STOCKS
Equities continue to trade lower. Dow can test its support at 27000 and DAX has room on the downside to test 12100-12000. Nikkei has bounced but has key resistances which can cap the upside. Shanghai has broken the range on the downside and can fall in the coming days. Sensex and Nifty are hovering above their crucial supports which have to hold in order to avoid further fall and trigger a bounce.
Dow (27171.90, +17.70, +0.07%) remains bearish in the near-term to test 27000. However, the slow pace of fall indicates that the downmove may not extend beyond 27000 and target 26600 immediately, but may happen after some consolidation above 27000.
DAX (12289.40, +29.33, +0.24%) remains bearish to test 12100 and 12000 on the downside. Resistance in the 12350-12400 region can cap the upside.
Nikkei (21630.74 +213.95 +1%) has risen past 21500 which we had expected to hold. However, there is resistance at current levels and at 21750 and the outlook will turn bullish only on a strong rise past 21750. While below 21750, the view is negative to test 20900 and 20750 in the coming days.
Contrary to our expectation, Shanghai (2893.26, +6.29, +0.22%) has declined below 2900. While below 2900, a fall to 2850-2835 is possible in the near term.
Sensex (38031.13, -305.88, -0.80%) can bounce to 38600-38800 while it sustains above the key support level of 37900. But, this bounce can get negated on a strong break below 37900 in which case a fall to 37000 or even lower is possible.
Nifty (11346.20, -73.05, -0.64%) has to sustain above 11300 in order to avoid further fall to 11000. While above 11300, a bounce to 11500 is possible in the coming sessions.
COMMODITIES
Commodities are all trading near immediate support or resistance levels that could old for a few sessions. Gold could bounce back from 1410 while Silver and Copper looks weak. Crude prices could move up a bit in the near term.
Gold (1419.10) has support near current levels on the 3-day charts and while that holds, Gold could move up again to re-test 1460/80 in the near term. Overall broad range of 1400-1480 is likely to hold for the week.
Silver (16.26) is holding below immediate resistance near 16.60 and while that holds, Silver could see some ranged movement in the near term. A dip towards 16.00-15.75 looks likely.
Copper (2.7250) has fallen from levels near 2.75 as expected and could dip lower towards 2.70-2.68 in the near term before again attempting to bounce from there. Very near term looks weak for Copper.
Brent (63.32) and Nymex WTI (56.23) have moved up a bit. Brent could test 65 on the upside before falling back towards 61 while Nymex WTI has resistance near 58 which is likely to hold just now. Although the crude prices may move up just now, they looks bearish in the longer run.
FOREX
Dollar Index (97.38) has moved up and could test resistance at 97.50. It would be important to watch if the index breaks above 97.50 to move up further in the near term. Preferred view would be a rejection from 97.50 again. In case the index moves up sharply, contrary to our expectation, we could consider a test of 98 in the medium term. For now, we watch price action near 98 closely.
Euro (1.1199) has fallen sharply and could test immediate support near 1.1180. On a break below 1.1180 we may look for a fall towards 1.1150-1.1125 over the next 1-2 sessions.
Dollar-Yen (108.02) has risen as expected and could rise towards 108.50-109.00 in the near term. Note that 107 is an important support and while that holds, Dollar-Yen is bullish for the coming months.
Euro-Yen (120.98) is trading just below 121 and if the pair manages to fall further, it could be vulnerable to a test of 120 or even lower I the near term. Watch price action near current levels. Failure to bounce back immediately could indicate a possible decline for the near term.
Aussie (0.7026) has immediate resistance near 0.7060/7070 and while that holds, Aussie could dip towards 0.70 or lower in the near term.
Pound (1.2463) is holding above important near term resistance near 1.26 and while that holds, the currency is bearish for the near term towards 1.2350.
USDCNY (6.8826) has risen as expected and could target 6.90 in the near term. View remains bullish above 6.86.
USDINR (68.9125) has some possibility to test 68.75/65 while 69 holds just now. Thereafter, the pair could move up towards 69.25 in the medium term. Trade within 69.00-68.75/65 looks likely in the near term.
INTEREST RATES
Bond market continues to trade subdued. The US Treasury yields remain lower and can dip further ahead of the Federal Reserve meeting next week (July 31). The German yields remains bearish in near-term as the market waits for the European Central Bank (ECB) meeting on Thursday (July 25). The Indian 10Yr GoI is holding higher and can see some corrective bounce in the coming days.
Treasury yields dipped at the near-end while the far-end remained stable. The 2Yr (1.82%) and 5Yr (1.81%) were down 1 bps while the 10Yr (2.06%) and 30Yr (2.58%) remained stable. Our view remains the same. We expect the Treasury yields to dip further in the coming days. The 30Yr can dip to 2.50% while below 2.60% and the 10Yr can test 2% on the downside in the near term.
The German yields have dipped further and keeps our near-term bearish view intact. The 2Yr (-0.79%) was down 2 bps and the 5Yr (-0.68%), 10Yr (-0.35%) and the 30Yr (0.24%) yields were down 3 bps each. As mentioned yesterday, the 2Yr can dip to -0.85% and the 10Yr can test -0.40% in the coming days.
The 10Yr GoI (6.4175%) sustains higher and is keeping our near-term bullish view for a rise to 6.50%-6.55% intact. A break above 6.45% will pave way for the above mentioned targets.
