Banks agreeing considered to be voluntary hence no default • Greece to get 100 billion Euro next year • European banks to get 106 Billion towards recapitalization to meet Tier one Capital Ratio of 9% • Europe Eyes IMF Channel for Aid as China Mulls Contribution • Euro surges past 1.42 mark against the US Dollar • Copper, lead and silver rally over 5% • US Personal consumption data tops the forecast • US Pending Home Sales data disappoints • Industrial production Japan declines more than expected Uncertainties regarding the European crisis were resolved to a certain extent yesterday on some positive announcements as stated above. Markets were euphoric as both commodities and equities staged violent rallies. Euro rallied above 1.42 against the US Dollar. Asian currencies are showing the similar pattern as they rise against the US Dollar on European optimism. In short-term we are likely to see further upside in risk assets as European announcements have coincided with somewhat better than expected data out of the US. However, it is not that European issues have been sorted out for good. Many nagging points remain: structural problems have not been addressed, The amount dedicated for banks recapitalization is probably not enough, even 9% Tier one Capital is being considered inadequate in the current scenario exact mechanism of EFSF enhancement is yet to be finalized, etc. For the time being, we look for higher prices in industrial commodities before markets start looking to China’s real estate issues, US unemployment, possibility of a recession in the US and Europe, etc. Asia Watch—Industrial production Japan declines more than expected Japan’s industrial output fell 4 percent in September from the previous month, the trade ministry said in a report today. This was the first decline since the March earthquake and tsunami, and more than the forecast of 2.1 percent in a survey by Bloomberg News, more than analysts expected, indicating that the recovery from the March earthquake may be stalling. Europe Watch—Europe Eyes IMF Channel for Aid as China Mulls Contribution European officials are studying the potential for an International Monetary Fund channel for money for their enlarged rescue fund, as China considers contributing to ending the area’s sovereign-debt crisis. The European Financial Stability Facility may explore setting up a special purpose vehicle with the IMF, Klaus Regling, the EFSF’s chief executive officer, said at a briefing in Beijing today. Separately, Chinese Vice Finance Minister Zhu Guangyao said that while an investment by his nation is “under discussion,” China needs more detail of what is planned.

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After adjusting for inflation. 2011 . Gross domestic product expanded at a 2. a global lender of last resort. Trimming Two-Day Decline. Lead—Up 6.5 percent annual rate in the period from July through September. stocks fell. as investors awaited the outcome of Europe’s efforts to raise money for its enhanced bailout fund.4 trillion. the International Aluminium Institute said. which is likely to be breached in short-term.sharekhan European leaders aim to tap China.S. up from 4. Resistance is at Rs 979/ Rs 992. Resistance is at Rs 394.K. assets as a haven. a person familiar with the matter said yesterday. U. Nickel— Up 4. Japan plans to support the increase in the fund and is awaiting details.02% LME 3-month lead closed with a gain of $116 at $2040. 2019 and 2022.K. We look for a test of major resistance around Rs 97. Market Watch—Pound Rises Versus Euro. for help after yesterday moving to contain the crisis by writing down Greek debt and targeting an expansion of the EFSF to about $1. the Commerce Department reported yesterday.50.35 trillion last quarter.68 percent at the last auction of the same securities on Sept. Surpasses Pre-Recession Level The value of goods and services produced in the U. Base metals summary commodities buzz All the base metals closed sharply higher led by copper and lead.05% LME 3-month nickel closed with a gain of $775 at $19900. However. Support is at Rs 393/ Rs 391.80. Major resistance is seen at Rs 111. Support is at Rs 963/ Rs 942. After Italian Auction The pound rose against the euro.33 trillion peak reached in the last three months of 2007.50 in near-term. taking three times longer than the average for 10 previous recoveries since World War II.S. The battery metal can rise to Rs 102. Support is at Rs 94.4 billion) in bonds due in 2014 to yield 4. an economist at Nomura Holdings Inc. stock futures fell.S. Support is at Rs 92. GDP climbed to $13. Stock-Index Futures Fall as Investors Await Progress on European Deal – U. topping the $13. indicating the benchmark Standard & Poor’s 500 Index will trim its biggest monthly gain since 1974. Gilts erased a decline after the Rome-based Treasury said it sold 3.80% LME 3-month aluminium closed with a gain of $40 at $2255. reversing an advance. Support is at Rs 108/ Rs 106. U.50. Japan anticipates waiting until November for specifics on how it may be able to help with the European rescue effort US Watch—Economy in U.05% LME 3-month copper closed with a hefty gain of $465 at $8145. For Private Circulation only Commodity Buzz 2 October 28. spurring demand for U. said Tomo Kinoshita.50 level in nearterm. holder of the world’s largest foreign-exchange reserves.93 percent. In short-term further gains are possible in the complex. lead and aluminium are likely to do better. Italy also sold securities due in 2017.486 million a month before. surpassed its pre-recession level after 15 quarters. Aluminium—Up 1.80. snapping a two-day decline after Italian borrowing costs rose at an auction.3 percent in the prior threemonth period.85% LME 3-month zinc closed with a gain of $90 at $1945.75/ Rs 401. Copper—Up 6.90. as a quid pro quo for contributing.S. China may aim to increase its influence at the IMF. Weaker Dollar has been the prime driver of this rally.08 billion euros ($4. gold can extend its rally despite stronger Dollar if European leaders don’t spell out their mechanism to contain the sovereign debt crisis clearly. Zinc. Inventories of unwrought aluminum dropped to 1. the fastest pace in a year and up from 1. Precious metals summary Both gold and silver closed higher as the complex extended its gains. Zinc—Up 4.50.4 million metric tons in September from 1.

