STOCKS
As mentioned yesterday, the equities are witnessing dips within their overall uptrend. The Fed Chairman Jerome Powell’s comments yesterday that the central bank will wait and watch before cutting rates could just be a reason for the market to take out some profit. But there is nothing new in it. Powell had reiterated (at least a couple of times) the same in his press conference on June 19 which did not catch the attention of the market on that day the market but has dashed the hopes for an immediate rate cut just now. There is room for the indices to dip further for the next few sessions before the uptrend could resume.
Dow (26548.22, -179.32, -0.67%) has declined as expected and can test the key support level of 26450. A bounce from 26450 can take the index back to 26900 levels. But a break below 26450 will see the corrective fall extending towards 26250. The broader picture however is still bullish.
DAX (12228.44, -46.13, -0.38%) is heading towards its 12200-12170 support zone as expected. The possibility of the fall extending to 12150-12130 cannot be ruled out. But further fall below 12130 looks less likely as the broader picture continues to remain bullish and the index is likely to reverse higher again.
Nikkei (21080, -82.94, -0.39%) is bearish to test 21000 and 20900 in the near term. A break below 20900 will accelerate the fall to 20750.
Shanghai (2979.21, -2.86, -0.10%) fell to test 2950 yesterday as expected and has bounced from there. A sideways consolidation between 2950 and 3020 can be seen for some time. While above 2950 the outlook is bullish to test 3050 and 3100 in the coming weeks.
Nifty (11796.45, +0.83%) bounced thereby negating the fall to 11600 mentioned yesterday. It can test the resistance at 11850 and reverse lower again. We expect it to remain range bound between 11600-11850 for some time.
Sensex (39434.94, +0.80%) is continuing to hold above 39000. A key resistance is coming up near 39700 which can be tested in the near term. A strong break above it is needed to gain bullish momentum. A pull-back from there can drag the index lower again to 39000.
The price action in the Sensex and Nifty will need a close watch in the coming sessions to see if our broader bearish view is getting negated or not.
COMMODITIES
The American Petroleum Institute (API) reported a Crude draw of 7.55mln barrels for week ended 21st June pulling up Crude prices after a short dip seen yesterday during the day. While the EIA stock inventory data is due today and market expects a decline in the stockpile levels (expectation of -1.077mln barrels), we could see some uptick in Crude prices.
Brent (65.76) has moved up again after a short dip to levels near 64.50. Brent could move higher in the next few sessions to test 67 on the upside. As mentioned earlier, note that 67-69 is a crucial resistance zone for Brent indicating that further upside could be limited for the medium term.
Nymex WTI (58.84) is also trading higher and could be headed towards immediate resistance at 60 from where a fall looks likely.
Powell’s statement yesterday that the interest rate cut in July that is widely expected by investors and economists is not a deal done, lead Gold to lose some gains. The unresolved US-China and US-Iran tensions and the fact that major central banks are moving their monetary policy to dovish and more accommodative stance, Gold could continue to act as safe heaven and could continue to see buying while prices May rally towards 1500. Gold (1416.40) is trading lower after almost testing 1450 on the upside. While the corrective dip is limited to 1400 on the downside, there is scope for a ride towards 1500 in the medium term.
Silver (15.27) has come down after testing resistance near 15.60/65 in line with our expectations. The fall is likely to be limited to 15 from where another bounce towards 15.25/50 is possible.
Copper (2.7275) is rising as expected and is headed towards our mentioned resistance near 2.75/80 from where a fall looks likely. Trend for the rest of the sessions this week look bullish
FOREX
Currency pairs across the globe are seeing a corrective move after facing immediate resistances/supports as mentioned in our earlier editions. Dollar has gained some strength leading to a corrective fall in major currencies. While Aussie looks bullish; Pound, Euro, Yen, Rupee and Yuan could trade weak against the Dollar for the next 1-2 sessions.
Dollar Index (96.28) has bounced from 95.84, above the immediate support at 95.50 and has managed to rise above 96. This is likely to be a corrective upmove targeting 96.50/70 from where another fall could be expected.
Euro (1.1356) fell as the US Dollar bounced but Euro could possibly limit the current fall to 1.1325 before again rising back towards 1.14 in the medium term.
Dollar-Yen (107.45) is sharply up after testing 106.78 yesterday. On the upside 107.80 could be important levels that could push back Dollar-Yen back towards 107.00. Note that for the longer term we may have scope of testing 106 on the downside which is a crucial support. Also the corrective fall in Gold has aided a sharp rise in Dollar-Yen.
Euro-Yen (122.01) faces immediate resistance at 122.5 which could hold for a few sessions. Overall while above 121, there is scope for a rise towards 123-124 on the upside. Euro-Yen looks bullish for the medium term.
Aussie (0.6964) has moved up to test our mentioned level near 0.6970 which if breaks on the upside could be bullish towards 0.70.
Pound (1.2683) tested 1.2784 yesterday before coming off from there. Note that 1.2790/1.2800 is a near term resistance and could hold for the next few sessions. Pound is likely to test 1.2630 before bouncing back towards 1.2780 again in the near term.
USDCNY (6.8857) is bouncing from levels near 6.8330 in line with the support mentioned near 6.85/80 on the 3-day candles. We could see the Yuan weaken towards 6.90 again in the near term.
USDINR (69.35) tested our mentioned support near 69.20 and bounced higher to close at 69.35 yesterday. We could see the rise to continue towards 69.50/60 today. Upside could be capped near 69.75 within the current upmove.
INTEREST RATES
Concerns of the global growth slow-down is continuing to weigh on the bond market. As such, both the US and German yields continue to fall. The 10Yr GOI can inch higher in the near-term within its overall downtrend and can consolidate sideways for some time before seeing a fresh fall.
The US 30Yr (2.53%), 10Yr (2.01%) and 5Yr (1.75%) yields fell yesterday while the 2Yr (1.76%) remains stable over the last few days. The outlook remains negative for the yields. The 30Yr can fall to 2.50% and 2.48% in the coming days. The 10Yr can test 1.98% and 1.95% on the downside in the near term.
The German 30Yr (0.24%), 10Yr (-0.33%), 5Yr (-0.66%) and 2Yr (-0.75%) has dipped across tenors. The near-term outlook is negative. The 30Yr can test 0.2% and even 0.1% in the coming days while the 10Yr can test -0.4%
The 10Yr GoI (7.0125%) continues to hover around 7%. The price action on the charts indicates that a rise to 7.05% and 7.10% is possible. The broader view remains the same. The 10Yr GOI can consolidate between 6.90% and 7.10% for some time before resuming its downtrend to 6.80%-6.75% in the coming weeks.
