STOCKS
Shanghai has surged further to reach our target much faster than expected. Better than expected manufacturing data release and a rate cut from the central bank are boosting the momentum. Shanghai continues to remain stronger among the lot. Dow and Nikkei remain stable within our preferred range while DAX has broken the range on the upside and can move higher now. Sensex and Nifty have key resistances ahead which will have to be broken to move further higher.
Dow (25827.36, +92.39, +0.36%) remains stable around 26000. We retain our view of seeing a range of 25000-26500 for some time before a fresh rally to 27000-28000 happens eventually. The US markets are closed today.
DAX (12608.46, +347.89, +2.84%) has surged breaking above 12500 much quicker than we had expected. A test of 12800-12900 is possible now while it sustains above 12500. A strong close above 12800 will then pave way for our next target of 13000-13200. From a medium-term perspective, the index has potential to test 13500-13800 now.
Nikkei (22219.65, +73.69, +0.33%) continues to remain stable above 22000. We reiterate that 22000 is an immediate support and the index can remain in the range of 22000-22600. Thereafter a break above 22600 and a fresh rally to 23000-23200 can be seen. From a medium-term perspective the upside is open to test 23800-24000 while the Nikkei remains above the deeper support level of 21500.
Shanghai (3112.72, +22.15, +0.72%) has surged without seeing a corrective dip from the 3050-3060 resistance zone that we had mentioned expected. The rise to 3150-3200 mentioned yesterday seems to be happening much faster than we had anticipated. A corrective fall from the 3150-3200 region cannot be ruled out. However, from a bigger picture with strong support now in the 3050-3000 region, a strong rise past 3200 will now pave way for 3400-3500 on the upside.
Nifty (10551.70, +121.65, +1.17%) moved up to test 10600 as expected and has come-off slightly. 10600-10630 will be a crucial resistance region now which will need a close watch. A strong break above 10630 (most preferred) will now be needed to extend the rally to 10750 and further higher levels. Else 10200-10600/630 range can remain in place for some more time.
Sensex (35843.70, +429.25, +1.21%). on the other hand can target 37000-38000 on a strong rise past 36000. Inability to breach 36000 immediately can keep the index in the range of 34000-36000 for some more time before an eventual break above 36000 is seen.
COMMODITIES
Crude prices have moved up while Copper saw a corrective dip but could soon rise back towards higher levels in the coming week. Gold and Silver could be bullish if they manage to hold above immediate supports and rise above the immediate psychological resistances.
Brent (42.88) and Nymex WTI (40.40) have risen and could target to test 45 and 41 respectively on the upside. We would keep an eye for a short term dip by the end of next week from the mentioned interim resistances. But we may see some upside move in the next 1-2 sessions.
Gold (1788) rose back again slightly. As mentioned yesterday 1770-1750 could be the maximum downside within the current move while bullishness towards 1800-1820 remains intact. View is bullish for the coming sessions.
Silver (18.31) declined from 19 yesterday. A re-attempt to rise to 19 again could eventually lead to a break above 19 leading to much higher levels in the near term towards 20.
Copper (2.7280) has dipped slightly but we could soon see a rise back towards 2.80/81 before another dip is seen.
FOREX
Dollar Index, Euro, USDJPY, EURJPY and Yuan are all stable within narrow ranges and need to see a break on either side to decide on further direction. Aussie may rise from current levels while Pound could face some rejection for the short term but could eventually move up in the coming week. USDINR fell sharply today but we would wait to see if the dip continues to project further downside for the near term. Watch price action near 75.
Dollar Index (97.19) is stuck within the 97.80-96.90 region and is likely to remain so for the next few sessions with a possible rise towards the upper end of the range. Unless a break on either side of the mentioned range is seen, it would be difficult to project further direction from here.
Euro (1.1245) is also stuck in the 1.1200-1.1290 region as mentioned yesterday. We may expect another 2-3 sessions of this sideways consolidation before a sharp break on either side is seen by mid- next week.
EURJPY (120.89) is trading just above immediate trend support near 120.60 and while that holds, we may expect some more of sideways consolidation between 120.60-121.67 in the near term.
Dollar-Yen (107.51) is stable and continues to be ranged within 107.24-108.20. View is stable for the very near term.
Aussie (0.6924) is stable near current levels. A rise towards 0.70/71 is on the cards for the near term. View is bullish while above 0.68.
Pound (1.2460) tested an intra-day high of 1.2530 yesterday. Note that 1.2545 could be a decent interim resistance above current levels which could hold and keep the Pound lower for the next few sessions. While below 1.2545, we may expect a dip to 1.2385-1.2340 before eventually rising again towards 1.2730 mentioned yesterday.
USDCNY (7.0652) is stuck in a sideways range of 7.0505-7.0838 and unless a break on either side is seen, it would be difficult to project further direction. But when a break out comes in, it would be expected to be sharp. For now we wait and watch for a directional break out from the mentioned range. Immediate view is stable.
USDINR (75.0150) came down sharply in the last 30mins of trade to close at 75.01. If the RBI does not intervene today, we may expect the fall to continue towards 74.75-74.75 in the next few sessions, negating a bounce back towards 76 for now. But while 75 itself is an important levels, we would wait to see if it bounces back from here to close higher today. We wait to see price action today to decide on further movement for Rupee.
INTEREST RATES
The US Treasury yields remain stable at levels seen in the early Asian trades yesterday. We prefer the yields to see a dip to test their supports before moving higher sharply. The German Yields have reversed as the resistances are holding well in line with our expectation and keeps our bearish view intact. The 10Yr GoI remains lower and is bearish to fall more in the coming days.
The US 2Yr (0.16%), 5Yr (0.30%), 10Yr (0.67%) and the 30Yr (1.43%) remains stable at levels seen in early Asian trades yesterday. The yields seem to lack strength to move higher from here itself. As such our preferred dip to test the supports at 0.60%-0.58% (10Yr) and 1.30%-1.25% (30Yr) can still happen before we see a fresh leg of rally. A strong rise past 1.5% on the 30Yr and 0.75% on the 10Yr will be needed to negate the above mentioned dip and move up from here itself.
The German 2Yr (-0.69%), 5Yr (-0.68%), 10Yr (-0.43%) and the 30Yr (0.02%) yields have come-off across tenors failing to breach their resistances. 0.05% on the 30Yr and -0.40% on the 10Yr has been holding well in line with our expectation. This keeps our broader bearish view intact of seeing -0.50%/-0.60% (10Yr) and -0.10%/-0.20 % (30Yr) on the downside in the coming weeks.
The 10YR GOI (5.8415%) remains lower below 5.85% and keeps our bearish view intact. While below 5.85%, a test of 5.80%-5.78% on the downside is possible. Resistance is in the 5.85-5.87% region which can cap the upside for now.