We may from time to time have positions in.16% Crude oil closed with a gain of $4. 2008 2 referred to herein. Any comments or statements made herein do not necessarily reflect those of Sharekhan Commodities Pvt. or options on.29% Natural gas closed with a loss of $0. The white metal is likely to test the crucial resistance at Rs 59400 in this cycle. hence the counter is likely to consolidate its gains in near-term.17% Spot gold closed with a gain of $20.69 at $35. The spot gold can rise to $1775 level in this cycle.95.50. please contact the sender and delete the material immediately from your computer/mailbox. Resistance is at Rs 27650/ Rs 27800. Energy complex summary The complex closed mixed as crude oil rallied on weaker Dollar as Europe moved closer to resolve the crisis and equities rallied.50/ Rs 189. Crude oil is likely to consolidate its gain in near-term. as seasonal demand is commodities buzz likely to support the counter. We suggest buying natural gas on dips. and buy and sell securities Commodities other January 01. Silver—Up 5. Kindly note thatBuzz 2 does not constitute05.16 at $93. Support is at Rs 4400.31 at $1744. Somewhat better than expected US data could also help it. any company mentioned. "This document has been prepared by Sharekhan Commodities Pvt.05% Spot silver closed with a gain of $1.offer or solicitation for the purchase or sale of any financial instrument Commodities this document November an 2007 Home Next or as an official confirmation of any transaction. We do not represent that it is accurate or complete and it should not be relied upon as such. or any other use is prohibited. Resistance is at Rs 4660." Commodities Buzz 3 October 28. Ltd. We may from time to time solicit from.sharekhan Gold—Up 1. orBuzzservices for. Natural gas was a tad lower. Support is seen at Rs 57300. and is intended only for the person or entity to which it is addressed to and may contain confidential and/or privileged material and is not for any type of circulation. only For Private Circulationretransmission. Crude oil is trading a bit lower today on Japan’s industrial production data. Any review.764. The information contained herein is from sources believed reliable. Home To know more about our products and services click here. 2011 3 For Private Circulation only For Private Circulation only . or perform investment banking. It is to be noted that crude oil has rallied strongly along with equities after falling below $75. Support is at Rs 183.10. Ltd. Crude oil—Up 4. Natural gas—Down 0. If you have received this in error. Resistance is at Rs 188. Support is seen at Rs 27520/ Rs 27100.011 at $3.96.

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