STOCKS
Shanghai continues to remain strong and has surged further. But a key resistance is ahead which can trigger a corrective fall before a further rise is seen. Dow and Nikkei can consolidate sideways before moving higher. Sensex and Nifty look bullish but might move up at a slower pace.
Dow (25827.36, +92.39, +0.36%) was closed on Friday. We reiterate that the Dow could continue to remain in the range of 25000-26500 for some time. Thereafter we expect it to break the range on the upside and rise to 27000-28000 eventually in the coming weeks.
DAX (12528.18, −80.28, -0.64%) has come-off slightly on Friday but sustains above 12500. Our view of seeing 12800-12900 and the 13000-13200 in the near-term remains intact while the index sustains above 12500. Also with strong support in the 12200-12000 region now, a rise to a test of 13500-13800 can be seen over the medium-term.
Nikkei (22612.72, +306.24, +1.37%) has risen sharply today treading above 22000. We may expect a rise towards 22600 within our view of seeing a consolidation between 22000 and 22600 before an eventual rise to 23000-23200 happens. Also, we reiterate that the Nikkei has potential to target 23800-24800 over the medium-term while it remains above the key support levels of 22000 and 21500.
Shanghai (3269.55, +116.74, +3.70%) is retaining its strength and has surged further breaking above our expected near term resistance at 3200. Now, while Shanghai sustains to rise above 3200, we may expect an upmove towards 3400-3500 on the upside over the medium-term.
Nifty (10607.35, +55.65, +0.53%) seems to lack strong follow-through rise above 10600. Outlook is bullish to see a rise to 10750-10800 in the near-term from where an intermediate corrective dip is possible before seeing a further rise to 11000-11250 eventually. Support is now in the 10400-10200 region.
Sensex (36021.42, +177.72, +0.50%) has risen just above 36000. Immediate support is at 35600. Our view of seeing a rise to 37000-38000 remains intact. The chances of seeing a consolidation stands reduced now as the bias has turned bullish after the rise above 36000. As such we can see the Sensex moving up straight away, though might be at a slower pace.
COMMODITIES
Crude prices are stable but could face a short term rejection from above current levels. Watch price action closely for a short corrective dip within the next few sessions. Gold and Silver are mixed. Gold looks bullish while above 1770 and Silver could trade in the 18.3-19 region for sometime both being immediate support and resistance levels on the near term and longer term charts respectively. Copper could see a short corrective dip just now but could rise back to test 2.80/81 before a sharper decline is seen.
Brent (42.90) and Nymex WTI (40.34) are almost stable near levels seen last week. We continue to look for a test of 45 and 41 just now followed by a possible dip from there in the near term. View is sideways for the next few sessions. Watch price action near mentioned interim resistances.
Gold (1781.70) has near term trend support near 1770 and while that holds, we may expect a possible test of 1800 again in the coming sessions. An initial dip below 1770 and then below 1750 would be necessarily required to negate a test of 1800 and instead fall lower towards 1700. For now view is stable to bullish, above 1770.
Silver (18.27) has immediate support near 18.30 on the near term charts while on the medium to long term charts, the price has faced rejection from resistance near 19. We watch price action near 19 which if holds could eventually push Silver down to 18 or even lower in the near term. Else a sharp break above 19 would be needed to confirm further bullishness.
Copper (2.7345) has dipped slightly but the dip could be limited to 2.70 from where a bounce back to 2.80/81 looks possible for the medium term.
FOREX
Dollar Index seems to be on the verge of breaking below the sideways range and could be bearish for the near term that could pull up Euro and aid strength in other currencies in the near term. Pound, Aussie and EURJPY also have scope of rising in the near term. USDCNY needs a close watch as it trades just above support levels. USDINR has scope to test 74.25 on the downside before bouncing back from there.
Dollar Index (97.00) has dipped further but we would keep a close watch at 96.90 which if breaks could be bearish for Dollar index over the coming sessions that could drag it down towards 96.50-96.00. A break out from the narrow consolidation mode on the downside would be bearish for Dollar Index for the near to medium term.
Euro (1.1278) has risen to test the upper end of the consolidation zone near 1.1290 and if it manages to break on the upside, we may not negate a test of 1.1380-1.14.06 on the upside within this week and the next. View is bullish on a break above 1.1290.
EURJPY (121.45) has immediate resistance near 121.65 which needs to break on the upside to give the pair enough momentum to rally further towards 122. A rejection from 121.65 (looks less likely) could bring it down towards 120.5 again in the near term. Bias is to see an upmove from here.
Dollar-Yen (107.67) has risen a bit but continues to be ranged within 107.24-108.20. View is stable for the very near term.
Aussie (0.6955) is inching up slowly towards 0.70/71 which could be tested in the next few sessions before a dip from there is seen again towards 0.68.
Pound (1.2483) is trading at immediate near term resistance which needs to break on the upside to further target 1.26-1.2730. While the dollar Index trades lower, we may expect some rally coming in Pound in the next few sessions.
USDCNY (7.0563) has dipped below 7.06 but we would watch support at 5.05 which if holds could keep the sideways range of 7.0505-7.0838 intact for a few more sessions. We reiterate that unless a break on either side is seen, it would be difficult to project further direction from here.
USDINR (74.6350) has scope to test daily trend support near 74.25 which is a crucial level and could see a bounce back from there towards 74.75-75.00 in the medium term.
INTEREST RATES
The US Treasury yields have bounced last week. However, we expect them to see a dip to test their supports before beginning a fresh leg of upmove. The German yields have crucial resistances which we expect to hold and drag them lower in the coming days. A strong rise past these resistances will prove our bearish view wrong. The resistance on the 10Yr GoI is holding well as expected and keeps the bearish view intact.
The US 2Yr (0.16%), 5Yr (0.30%), 10Yr (0.67%) and the 30Yr (1.43%) have seen a corrective bounce last week. We retain our view of seeing a dip to test the supports at 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr first before we see a fresh leg of rally. As mentioned on Friday, a strong rise past 1.5% (30Yr) and 0.75% (10Yr) is needed to move up from here itself without seeing the above mentioned dip.
The German 2Yr (-0.70%), 5Yr (-0.69%), 10Yr (-0.44%) and the 30Yr (0.02%) yields remain below their key resistances. 0.05% on the 30Yr and -0.40% on the 10Yr are crucial levels which we expect to hold and keep our bearish view of seeing 0.50%/-0.60% (10Yr) and -0.10%/-0.20 % (30Yr) on the downside in the coming weeks. A strong rise past 0.05% (30Yr) and -0.40% will prove our bearish view wrong and rise to 0.20% (30Yr) and -0.30%/-0.25% (10Yr) can come into the picture.
The 10Yr GOI (5.8455%) bounced above 5.85% but failed to rise past 5.87%. The 5.85%-5.87% resistance region is holding well in line with our expectation and keeps our bearish view intact of seeing 5.80%-5.78% on the downside. The upside is likely to be capped at 5.90% even if we see a break above 5.87% in the near-term.
