INSIGNIA CONSULTANTS

Asian Metals Market Update for 16th April, 2008

EXPECTED TRADING RANGE

COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE

COPPER MAY 08   -- $372.00 - $397.00

NYMEX CRUDE OIL   - $110.00. - $116.20

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GENERAL MARKET CONDITIONS

The US dollar should depreciate further and euro should gain against the US dollar over the coming weeks. The prime reason is the focus of the two central banks. Federal Reserve is focused on growth while the European central bank on controlling inflation. The lagging affects of US slowdown/recession will affect Eurozone growth over the coming months, but may not necessary result in ECB cutting interest rates. Unless the ECB lowers its growth forecast and interest rate outlook the bullish trend of Euro will continue. Technically its is just the reverse for euro/usd and failure to break 1.60-1.61 in the rest of April will result in a fall to 1.5587 and 1.4975 in May, while a consolidated break of 1.61 will result in euro/usd nearing 1.70.

At the beginning of 2008, investors were confident that Asia and other emerging markets will be decoupled from US led recession which has not been the case. Indian and Chinese stock markets have fallen nearly thirty percent from the highs in January. Infosys Technologies reported one of its slowest quarters since the internet boom a decade ago.
It’s net profit grew 9.20% to Rs12.5bn ($314m) in the three months ended March, against a year earlier, below its average growth in recent quarters of more than 20%. As per my information a large number of small outsourcing companies in India are either nearing closure or shedding excess staff to cut cost further. Gone are the days when a class 12 passout could easily get job in an outsourcing company in India and earn over $150 a month and at the same time study for other courses.

 Business process outsourcing (BPO) growth rates will fall further over the next few years. The future in India lies in Knowledge process outsourcing (KPO). However to get a job in a KPO one needs to get a professional degree. The easy job route for the Indian youth may be over. BPO will probably move to Tier2 and Tier3 cities in India where manpower cost is lower. If global is to slowdown, commodities will remain the biggest beneficiary of the same.

A US led recession/lower growth will affect every nation but in varying proportion. The key for base metal prices will be the degree by which India and China are impacted. As far as steel is concerned, I am very bullish as demand will remain firm in India, China and middle east in the next two three to five year. India still is an infrastructure deficient country. Power is still a problem with over ten hours of power cuts in rural and semi urban areas. Highways are better, but states like Uttar Pradesh and Madhya Pradesh even highways are pathetic. Base metals demand will not fall from India or China in a big way. It’s just speculative interest that will dictate base metal prices for the rest of the year.

COPPER -- MAY FUTURE -- INTRA DAY PIVOT: $404.0

Sell on rise strategy has worked for copper. A close below $380 for 3 days will result in a fall to $365 and $352.0

NYMEX CRUDE OIL --  FUTURE -- INTRA DAY PIVOT: $112.20

Crude oil has to break $116.20 this week else a fall back to $109.10 and $105.60 in short term.

INDIAN RUPEE (USD/INR)

Indian rupee has been consolidating in 39.90-40.08 range and should break out from this range soon. There is lack of major market moving news except the focus of the government to control food prices and inflation. The measures to curb exports of minerals, metals and food grains will result reduce exports in the current fiscal (2008-2009) and could result in a weaker rupee. Indian stock markets are dependent on foreign portfolio flows. In the short term to medium term foreign portfolio flows along the central bank intervention affects rupee. All eyes will be on the RBI annual review of the economy and its interest rate outlook for the rest of April. We expect rupee to gain to 39.80 and 39.68 in the short term.

HAPPY PROFITABLE TRADING

 Disclaimer : Any opinions as to the commentary, market information, and future direction of

prices of specific currencies, precious metals, base metals, or equity indices reflect the views

of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability 

for any losses incurred in connection with any decision made, action or inaction taken by any

 party  in reliance upon the information provided in this material; or in any delays, inaccuracies,

errors in, or omissions of Information.