STOCKS
Dow is moving higher but at a slow pace. DAX and Nikkei, though can dip in the near-term have strong supports that can limit the downside and keep the broader bullish view intact. Shanghai has surged and seems to be gaining momentum for further rise. Sensex and Nifty have also bounced-back strongly yesterday and are bullish to move further higher.
Dow (28267.16, +31.27, +0.11%) is continuing to move higher but at a slower pace and seems to face resistance around 28330 for now. A strong break above it will pave way for our target of 28400-28430 in the coming days after which an intermediate correction is possible before we see 28800 eventually on the upside.
DAX (13287.83, -119.83, -0.89%) has come-off sharply but might find support in the 13200-13180 region. A bounce from there will take the index higher again to 13400-13500. Only a break below 13180 will turn the outlook negative and drag DAX to 13100 and 13000 levels again.
Nikkei (24000.56, -65.56, -0.27%) has come-off and is hovering around the key near-term support level of 24000. A fall below it can drag it to 23650-23600 which will then delay our preferred rise to 24800-25000.
As expected Shanghai (3029.45, +7.03, +0.23%) has surged breaking above 3000 to make a high of 3039.38 yesterday. The region between 3040 and 3050 is an important resistance which if broken will pave way for 3100-3110. If 3050 holds for now, then Shanghai can consolidate between 3000 and 3050 for some time.
Sensex (41352.17, +413.45, +1.01%) has risen past the key resistance level of 41200. The outlook is bullish. 41000 will now be a good support. A rise to 41800-42000 looks likely now.
Nifty (12165, +111.05, +0.92%) has risen back above 12100 and has closed on a strong note. This has eased the danger of seeing a break below 12000. The outlook is bullish while above 12100. A rise to 12200 and 12300-12350 can be seen in the coming days.
COMMODITIES
Brent (65.82) and Nymex WTI (60.50) have immediate trend resistance near 66 and 61 respectively and it would be crucial to see if the prices manage to break above these. Preference is for a fall from respective resistances for a corrective dip towards 64 and 58 respectively.
Gold (1480.10) and Silver (17.06) are stable and could remain sideways within the 1490-1460 and 17.25-16.25 region for the near term. No sharp movement is expected just now.
Copper (2.8040) has important resistance near 2.80/85 which if holds could produce a dip towards 2.70. Eventual rise towards 2.95/3.00 is preferred and looks likely in the longer run.
FOREX
Dollar Index (97.28) has risen slightly from levels just above 97 seen yesterday. Overall 97 is crucial to watch and whether it would hold or not would be the directional driver for the currencies in the medium term. 98.50 continue to hold as a strong resistance now.
Euro (1.1141) has dipped slightly after testing 1.1175 yesterday. 1.12 remains to be crucial levels to watch in line with the support seen near 97 on Dollar Index. While we prefer 1.12 to hold just now, any break on the upside could be a bullish trigger for the medium to long term.
Dollar-Yen (109.43) has been trading near 109.50 for the last 2-3 sessions and could attempt to test resistance near 110. Note that 109.50-110.00-110.50 are important key resistances above current levels and unless a sustained break above 110.50 is seen we may continue to see limited upside with a sharp reversal in the medium term.
EUR-JPY (121.94) has dipped a bit. Upper resistance near 122.78/86 is holding well for now and while that holds we may see a dip towards 121.50-121.00 before bouncing back higher.
Pound (1.3096) has come off sharply, losing all gains seen in the last week’s rally from 1.3050 to 1.3515. We continue to look at 1.30 as immediate support, a break below which would re-initiate bearish sentiment for the rest of the month.
Aussie (0.6843) has come off sharply and could be headed towards 0.68 in the near term before rising back again.
USDCNY (7.0039) has bounced as support near 6.95/96 is holding well for now. A re-attempt to rise towards 7.04/05 cannot be negated for the near term.
Dollar-Rupee (70.98) dipped to 70.86 but traded above 70.90 for most of the trading hours yesterday. 70.80/75 is now a strong support region and we may expect that to hold possibly taking USDINR higher towards 71.10 and eventually to 71.25 on the upside before coming off from there.
INTEREST RATES
The US Treasury yields sustain higher and can test their key resistances in the near-term after which they can fall-back again. The German yields can consolidate sideways before resuming their uptrend. The 10Yr GoI is coming down in line with our expectation and has room to extend the fall in the coming days.
The US 2Yr (1.63%), 5Yr (1.71%), 10Yr (1.88%) and 30Yr (2.31%) Treasury yields sustained higher and stable across tenors. Our view remains the same. Key resistances are at 1.90% and 1.95% on the 10Yr and in the 2.30%-2.35% region on the 30Yr which can be tested in the near-term. However, we expect these resistances to hold and drag the yields lower again in the coming weeks.
The German 2Yr (-0.65%), 5Yr (-0.56%), 10Yr (-0.30%) and 30Yr (0.21%) have dipped across tenors. The 30Yr is struggling to breach 0.22% which is much needed for it to gain momentum to target 0.40% on the upside. While below 0.22% it can continue to oscillate around 0.20%. The 10Yr on the other hand has been consolidating between -0.28% and -0.35% over the last couple of weeks. The bias is bullish for it to breach -0.35% in the coming days and rise to -0.20% and even -0.10%.
The 10Yr GoI (6.7502) tested 6.75% as expected. Our bearish view remains intact to test 6.70% on the downside. A break below 6.75% can accelerate the fall. However, the above mentioned fall could get delayed in case if the yield sustains above 6.75%. In that case a narrow sideways move between 6.75% and 6.80% is possible for some time before the preferred fall happens.
