STOCKS
Equity segment seems to be turning cautious within their broader uptrend ahead of the US Federal Reserve meeting today. It will be important to see what the central bank says about its future policy path as a 25bps rate cut has been broadly prices in the market already. Dow, DAX and Nikkei has to surpass their respective psychological resistance to move further higher. Shanghai seems to lack strength to sustain higher and needs a close watch. Sensex and Nifty has risen past their key hurdles and are bullish to move further higher.
Dow (27071.42, -19.3, -0.07%) needs to hold above 27000 in order to test 27250 and also break above it to target 27600 on the upside. Support below 27000 is at 26750.
DAX (12939.62, -2.09, -0.02%) on the other hand has to surpass the psychological level of 13000 to test 13200 initially. As mentioned yesterday, a further rise past 13200 will pave way for 13500. While 13000 holds, an intermediate dip to 12800-12700 cannot be ruled out before we see a fresh rally.
Similarly, Nikkei (22905.66, -68.47, -0.30%) has to breach 23000 to proceed towards our preferred target of 24000. While below 23000, a corrective fall to 22700-22600 is possible before the above mentioned target is attained.
Shanghai (2947.44, -6.74, -0.23%) seems to be struggling to sustain above 2950. A dip to 2930-2920 looks possible again. We will have to watch the price action in the next few days.
Sensex (39831.84, +581.64, +1.48%) and Nifty (11786.85, +159.70, +1.37%) have risen past their key resistance levels of 39430 and 11720 respectively. The outlook is bullish. Sensex can test 40200-40300 and the Nifty can target 12000-12100 in the coming days.
COMMODITIES
Commodities have dipped except Copper. Gold and Silver could test supports just below current levels while Crude prices could dip in the rest of the sessions this week.
Brent (61.40) and WTI (55.25) are trading lower as traders seem to have trimmed their positions in yesterday’s trade. Brent came off from levels above 62 instead of testing 63 on the upside. Immediate support is seen at 60. WTI has also held below 57 and could test 54 before bouncing back from there.
Gold (1490.90) and Silver (17.79) are trading at slightly lower levels compared to yesterday. Gold could test 1480 on the downside but needs to break lower to fall further towards our expected 1460/50 levels. For now 1480-1520 is the range we look for with a preference of an eventual break on the downside. Silver has immediate support at 17.70 which if holds could take the price higher in the near term. Only a break below 17.70, could trigger a fall towards 17 or lower.
Copper (2.6820) is trading below resistance zone of 2.70-2.7250 which is expected to test in the next few sessions. Thereafter we may see a corrective fall towards 2.65.
FOREX
Currencies are mixed. Dollar Index may trade below 98, Euro could rise towards 1.1180. Dollar-Yen and Aussie dipped from respective resistances and could trade lower. Dollar-Rupee, EUR-JPY and Pound look bearish. USDCNY could be sideways within 7.05-7.10
Dollar Index (97.72) has daily trend resistance at 98 which is likely to hold and keep the index low for the near term. While 98 hold, we may expect another fall towards 97. Overall on the weekly chart, 97 seems to be an important medium term support and could produce a sharp bounce towards 99 in the longer run. We do not look for a fall below 97 just now.
Euro (1.1108) tested 1.1074 before bouncing back. As mentioned earlier the support region of 1.1050/60 is likely to hold well and Euro could rise towards 1.1180 again. Dollar Index needs to restrict its fall to 97 which could keep the resistance at 1.12 on Euro intact. For now 1.1050-1.1180 could be the broad trade zone.
Dollar-Yen (108.85) has been moving in very narrow range in the past 1-2 weeks. Immediate resistance is seen near 109.15 and while that holds, a dip towards 108 is in place. 109.15 has to be breached to take the exchange rate higher towards weekly resistance at 110. For now watch price action near 109.15 from where a fall is expected.
EUR-JPY (120.91) is trading within the 121.5-120.5 region. The pair is likely to trade sideways within the mentioned region but is likely to come off towards 120 and lower in the medium term. Overall view is bearish for EUR-JPY.
Pound (1.2862) could dip towards support near 1.27-1.26 in the near term before bouncing back from there. Upside is expected to be capped at 1.30.
Aussie (0.6859) has resistances at 0.6870/80 and higher at 0.6940 which could keep Aussie lower in the medium term pushing it back towards 0.68. View is bearish while below 0.6870/80.
The USDCNY (7.0647) has risen as expected and could rise towards 7.10 in the near term. Immediate support at 7.05 is holding well for now.
Dollar-Rupee (70.8450) could trade within 70.60-70.90 for the day. An eventual break below 70.60 is preferred in the medium term.
INTEREST RATES
The US Treasury and the German Yields remains stable. The market seems to be waiting to see the outcome of the Federal Reserve meeting today. A 25 bps rate cut has been already factored in the market. Market will be watching to hear about the future policy path which will be key in determining the yield movement going forward. Broadly, both the US Treasury and the German yields look bullish in the near term. The 10Yr (07.26 GS 2029) remains stable.
The US 2Yr (1.64), 5Yr (1.65%), 10Yr (1.83%) and 30Yr (2.32%) Treasury yields were stable across tenors. The broader view remains bullish. The 30Yr ccan test 2.40% while it sustains above 2.25%. The 10Yr can move up to 1.95%. It has support in the 1.78%-1.75% region.
The German 2Yr (-0.65%), 5Yr (-0.59%), 10Yr (-0.35%) and 30Yr (0.17%) remains higher but stable. The 30Yr can test its immediate resistance in the 2.25%-2.28% region from where a corrective fall is possible. The 10Y can rise to -0.28% in the near term.
The 10Yr (07.26 GS 2029) GOI (6.6866%) can continue to oscillate around 6.70% with the bias being bullish to see an eventual rise to 6.75% and 6.80% in the short term.
The 10Yr (06.45 GS 2029) GOI has closed higher yesterday at 6.5184% as compared to 6.5004% on Friday.
