STOCKS
Equities like the Dow, DAX and Nikkei are broadly mixed to negative in the short term with chances of a slight uptick in the near term before a fresh fall. Shanghai is turning bearish and looks vulnerable for a corrective fall. Indian equities looks relatively stronger than the global indices.
Dow (25657.73, +140.90, +0.55%), though has moved higher looks mixed on the daily candles. The 21-day moving average at 25755 is a key resistance to watch. A strong break above it is needed the Dow to ease the downside pressure and rise to 26000 levels again. But while below 25755, the outlook remains negative and a fall to 25200-25180 cannot be ruled out.
DAX (11419.48, +72.83, +0.64%) remains above 11300 and has bounced as expected. A test of 11500-11520 is possible as mentioned yesterday.
Nikkei (21297.73, -130.66, -0.61%) looks mixed in the near term. It has support at 21227 (100-day moving average) which if holds can take the index higher to 21500 and 21700 in the near term.
Shanghai (3013.57, +16.47, +0.55%) seems to be coming under pressure. The sharp fall below the 21-day moving average support level of 3035 has turned the possibility high for Shanghai to break below 2950 and fall to 2900 in the coming days. Resistances are at 3022 and 3035
Sensex (38233.41, +424.50 +1.12%) and Nifty 50 (11483.25, +129.00, +1.14%) have risen sharply contrary to our expectation for a fall. The supports at 37650 on the Sensex and 11320 on the Nifty 50 seems to have held very well. While above 11400 Nifty can test 11600 in the near term. Sensex can target 38500 or even higher levels while it sustains above 38000.
COMMODITIES
Gold remains positive but may move higher at a slow pace. Silver can consolidate in a narrow range for some time before moving up. Copper looks vulnerable for a further fall. Oil is bullish in the near term.
Gold (1317) has come-off from its high around 1324. But with support in between 1315 and 1310, the outlook continues to remain bullish for it to test 1330 in the near term.
Silver (15.45) is stuck in between its support at 15.35 and resistance at 15.65. A breakout on either side of 15.45 or 15.65 will decide the next move. The possibility looks high for silver to breach 15.65 and surge to 15.8 and 16 going forward.
Copper (2.87) can test the resistance at 2.89 and may reverse lower again to 2.84 or even 2.82.
Brent (68) has inched higher and is likely to test 68.5 as mentioned yesterday. A strong break above 68.5 will pave way for the next target of 69.8 and 70. But a pull-back from 68.5 can drag it to 67 and 66.5. In that case Brent can continue to trade between 66 and 68.5 for some more time.
WTI (60) remains bullish for a rise to 61.5 and 62 in the near term.
FOREX
Dollar looks strong for the next few sessions and could help the other currencies strengthen a bit.
Dollar-Index (96.90) is looking bullish and could continue to rise towards 97.50/75 in the near term. Note 97.75 is a decent resistance.
Euro (1.1256) is trading lower and looks strongly bearish towards 1.12/11 in the coming sessions.
Euro-Yen (124.41) needs to rise above 125.20 to remain bullish towards 126.80.Else the pair could face rejection from levels near 125.20-124.60 and again fall back towards 123.60 or lower.
Dollar Yen (110.53) has risen from levels near 110 seen yesterday. As mentioned yesterday, while the pair trades above 109.50 we could see a further rise to 112.00/50 in the near term.
Aussie (0.7105) is bearish while below 0.7150. There is enough room on the downside towards 0.70-0.6950 levels.
Pound (1.3180) came down slightly from 1.3250 yesterday. Downside could be limited to 1.3150/3100. On the upside there is room towards 1.34.
USDCNY (6.7131) is likely to trade within 6.68-6.72 region with a preferred fall to 6.68 in the coming sessions.
Dollar-Rupee (68.87) is likely to come down towards 68.60/55 before again bouncing back towards 69.00-69.25 in the medium term.
INTEREST RATES
The Reserve Bank of India yesterday carried out an FX buy/sell swap auction of $5 bln for a 3-yr period, setting a cut off premium of Rs.7.76. This is at an annualized rate of 3.75% which was lower than the premium of 3.82% seen yesterday morning. The 12-mnth (3.69%) and 6mnth (3.95%) forward premia is expected to fall but downside could be limited to 3.35% and 3.60% respectively which could be followed by a rise in the medium term.
The MIFOR rate for 3Yr came down sharply yesterday from 6.22% to 6.1050%. MIFOR is likely to remain low today also but this could be short lived as it could soon start rising again.
The 10YR GOI (7.4871%) was almost stable yesterday rising from 7.4711%. It would be important to see if it tests 7.45% or breaks on the downside to turn bearish for the medium term targeting 7.35%. Else a bounce from current levels can be expected.
The US yields are trading low and look strongly bearish just now. The 10Yr (2.41%) and the 30YR (2.87%) can possibly fall further towards 2.40/35% and 2.8% respectively before pausing. Near term trend is down.
