STOCKS
Dow has risen in line with our expectation and has room to move up further. But crucial resistance is coming up in the 28000-28200 region which will need a close watch as a sharp correction could be possible from there. DAX continues to trade stable below 12800. Nikkei has moved up but has an important resistance which needs to be broken in order to bring back the bullishness and avoid a fall again. Shanghai can move up towards the upper end of the 3180-3450 range in the coming days. Sensex and Nifty have risen well yesterday thereby by strengthening our bullish view. A further rise can be seen in the coming days.
The Dow (27791.44, +357.96, +1.30%) has risen further as expected indeed has moved above 27600. The rise past 27600 will now have opened doors to test 28200 on the upside. As mentioned yesterday, 28000-28200 will be an important resistance to watch from where a sharp corrective fall could begin. We will be watching that cautiously.
DAX (12687.53, +12.65, +0.10%) continues to trade stable inside the narrow range of 12500-12800. We reiterate that a strong break above 12800 will be needed to bring back the bullish sentiment and resume the uptrend. While below 12800 the bias is negative to see a break below 12500 and a corrective fall to 12000 and even 11500.
Nikkei (22710.60, +380.66, +1.70%) has risen back well above 22500 to test 22700. This has eased the danger of seeing a fall to 22000 that we had mentioned last week. However, 22800-23000 will be an important resistance zone to watch. A strong rise past 23000 is necessarily needed to wipe out the danger of seeing the fall to 22000 and in turn take the index higher to 23800-24000 in the coming days. We will have to wait and watch.
Shanghai (3399.01, +19.76, +0.58%) has moved up and seems to be attempting to breach 3400. A strong break above 3400 can take it further higher towards 3450 – the upper end of the broad 3180-3450 range. The region between 3450 and 3470 is a strong resistance and we expect it to cap the upside for now and keep the 3180-3450/3470 range intact.
Nifty (11270.15, +56.10, +0.50%) has risen and closed well above 11200. This keeps our bullish view of seeing 11400-11600 on the upside in the coming days.
Sensex (38182.08, +141.51, +0.37%) has risen above 38000. A strong follow-through rise past 38200 from here today will strengthen our bullish view of seeing 39500-40000 on the upside.
COMMODITIES
Crude prices show an uptick in movement and could pick up momentum on a break above important levels of 45.27(brent) and 42.50 (WTI) while Gold and Silver could see some correction before resuming the uptrend. Copper has bounced wel from the lower support at 2.80 and could rise back towards 2.95 in the coming sessions. Overall view for Copper and crude looks bullish while precious metals could face some correction before rising higher.
Brent (45.17) and WTI (42.19) have both risen well and nearing the upper important level of 45.27 and 42.50 respectively, a break above which could indicate a rally towards $48-50 in the medium term.
Gold (2029.30) has dipped and could move down to test 2000 in the near term while Silver (29.10) has moved up above $29 again. Gold could bounce back after a short corrective move for a few sessions. Silver on the other hand could see a short dip too but looks strong on the longer term charts for an eventual rise towards $30-32.
Copper (2.8735) has risen well after the sharp fall seen on Friday. A bounce from 2.80 seen yesterday is likelhy to hold for the near term now and could take prices back towards 2.90/95 in the near term. Immediate view is bullish for Copper.
FOREX
Dollar Index needs to rise above 94 to sustain higher leevls. Euro and EURJPY have bounced from yesterday’s lows and indicates a possible rise in the near term. Aussie also looks bullish for the near term while we watch price action near important resistance at 1.32 on Pound. Dollar-Yen also needs to break above 106.36 to head higher. Yuan and Rupee may trade weak against the US Dollar; USDCNY looks likley for a fall while USDINR could remain ranged above 74.70.
Dollar Index (93.57) has moved up a bit but needs to continue to rise in the near term to enable a further rise towards 95. We look for a break above 94 to confirm further upmove in the coming sessions.
Euro (1.1743) has bounced from 1.17 and while that holds, a rise back to 1.18 is possible. But therafter a fall back towards 1.17 or lower could be expected if Dollar Index continues to move up.
EURJPY (124.55) may test 124 on the downside before attempting to bounce back in the near term. But on the longer run, while resistance near 125.50-126.00 holds, we may expect the pair to eventually fall in the medium term. Only a break above 126, if seen would bring in upper targets of 127 or higher.
Dollar-Yen (106.06) has moved above 106 but needs to break above 106.36 to rise further towards 107+ in the medium term.
Aussie (0.7172) has risen a bit and with the rise seen in Copper, Aussie too may continue to move up in the near term targeting 0.7247. Overall immediate view is bullish.
Pound (1.3083) has scope to test 1.32 before dipping from there back towards 1.28. Watch price action near resistance at 1.32.
USDCNY (6.9527) has come down from 6.9720 as expected and could fall back towards 6.95-6.93 in the near term. Immediate view is bearish while below 6.9720.
USDINR (74.8950) has immediate support near 74.70/75 which if holds could keep the pair higher. Broad range of 74.70-75.25 and narrow range of 75.00-74.85 is likley to hold for the near term.
INTEREST RATES
The US Treasury yields have witnessed some follow-through rise yesterday thereby by reducing the danger of breaking below their key supports. While this bounce sustains a corrective rise can be seen in the near-term before the broader downtrend resumes again. The German yields remain lower in line with our expectation. Our bearish view of seeing a further fall from current levels remain intact. The 10Yr GoI had risen to test 5.92% as expected. It will have to be seen if it can rise past 5.92% and move up further to 5.95% from here or not.
The US 2Yr (0.13%) and 5Yr (0.24%) Treasury yields remain stable while the 10Yr (0.58%) and the 30Yr (1.26%) have inched up by 2bps and 3 bps respectively. The 10Yr and 30Yr seem to be getting the follow-through rise that we had mentioned yesterday. While this bounce sustains a further rise to 0.60%-0.65% (10Yr) and 1.25%-1.30% (30Yr). It will also avoid the danger of breaking below the key support levels of 0.40% (10Yr) and 1.10% (30Yr).
The German 2Yr (-0.72%), 5Yr (-0.72%) and 10Yr (-0.53%) yields have dipped again while the 30Yr (-0.11) remains stable. Our bearish of seeing 0.60% (10Yr) and -0.20% (30Yr) on the downside remains intact. As mentioned yesterday, the resistances at -0.45% on the 10Yr and -0.05% on the 30Yr can restrict the upside in case any intermediate bounce is seen.
As expected, the 10Yr GoI (5.8949%) moved up to test 5.92% and has come-off slightly. The price action around 5.92% will need a close watch to see if the upside can extend breaking above 5.92% to 5.95% or not. Inability to break above 5.92% can see the 10Yr GoI moving down to 5.85% again. We will have to wait and watch.
