STOCKS
Equities remain stable well within our preferred sideways range. As mentioned yesterday, the indices an continue to trade in a narrow sideways range for some time. Dow can trade between 23000 and 24000/24200. DAX and Shanghai remains well within our preferred range of 10100-10800 and 2800-2850 respectively. Nikkei is stable above the lower end of the 19000-20000 range. Sensex and Nifty can trade in the range of 30000-32000 and 8900-9500 respectively.
Dow (23515.26, +39.44, +0.17%) remains stable within the preferred 23000-24000/24200 range. As mentioned yesterday, we need to see strong break above 24000 to reduce the danger of a fall below23000 and see our preferred near-term rise to 24500-25000. Also we expect the upside to be capped at 24500-25000 from where we would be looking for a fresh leg of fall to 21000 or even lower.
DAX (10513.79, +98.76, +0.95%) is trying to move higher towards the upper end of its 10200/100 – 10700/800 range. Within this range our bias continues to remain bullish to see an upside break above 10800 and a rise to 11000-11300 before we see a fresh leg of fall.
Nikkei (19272.42, −157.02, -0.81%) is managing to sustain above 19000 but seems to lack strength. A strong break below 19000 bring in the danger of seeing a fresh fall to 17800. But as mentioned yesterday, while above 19000, Nikkei can consolidate between 19000 and 20000 for some time.
Shanghai (2825.78, −12.72, -0.45%) failed to sustain the break above 2850 yesterday. The 2800-2850 range remains intact and can be in place for some more time. Within this range our bias remains bullish to see a break above 2850 and a rise to 2870-2880 and 2900 eventually.
Nifty (9313.90, +126.60, +1.38%) has risen and is heading towards 9400 as mentioned yesterday. 9400-9500 is a good resistance from where it can reverse lower again. Broadly we can look for a range of 8900-9500 on the Nifty for some time.
Sensex (31863.08, +483.53, +1.54%) has risen and can test 32000 as expected. While 32000 holds, the index can remain in the range of 30000-32000 (most preferred) for some more time. However, if it manages to breach 32000 decisively, a further rise to 33000 and even 34000 can be seen.
COMMODITIES
Gold trades higher while Silver is stable and Copper is attempting to rise towards resistance levels. Crude prices have rebounded well but unless a break above $28 and $21 is seen on Brent and WTI respectively, we may not negate another potential fall from here, next week. We continue to watch prices closely.
Brent (22.0, June futures) and Nymex WTI (17.27, June futures) both see sharp recovery after the recent panic sell off seen this week. We may now have to allow for a slow and steady recovery towards $25-28 and $20-23 for Brent and WTI respectively.
Gold (1745.80) continues to trade higher breaking above our mentioned 1720 levels yesterday. A steady rise is seen which could take the price higher towards 1780-1800. A dip from 1780-1800 could be likely in the medium term. However, we would be cautious to see if the current rebound in prices turns to the upside or could have another dip from here in the near term.
Silver (15.36) is stable for now. View is bearish for the near to medium term while below immediate resistance at 16. A break above 16 is needed to take prices higher; till then, we may expect some ranged trade in the 16-14 region.
Copper (2.2985) has risen but looks likely to be ranged in the 2.40-2.25 region broadly for the near term. We may expect a rise towards 2.35/40 in the coming week followed by a dip back towards 2.25 or lower in the longer run.
FOREX
Dollar-Index and Dollar-Yen are trading in a narrow range and looks stable for now while Euro dropped below 1.08 and looks bearish for the near term. Aussie and Pound look stable too. Yuan is likely to weaken while USDINR may bounce from 76 and move higher towards 76.25/35 initially with a higher target of 76.40/50 eventually.
Dollar Index (100.53) continues to remain stable in the 101-98 region. We may expect some more sessions of sideways movement in the near term.
Euro (1.0770) fell on weak PMI data that indicated a contraction in manufacturing and service industry. This fall is seen despite a stable Dollar Index. Euro looks bearish for the near term with a potential test of 1.0750-1.0700 in the near term. A bounce from 1.07 or slightly lower can be expected in the medium term.
Dollar-Yen (107.65) is trading in a very narrow range and needs to see some pick up in volatility to move on either direction from here. We will have to wait and watch for now.
EURJPY (115.99) has broken below crucial support at 116 contrary to our expectation of seeing a bounce and if the fall sustains, could trigger a fall towards 114 in the near term as mentioned yesterday. EURJPY could be bearish for a fresh fall while below 116.
Aussie (0.6364) is trading in a narrow range just below 0.65 but doesn’t seem to be falling off from here just now. 0.62-0.65 is likely to be the near term trading range and unless a break on either side is seen, further direction remains unclear. Looking, at medium term charts, Aussie looks bearish for the medium to long term.
Pound (1.2348) has slightly risen but continues to trade below 1.26/27. Sideways range of 1.22-1.26/27 is likely to hold in the near term.
USDCNY (7.0822) is trading above immediate support at 7.08 and is likely to move up from here in the near term towards 7.10/12. A break below 7.08 is needed to turn the view bearish for USDCNY in the medium term.
USDINR (76.08) fell sharply and close lower yesterday. Watch crucial support at 76 which could have some scope to produce a bounce back towards 76.40/50 in the near term.
INTEREST RATES
The US Treasury yields have room to dip in the near-term before we see a sustained bounce in the coming weeks. The German yields have crucial resistances ahead which will have to be broken in order to move further higher and negate the chances of a fall. The 10Yr GoI has declined sharply to test 6% as expected and is now closer to a key support from where it can bounce-back again.
The US 2Yr (0.22%) and 5Yr (0.36%) Treasury yields remain stable while the 10Yr (0.59%) and 30Yr (1.16%) have come-off slightly.The yields have room to dip in the near-term before we see a sustained bounce. The 10Yr can test 0.50% even 0.40% in the coming days and then reverse higher. The 30Yr can dip to 1.10% in the near-term before bouncing-back again.
The German 2Yr (-0.70%), 5Yr (-0.63%), 10Yr (-0.43%) and 30Yr (-0.04%) yields have dipped slightly across tenors.. As mentioned yesterday, key resistances are ahead which needs to be broken to negate the chances of seeing a fall. The 10Yr has resistance at -0.40% and a rise to -0.20% is possible on a break above it. The 30Yr will have to break above -0.04% in order to move further higher to 0.15%. We will have to wait and watch the movement closely for a few sessions to get a clear idea.
The 10Yr GoI (6.0602%) failed to sustain above 6.20% and declined sharply to test 6% on the downside. 6% and 5.95% are crucial supports to watch now. While these supports hold, a bounce-back move to 6.10% and 6.20% is possible again. We will have to wait and watch.
