STOCKS
The rally in the major indices seems to be losing steam. Dow has to sustain above 27600 in order to move higher. Nikkei, DAX, Sensex and Nifty looks vulnerable to dip in the near-term within their broader uptrend. Shanghai looks mixed and can remain range bound.
Dow (27681.24, +6.44, +0.02%) has to be seen whether it manages to hold above 27600 or not. While above 27600 the outlook is bullish to see a rise to 28000 – the next crucial resistance. A break below 27600 on the other hand can drag it to 27250-27200. The US markets are closed today.
DAX (13228.56, -60.9, -0.46%) has an immediate support in the 13200-13150 region. While above this support the rise to 13400-13500 which we have been expecting can be seen this week. 13000-12950 is a slightly lower support that can be tested in case if the index declines below 13150.
Nikkei (23351.24, -40.63, -0.17%) has come-off sharply from its resistance at 23600. A dip to 23200 or even 23000 is likely before we see the broader uptrend resuming towards 24000-24200.
Shanghai (2933.04, -31.15, -1.05%) could consolidate between 2950 and 3000 for some time. A breakout on either side of 2950 or 3000 will decide whether the index will go up to 3050 or fall to 2900.
Nifty (11908.15, -103.90, -0.86%) seems to lack strong follow-through buyers above 12000. Though, the broader view remains bullish, a near-term dip to 11850-11800 looks likely from where the index can reverse higher again and keep the uptrend intact.
Similarly, Sensex (40323.61, -330.13, -0.81%) can dip to 40000 and then reverse higher again. A sideways consolidation between 40000 and 40750 is also possible for some time before the overall uptrend resumes.
COMMODITIES
Brent (62.02) and Nymex WTI (56.84) are trading higher. Brent is holding well above support at 61 and could be capped at 64 on the upside while Nymex WTI is likely to be limited to 58-59 on the upside. It would be important to see if WTI sustains above 56 and manages to rise past 58-59 in order to become more bullish.
Gold (1463.90) continues to trade low on stronger Dollar. We may look for a test of 1440 in the next 1-2 sessions.
Silver (16.84) is likely to get some support at 16.50 or lower at 16 from where a bounce towards 17.5 is expected in the near term.
Copper (2.6785) has dipped slightly from 2.7250 and is likely to trade in the 2.7250-2.65 region. A sharp rise above 2.7250 seems less likely just now.
FOREX
Dollar Index (98.33) has held below 98.50 in the rise seen from 97.11 since the beginning of the month. A dip to 98 is possible before again rising back towards 98.50-99 levels in the near term. Overall medium term outlook is bullish.
Euro (1.1022) has been falling sharply and could test 1.0995 before bouncing back from there.
Dollar-Yen (109.02) is holding well below 109.50 and could see a dip towards 108.50/25 on the downside before bouncing back to current levels.
EUR-JPY (120.16) seems to be moving lower and while below 120.50, there is enough room towards 119 in the coming 1-2 weeks. View is bearish for the near term.
Pound (1.2791) has fallen as expected and could test 1.27/26 by this week or the next. View is bearish.
Aussie (0.6851) is trading near support levels. A break below 0.6825 is needed to turn bearish for the near term; else a bounce from current levels could take it higher towards 0.6925 again. Watch price action within 0.36850-0.6825 region.
The USDCNY (7.0025) has bounced from 6.9670 and could test 7.02/03 on the upside as upward correction after the recent fall last week. If 7.03 holds, USDCNY could come down towards 6.93/90 in the medium term.
Dollar-Rupee (71.30) could test 71.45 on the upside but is likely to face some rejection there which could bring down Dollar-Rupee today towards 71.25/15 levels or lower.
INTEREST RATES
Increasing optimism on the US-China trade front has raised the risk appetite in the market and have taken the US Treasury yields sharply higher last week. However, crucial resistances are coming up which will need a close watch as they can halt the current rally. The German yields retain their uptrend and have room on the upside. The 10Yr GoI is bullish and can move up further.
The US 2Yr (1.67%), 5Yr (1.75%), 10Yr (1.94%) and 30Yr (2.42%) Treasury yields have surged across tenors last week. The 2Yr was up over 10 bps while the 5Yr, 10Yr and 30Yr rose over 20 bps in the past week. However crucial resistances are coming up at 2.50% on the 30Yr and 2% on the 10Yr which we expect to hold and drag the yields lower in the coming days.
The German 2Yr (-0.63%) dipped 2 bps while the 5Yr (-0.53%), 10Yr (-0.26%) and 30Yr (0.26%) moved up by 3bps, 5bps and 7bps respectively on Friday. The 30Yr is coming closer to its key resistance level of 0.28% which will need a close watch. A strong break above it will be bullish to see 0.40% on the upside. The 10Yr can test -0.20% in the near term.
The India 10Yr GOI (07.26 GS 2029; 6.7547%) has risen sharply on Friday and is keeping the bullish view intact to test 6.80% on the upside. While above 6.70%, the current upmove may have the potential to target even 6.90% on the upside in the coming weeks.
The 10Yr (06.45 GS 2029; 6.5586%) GoI on the other hand is bullish to test 6.58%-6.60% in the coming days. Supports are at 6.54% and 6.52%.
