STOCKS
Equities look mixed. The immediate resistances on the Dow and Nikkei are holding well but at the same time the market seems not wanting to take profit off the table here itself. Both the Dow and Nikkie can dip and consolidate in a narrow range for some time with room left on the upside to move further before a sharp correction comes in. Shanghai has seen the corrective fall much faster than we had expected. Sensex and Nifty look bullish but can consolidate before moving sharply higher. DAX continues to remain relatively stronger among the others.
The resistance at 27000 on the Dow (26734.71, −135.39, -0.50%) is holding well as of now. While below 27000, a dip to 26000 and a consolidation between 26000 and 27000 is possible for some time. As mentioned yesterday, 27000 and 27500-28000 are key resistances that can cap the upside in the current leg of rally.
The DAX (12874.97, −56.01, -0.43%) remains stable above 12800. While above 12800, the bullish view of seeing 13200 on the upside remains intact.
Nikkei (22773.95, +3.59, +0.02%) remains below 23000 and could inch lower towards 22500-22400 in the coming days. As mentioned yesterday, a narrow range of 22400-23000 can be seen for some time and a strong rise past 23000 will be needed to pave way for 24000.
As expected Shanghai (3234.60, +24.50, +0.76%) fell to test 3200, indeed much faster that we had expected. 3200 is a good support which can limit the downside. A broad range-bound consolidation between 3200 and 3450 is possible for a few weeks now on the Shanghai. In case of a break below 3200 (less preferred) the downside can extend to 3150-3100 and not more than that.
Nifty (10618.20, +10.85, +0.10%) remains well within our preferred range of 10550-10830 in line with our expectation. Within this range the bias is bullish to see an upside break above 10830 and a rise to 11000-11250 in the coming days.
Sensex (36471.68, +419.87, +1.16%) tested 36000 and has bounced-back well yesterday. The 36000-37000 range mentioned yesterday remains intact. A strong rise past 37000 will be needed to take the index further higher to 38000.
COMMODITIES
Commodities have dipped slightly except the Copper which has moved up contrary to our expectation of a dip. Crude prices could eventually rise while Silver could trade lower while below resistance near 20. Gold needs to bounce back from immediate support to again bounce back towards 1810+ levels. Copper looks bullish for the near term too.
Brent (43.38) and WTI (40.95) have dipped slightly but has scope for rising towards 45 and 44 respectively in the coming sessions. View is bullish for the next few sessions.
Gold (1798) and Silver (19.44) have dipped. Gold is trading at immediate trend support on the daily chart which if holds could produce a bounce back towards 1810/20; else a fall towards 1780/60 could be seen in the near term signalling some weakness in the otherwise upward trend for the near term. Silver could fall towards 19 in the near term before bouncing back again. We may expect some sideways to bearish movement while below immediate resistance at 20.
Copper (2.9025) has bounced contrary to our expectation of a fall to 2.80 indicating that the price may not be as bearish as we expect.
FOREX
Dollar Index trades lower but is trying to move up while Euro may dip in the near term. EURJPY could move up while above 121.50. USDJPY and USDCNY are ranged while Aussie and Pound look bearish for the near term. USDINR needs to sustain below 75.20 to move lower towards 75.
Dollar Index (96.28) continues to trade sideways in the 97.0-96.0-95.70 region and is expected to remain so for the near term.
Euro (1.1384) dipped below 1.14 and while 1.1450 holds, we may expect a fall towards 1.1352 or even lower.
EURJPY (122.08) is trading around 122 but has some scope to dip to 121.5 before again rising back from there. While above 121.40, view is bullish.
Dollar-Yen (107.24) is trading sideways and is not very clear on which direction it would move just now. We expect overall trade to be stable in the near term.
Aussie (0.6984) is stable and looks bearish for a dip towards 0.69-0.68 in the near term.
Pound (1.2565) looks bearish for a fall to 1.24 while resistance near 1.26-1.2650 holds.
USDCNY (7.00) is trading around 7 and is likely to remain within our mentioned range of 7.0239-6.98 for a few more sessions. Upside could be limited to 7.03 while we may expect a dip from there towards 7.00.
USDINR (75.1875) needs to sustain a fall below 75.20 in order to move lower towards 75.10/00 in the near term before bouncing back from there. On the upside, we may expect the rise to be limited to 75.30/50 for the near term.
INTEREST RATES
The US Treasury yields continue to remain lower and stable above their key supports. We expect the supports to hold and produce a bounce in the coming days. The German yields have dipped after the European Central Bank left their rates and asset purchase program unchanged yesterday. The German yields look vulnerable to break their immediate supports and fall further. The 10Yr GoI remains below its resistance and keeps our bearish view intact.
The US 2Yr (0.15%), 5Yr (0.28%), 10Yr (0.62%) and the 30Yr (1.31%) Treasury yields remain lower and stable. Our view remains the same. Key supports are coming up at 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr. While a test of these supports is likely in the near-term, we expect the Treasury yields to reverse higher after testing them going forward.
The German 2Yr (-0.70%), 5Yr (-0.68%), 10Yr (-0.47%) and the 30Yr (-0.03%) have dipped across tenors. Though the 10Yr and 30Yr have support near current levels at -0.50% and -0.05% respectively on the weekly chart, the daily charts look weak. As such the bias is inclined towards bearishness for the yields to break these supports and fall further. We will have to wait and watch.
The 10Yr GOI (5.8130%) remains below 5.85% and has dipped slightly yesterday. As mentioned yesterday, the outlook is bearish to see a test of 5.78%-5.75% on the downside while the 10Yr GoI remains below 5.85%.
