STOCKS
Equities remain mixed and can dip/consolidate in the near term before we see a fresh leg of rally. Most indices like the Dow, Shanghai, DAX have key supports which can limit the downside and keep the broader uptrend intact.
Dow (26783.49, -22.65, -0.08%) has been inching lower over the last few days, but at a slower pace. The downside is likely to be limited to 26600-26500 due to lack of momentum in the current downmove. As mentioned yesterday, Dow can consolidate between 26500 and 27000 before a fresh rise to 27200-27500 happens.
Contrary to our expectation, DAX (12436.55, -106.96, -0.85%) has declined below 12450. While below 12450 DAX can dip to 12300-12250 after which a bounce is possible.
Nikkei (21542.04, -23.11, -0.11%) is managing to hold above 21500. While above 21500 a sideways consolidation between 21500 and 21750 is possible for some time and a rise to 21700-21750 can be seen in the coming sessions.
Shanghai (2921.88, -6.35, -0.22%) is holding above 2900 and the pace of fall seems to be slowing down. We expect the support at 2900 to hold and Shanghai can 2950-3000 in the coming day.
Sensex (38730.82, +10.25, +0.03%) has recovered from the low of 38435.87 yesterday. An intermediate rise to 39100 can be seen in the near term after which the fall can resume targeting 38000 on the downside in the coming weeks.
Nifty (11555.90, -2.70, -0.02%) fell as expected to 11470 as mentioned yesterday and has bounced from the low of 11461. The support at 11460 is holding well and an intermediate rise to 11600-11650 is possible in the coming sessions. The broader view is bearish for the Nifty to break 11460 and fall to 11400-11300 in the coming weeks.
COMMODITIES
Commodities remain mixed. Gold and Silver are managing to hold above their key supports and can remain range bound in the near term. Copper has declined below a key support and has room to dip further. Oil has moved up and can inch further higher in the coming sessions. The US inventory data release today will need a watch which can influence the oil price direction.
Gold (1393) is managing to hold above 1380 indicating lack of strong sellers. Though the near term view is mixed, while above 1380 a rise to 1410 looks possible in the coming sessions.
Silver (15.05) is facing resistance near 15.15 and can dip to 14.90 in the coming sessions. It can trade in a narrow range between 14.90 and 15.15 for some time.
Copper (2.63) has declined sharply thereby reducing the chances of breaking above 2.69. While below 2.65, the near-term view is now bearish to test 2.60 and 2.58 on the downside.
Brent (64.71) can test its near-term resistance at 65.25. A strong break above it can take it further higher to 66 in the coming sessions.
Nymex WTI (58.65) on the other hand can test 59.30-59.50 and can possibly reverse lower again.
FOREX
Dollar continues to trade strong and can move further higher in the near term. As such the major currencies can continue to trade under pressure. Euro, though holding above 1.12, looks vulnerable for further fall. Dollar-Yen can inch further higher while the Euro-Yen remains mixed within its sideways range. Aussie and Pound have declined sharply in line with our expectation and keeps the bearish view intact. Dollar-Rupee is struggling to breach 68.80. It can dip to 68.30 while below 68.80.
Dollar Index (97.52) has risen above 97.50 and keeps our bullish view intact for a test of 97.80 and 98. Whether the index manages to rise past 98 or not will be key in deciding the next leg of move.
As expected, Euro (1.1206) is hovering around 1.12. An intermediate bounce to 1.1230-1.1250 is possible while above 1.12. But the broader picture remains negative for it to break 1.12 and fall to 1.1150 and 1.11 in the coming days.
Dollar-Yen (108.92) has risen towards 109 as expected and can test 109.20. As mentioned yesterday, a pull-back from 109.20 to 108.80 is possible in the coming sessions before we see further rise to 109.50.
Euro-Yen (122.07) remains stuck in the middle of its 121-123.5 sideways range. Our view remain the same. Within this range, we see higher possibility of the cross moving up to 123-123.5 in the coming sessions.
Aussie (0.6922) has tumbled breaking below the key support level of 0.6950 as expected. It can test 0.6900-0.6880 on the downside. An intermediate bounce to 0.6950 cannot be ruled out from 0.6910 before the pair tests 0.6900-0.6880.
As expected, Pound (1.2450) has declined below 1.25 and keeps our bearish view intact for a test of 1.2350 on the downside.
USDCNY (6.8844) is stuck in between 6.88 and 6.90. While below 6.90 we expect the parit to break 6.88 and fall to 6.86 and 6.85 in the coming days. As mentioned yesterday, broadly the pair can remain range bound between 6.83 and 6.90.
Dollar-Rupee (68.5450) has failed to breach 68.80 decisively and has come-off from a high of 68.83. While below 68.80, a dip to 68.30 is possible in the coming sessions.
INTEREST RATES
The US Treasury yields continue to move higher as the hopes in the markets have come down for aggressive rate cut from the Fed after the strong US jobs data release last week. Market will be watching the Fed Chairman Jerome Powell’s testimony today to get any hint on the rate cuts. As mentioned yesterday, the outcome of this event could influence the yield movement going forward.
The US Treasury yields are up across all tenors, 2Yr (1.91%), 5Yr (1.89%), 10Yr (2.08%) and 30Yr (2.55%). The yields have room on the upside and are likely to remain higher. The 5Yr can test 1.92% in the near-term and even 2% in the coming weeks. The 30Yr can test 2.60%.
The German yields were mixed. The 2Yr (-0.75%) was down by 2bps and the 30Yr (0.25%) was up 2bps. The 5Yr (-0.63%) and 10Yr (-0.36%) remained stable. The yields can move up in the near term. The 10Yr can test -0.30% and the 30Yr can move up to 0.30% in the coming days.
As expected the support at 6.55% has halted the fall in the 10Yr GOI (6.5884%) as of now. The yield has bounced slightly yesterday and can move up to 6.65%-6.75% in the near term. While above 6.55% the possibility is high of seeing a rise to 7% in the coming weeks.
