STOCKS
Dow and Nikkei are showing signs of seeing a corrective fall from here itself rather than moving up further first and then a fall. We will have to watch closely the movement in these two indices to get a clear picture. Shanghai and DAX are holding well above their range supports and can move higher in the near-term within the preferred sideways range. Sensex and Nifty have risen above their key near-term resistances and are bullish to see further rise. Sensex and Nifty are relatively looking much stronger than the others in the lot and can outperform in the coming weeks.
The Dow (26379.28, −205.49, -0.77%) has declined below 26400. A fall below 26300 will be bearish. It will also increase the chances of seeing a break below 26000 which can trigger a corrective fall to 25000 from here itself rather than seeing a rise to 28000 and then a fall-back.
The DAX (12835.28, −3.38, -0.03%) continues to hover in a narrow range above the support level of 12800. We retain our view of seeing a range of 12800-13200 for some time before a fresh rise to 13350-13400 happens. Our medium-term view of seeing 13800 on the upside also remains intact. 12800 is an immediate support and 12400 is the next slightly deeper support available for the index.
Nikkei (22492.32, −165.06, -0.73%) is oscillating between its support at 22400 and resistance at 23000. The struggle to breach 23000 keeps the chances high of seeing a corrective fall to 22000-21500 from here itself as against our expectation for seeing a rise to 24000 first before a corrective fall as mentioned yesterday. We will have to wait and watch.
Shanghai (3264.96, +37, +1.15%) has risen further and keeps intact our view of seeing a rise to 3300-3350 from here. and has moved up. We reiterate that Shanghai can remain in the range of 3180/3200 – 3400/3450 for a few weeks.
Nifty (11300.55, +168.75, +1.52%) has risen above 11250 as expected thereby keeping our bullish view intact. As we have been mentioning for some time, the break above 11250 has opened doors to test 11400-11600 on the upside now and even further higher levels over the medium-term.
Sensex (38492.95, +558.22, +1.47%) on the other hand has made the much needed close above 38200 yesterday. While above 38000 Sensex is bullish to target 39500-40000 on the upside now.
COMMODITIES
Gold and Silver take a breather after the recent sharp rally seen in the last 1-2 weeks. A corrective dip is possible that may take prices lower in the near term towards respective weekly trend supports before a bounce can be expected. Crude prices trade stable just now and could continue to slowly inch upwards. Copper trades near immediate support but could break on the downside to test lower support.
Brent (43.33) and WTI (41.04) have dipped slightly. Narrow sideways movement continues and a sharp break on either side could come in soon. Till then we continue to look for a test of 45.27 on Brent and 43.50-44.00 on WTI.
Gold (1950.20) and Silver (24.34) have dipped from levels near 1970 and 26.21 seen yesterday and the correction could extend towards weekly trend supports near 1850 and 21.50 respectively. Thereafter, we may expect another fresh bounce in the medium term.
Copper (2.9120) is holding above interim support at 2.90 but a break below that if seen could open up chances of further fall towards lower support at 2.80 (revised from earlier mentioned 2.85) in the near term. While below 3, we may expect a possible fall below 2.90 in the near term for a possible test of lower supports. View is stable to bearish for the coming sessions.
FOREX
Dollar Index takes a pause after the continuous decline and could see a bounce while above 93. Euro has immediate resistance in the 11750-1.18 region which if holds could push the currency down towards 1.16. EURJPY and Aussie also could dip while Pound has scope to move higher towards resistance near 1.30/31. Dollar Yen needs to bounce from 105 to avoid further fall towards 104. Yuan trades slightly weak today. Consolidation could be possible for the Rupee today while above 74.60.
Dollar Index (93.69) tested 93.46 on the downside, above our expected 93.20/10 and seems to consolidate just now within 94.0-93.45. This range could hold on for a couple of sessions but we would wait to see if the index manages to break above 94 in the near term to indicate a possible bounce or falls below 93.45 to continue its decline. Preference is to see a corrective bounce from here.
Euro (1.1726) is also trading below 1.1750-1.180 zone and a dip could be expected towards 1.16 in the medium term. Overall view is bearish while below 1.18.
EURJPY (123.20) has dipped too. While the pair holds below 124, there is scope for a fall towards 122.40 on the downside before another bounce is seen in the medium term. Watch price action near 122.40, if a fall from current levels is seen. Upside could be capped at 124.00/30 just now.
Dollar-Yen (105.03) continues to trade lower but has interim support near 105 which if holds could take the pair back towards 106 or higher. But failure to bounce just now from 105 could take it lower towards 104 in the medium term.
Aussie (0.7166) trades higher but as mentioned yesterday we would be cautious to see a corrective dip from 0.72 towards 0.71-0.70 in the near term. Only a successive break above 0.72 would open up chances of further rise towards 0.74 in the coming 1-2 weeks. For now watch price action near 0.72.
Pound (1.2926) has risen in line with our expectation and could test 1.30/31 on the upside before entering into a correction mode. Watch price action above current levels.
USDCNY (7.0031) has moved up slightly and could indicate a possible rise towards 7.02 if the pair manages to remain above 7. Overall broad range of 7.02-6.9770 seems to be holding well for now.
USDINR (74.8350) has been closing near 74.84 for the last 3-sessions now. Resistance at 75 is likely to hold for now and push the pair down towards 74.50-74.30 in the medium term as seen on the daily charts. But while above 74.60, we may expect sideways consolidation to continue in the 74.60-75.00 region for some more time.
INTEREST RATES
The US Treasury yields remain lower and are struggling to gather momentum for our preferred bounce. The outcome of the US Federal Reserve meeting tonight will need a close watch to see if it can provide the much needed trigger for the yields to bounce-back. The German yields have dipped further and keeps our bearish view intact to see further fall. The 10Yr GoI has dipped yesterday but has supports that can limit the downside and take it higher again in the near-term.
The US 2Yr (0.14%) and 5Yr (0.27%) Treasury yields have dipped slightly by 1bps and 2bps respectively. At the far-end the 10Yr (0.58%) and the 30Yr (1.22%) have dipped by 4bps and 5bps respectively. The expected bounce seems to be not happening for now. The 10Yr has support at current levels and can dip to 0.50% in case of a break below 0.58%. The 30Yr on the other hand can dip to 1.18% while it remains below 1.25%. The levels of 0.50% (10Yr) and 1.18 (30Yr) are crucial which need to hold in order to keep alive the chances of seeing a bounce.
The German 2Yr (-0.70%), 5Yr (-0.71%), 10Yr (-0.51%) and the 30Yr (-0.10%) have dipped further. Our bearish view remains intact. As mentioned yesterday, the expected fall to -0.60% (10Yr) and -0.20% (30Yr) from here itself.
The 10Yr GoI (5.8497%) has dipped from the high of 5.8820% yesterday. As mentioned yesterday, 5.83%-5.82% will be a good support now. While above this support zone, we retain our bullish view of seeing a rise to 5.92%-5.95% in the near-term..
