STOCKS
Global equities have seen some dip within their recent upmove. Though there is room for more dip in the near-term, key supports coming up on the major indices like the Dow, DAX, Nikkei can limit the downside and push these indices higher again. On the domestic front, the Sensex and Nifty remains weak and vulnerable to fall within their sideways range.
Dow (26004.83, -43.68, -0.17%) has dipped to test 26000 as expected. As mentioned yesterday, we expect the supports at 26000 and 25750 to limit the downside and push the index higher again. While above 25750 the outlook is bullish for the Dow to break the resistance at 26250 and rise to 26500-26600.
DAX (12115.68, -40.13, -0.33%) has support in the 12020-12000 region. While above 12000, the near-term view remains bullish for a rise to 12300.
Nikkei (20953.04 -176.68, -0.84%) has declined below 21000 thereby negating our bullish view for a rise to 21500-21750. A dip to 20750 looks likely while the index remains below 21000.
Shanghai (2891.92, -17.46, -0.60%) continues to oscillate within its 2835-2950 sideways range. While below 2900, a dip to 2850-2835 is possible in the coming sessions. A breakout on either side of 2835 or 2950 is needed to get a clear view on the next direction of move.
Sensex (39756.81, -193.65 -0.48%) and Nifty (11906.20, -59.40, -0.50%) seems to lack strong and fresh buying interest. Sensex can fall to 39500-39300 within its 39300-40300 range while the Nifty can dip to test 11800 – the lower end of its 11800-12200 range.
COMMODITIES
Gold has bounced contrary to our expectation for a fall. It can remain range bound and move up within this range in the near term. Copper can continue consolidate sideways. Oil has declined sharply and keeps our bearish view intact. The US reporting an increase in its crude inventories for the second consecutive week has dragged the oil prices sharply lower. US inventories rose by 2.2 million barrels as against the market expectation for a draw-down of 471,000 barrels.
Gold (1333) has bounced above 1330 thereby negating our negative view for a fall to 1320-1310. A sideways move between 1320 and 1350 looks likely in the near term. Within this range, gold can rise to 1340-1345 in the coming sessions while it remains above 1330.
Though Silver (14.77) has bounced slightly, it lacks strength. It has cluster of resistances in the broad 14.80-15.0 region which are likely to cap the upside and keep the broader bearish view intact for a fall to 14.25-14.0 over the medium term.
Copper (2.64) dipped yesterday as expected and can test 2.62-2.60 on the downside. Though it sustains above 2.60, copper seems to lack strength. This leaves the bias negative for copper to break 2.60 and fall to 2.58 and 2.55 in the coming weeks.
Brent (60.24) has resumed its downtrend and fell to test 60 as expected yesterday. Now, while below 62 a test of 57 on the downside is on the cards. An interim bounce is possible from 57 before it eventually falls to test our long-term target level of 55.
Similarly, WTI (51.32) declined to test 51 as expected and retains our bearish view. A break below 50 can accelerate the fall initially to 48.5 and eventually to 45.
FOREX
Contrary to our expectation for a fall, the dollar has risen yesterday. The Euro and Euro-Yen has dipped but has key supports which can limit the downside and push it higher again. Dollar-Yen keeps our bearish view intact and can fall further. Pound continues to trade sideways.
Dollar Index (96.93) has bounced as against our expectation for a break below 96.5. We expect it to consolidate between 96.50 and 97 in the near term. A break above 97 will be bullish for a rise to 97.5 and 98 over the short term.
3c Euro (1.1296) has dipped below 1.1300. It can test 1.1270-1.1260 in coming sessions while it remains below 1.1310 and then can possibly reverse higher again.
Euro-Yen (122.32) has support at 122 which can limit the downside and push it higher again. The outlook remains bullish for the cross to test 124 in the coming days.
Dollar-Yen (108.26) has dipped further and keeps our bearish view intact. It can test 108 and an eventual break below it can accelerate the fall to 107. Immediate resistance is at 108.5 and the next significant resistance is at 109.
As expected, Aussie (0.6918) has declined below 0.6950 and is now heading towards 0.6900. A bounce from to 0.6950 from 0.6900 cannot be ruled out. But, a break below 0.69 can intensify the sell-off and drag it to 0.6865
Pound (1.2696) retains its 1.2650-1.2750 sideways range and has declined sharply after testing the upper end of this range. While above 1.2650 a rise to 1.2725-1.2750 is possible again. The bias remains positive within this range to seen an upside break above 1.2750 and a rally to 1.2800-1.2850 in the coming days.
USDCNY (6.9190) can consolidate between 6.90 and 6.94 in the near-term. While above 6.90, the outlook remains bullish for the pair to break 6.94 and rally towards 6.98 and 7.0 over the medium term.
USDINR (69.3450) has strong resistances at 69.40 and 69.55 which can cap the upside and take it lower to 69.15-69.10 in the coming sessions.
INTEREST RATES
The US yields have declined yesterday after the inflation data release. The US Core CPI has dipped to 2% in May from 2.07% a month earlier. The corrective bounce in the yields seems to have come to an end. Further dip from current levels will confirm the same. The 30Yr (2.60%) and 10Yr (2.10%) are poised at a key support. They can fall to 2.50% (30Yr) and 2.0% (10Yr) on a break below current levels. The 5Yr (1.85%) can test 1.80% and 1.75% while it remains below 1.90%.
The German yields have dipped slightly. However, the short-term view remains positive. The 30Yr (0.36%) can rise to 0.50% on a break above 0.40%. The 10Yr (-0.24) can test -0.10% on a break above -0.20% while the 5Yr (-0.60%) yield can rise to -0.50% in the short term.
The 10YR GOI (7.1720%) has resistance at 7.20% and can dip to test 7.10% in the near-term which could favor a fall in the Dollar-Rupee.
