STOCKS
Equities like the Nikkei, Shanghai and DAX remain broadly positive. Dow has room on the upside, but a crucial resistance is coming up which can halt the current rally and trigger a corrective fall. Sensex and Nifty are likely to consolidate sideways with a bearish bias.
Dow (27359.16, +27.13, +0.10%) is inching higher towards 27500 as expected. The level of 27500 is a strong resistance which can trigger a pull-back to 27200-27000 initially. The possibility of this corrective fall extending beyond 27000 towards 26500 or even lower levels cannot be ruled out.
The support in the 12300-12250 zone is holding well as expected and DAX (12387.34, +64.02, +0.52%) has bounced after testing 12300. A strong rise past 12450 is needed to gain momentum and revisit 12600 levels. While 12450 holds, DAX can dip to 12300 again and even test 12250 on the downside.
Nikkei (21525.64, -160.26, -0.74%) has dipped within its 21500-21750 sideways range. We need to wait for a breakout on either side of 21500 or 21750 to get a clear cue on the next leg of move. We prefer the index to break 21750 and rise to 22000.
Shanghai (2940.17, -2.01, -0.07%) is holding well above 2900 and keeps our bullish view intact to break 2950 and rise to 3000 in the coming days. While 2950 holds, it can consolidate sideways between 2900 and 2950 for some more time.
Sensex (38896.71, +160.48, +0.41%) and Nifty (11588.35, +35.85, +0.31%) have inched higher yesterday but seems to lack momentum. The resistance at 39100 on the Sensex and 11650 on the Nifty are likely to hold and keep them in a sideways range of 38400-39100 and 11450-11650 respectively. The broader view remains bearish for the Sensex to break 38400 and the Nifty to decline below 11450.
COMMODITIES
Commodities are overall stable and could see some sideways movement while most of them have crucial resistances above current levels. An eventual dip in the longer term would be preferred after some ranged movement in the near term.
Gold (1414.90) is trading above immediate support at 1410 which if holds could take the price towards 1440 on the upside before coming off from there. However, our view of sideways consolidation within the broad 1380-1440 region remains intact.
Silver (15.39) is seeing a contraction in movement as seen on the daily candles. It could test 15.40/45 on the upside before falling back from there towards 15.10. On the 3-day candles, 15.50 is a crucial resistance and has the potential to push prices towards 15.0 or even 14.50 in the longer run.
Copper (2.7110) has dipped slightly from immediate resistance just below 2.72. while that holds, copper could dip towards 2.66/64 in the next few sessions. However on the weekly candles, there is scope for testing 2.75/80 on the upside within the next 2 weeks.
Brent (66.43) has dipped slightly and could test 64.50 before re-attempting a rise towards 68 again. Above 68, 69-70 could act as important resistances in the longer run.
Nymex (59.45) could test 59.0-58.50 in the near term before rising towards crucial resistance at 62.
FOREX
Dollar Index (96.93) has risen slightly and while above immediate support at 96.50, the index could attempt to test 97.20 in the near term. However, Dollar Index could eventually drop towards 96 in the next 1-2 weeks indicating that any immediate bounce from current levels could be short lived.
Euro (1.1261) is likely to hold below 1.13 in the near term falling back towards 1.1225. A sustained rise above 1.13-1.14 is needed in the longer run to take the Euro higher. Immediate view is bearish while 1.13 holds.
Dollar-Yen (107.94) is almost stable and while resistance near 108.50 holds, Dollar-Yen could fall towards 107.50. Immediate trade is likely to b seen within 107.50-108.50
Euro-Yen (121.57) is trading above immediate support at 121 and could rise towards 122.50 in the near term.
Aussie (0.7037) could face rejection from 0.7050/60 which could push Aussie towards 0.695 again in the near term. View is bearish for the coming sessions.
1.26 is an important resistance above current levels on Pound (1.2516). If that holds, Pound could dip back to 1.25 in the near term. A sustained rise above 1.26 is required to take the Pound higher and initiate a fresh rally towards 1.28. For now watch price action near 1.26
USDCNY (6.8744) could be capped at 6.88 on the upside as mentioned yesterday. An eventual dip towards 6.84/83 could be on the cards for the near term.
USDINR (68.54) dipped slightly yesterday in line with our expectation. Broad range of 68.25-68.80 could work for the near term. While above 68.50, it could re-attempt a test of 68.80 on the upside.
INTEREST RATES
The US and German Yields have come-off after a strong surge last week. Both the US and the German yields can see some dip in the near-term and then possibly reverse higher again. The Indian 10Yr GoI has dipped below a key support and has room to test 6.35% on the downside.
The rally in the US Treasury yields take a breather. The Treasury yields have dipped across tenors. The 2Yr (1.82%), 10Yr (2.08%) and 30Yr (2.61%) were down 4 bps each while the 5Yr (1.84%) was down 3 bps. The 10Yr has support in the 2.05%-2.00%. While this support holds, a strong rise past 2.10% again will pave way for a further rise to 2.20% and even higher levels in the coming weeks. The 5Yr can test its support at 1.80% and can reverse higher targeting 2% on the upside.
The German yields were also down across tenors yesterday. The 2Yr (-0.75%) and 5Yr (-0.60%) were down 3 bps each while the 10Yr (-0.26%) dipped 1 bps. The 30Yr (0.32%) German Yield which had surged at a much faster pace last week was down sharply by 6 bps. The 30Yr can dip further to 0.28%-0.26% and then reverse higher again.
The 10Yr GOI (6.4327%) has declined further as expected and is now trading below the support level of 6.45%. The near-term bearish view remains intact to test 6.35% on the downside after which a bounce is possible.
