STOCKS
Dow is hovering near its crucial resistance which will have to be broken in order to move further higher. While this resistance holds, a corrective fall is possible in the coming days. DAX has moved up further and keeps our bullish view intact. Nikkei has risen past 23000 and can now target 23800-24000 on the downside. The danger of seeing a fall has been wiped out. Shanghai looks mixed. We prefer it to coming down within its broad 3180-3450 range. Sensex and Nifty remains bullish but might trade stable for a few days before moving sharply higher.
The Dow (27976.84, +289.93, +1.05%) hovers around 28000. Our view remains the same. A strong rise past 28200 will be needed from here in order to become more bullish to see higher levels of 29000-29500. The index has to sustain above 27500 necessarily for this. Failure to breach 28200 will increase the danger of seeing a corrective fall to 27000-26500. A break below 27500 can trigger this fall. We will have to wait and watch the price action closely in the coming days.
DAX (13058.63, +111.74, +0.86%) sustains higher and is moving up towards 13200 in line with our expectation. The outlook is bullish. As mentioned yesterday, a strong break above 13200 will open doors to test 13600-13800 on the upside going forward.
Nikkei (23287.83, +443.87, +1.94%) has opened with a wide gap-up above 23000 thereby wiping out the danger of seeing a fall to 22000. The surge above 23000 has now opened doors for it to test 23800-24000 on the upside. 24000 is a crucial resistance which will need a close watch. A sharp corrective fall from 24000 cannot be ruled out.
Shanghai (3331.53, +12.27, +0.37%) fell towards 3250 as expected but had bounced back sharply from the low of 3263. The near-term outlook is mixed. The broader 3180-3450 range continues to remain intact. Within this range we prefer the index to fall-back to 3250-3200 again while it remains below 3350.
As expected Nifty (11308.40, -14.10, -0.12%) tested 11250 during the day but had bounced-back well. 11400 can be tested in the near-term in line with our expectation but the extension to 11600 might get delayed. The index could trade stable between 11200 and 11400 for some time. Strong supports are at 11200 and 11000.
Sensex (38369.63, −37.38, +0.09%) remains stable above 38000. While above 38000, the near-term outlook is bullish to test 39000. But this rise might happen at a slow pace. The index will come under pressure in case if it breaks below 38000. We will have to wait and watch.
COMMODITIES
Crude prices rose today after the EIA reported a crude oil inventory draw of 4.5mln barrels for the week ended 7th August. This was higher than the analyst expectations of seeing a 3.2mln barrel draw. Crude prices may continue to remain bullish going forward. Gold and Silver have bounced back from respective supports and could rise in the near term. Copper looks bullish in the near term within the broad range of 2.80-3.00.
Brent (45.31) and WTI (42.57) have both broken above the respective levels of 45.27 and 42.50 mentioned yesterday. While prices hold above these levels, we may look for further bullishness in the near term towards $48-50 on Brent and $45-48 on WTI.
Gold (1946.90) has bounced back after testing immediate trend support at 1874 on the daily candles and could re-attempt a rise to $2000 in the near term. We may expect trade in the 2000-1880 region to continue for sometime before deciding on further direction.
Silver (26.01) has similar support to that seen in Gold near 21 but it bounced back from 23.58 itself without moving down further. This was in line with our expectation to see a bounce from $24 itself as mentioned in yesterday’s edition. A re-test of 27-28 levels look possible in the near term.
Copper (2.8780) has also risen from support at 2.80 which is likely to hold for the medium term. As mentioned yesterday, the range of 2.80-3.00 holds well for now and while the bounce from 2.80 sustains, we may expect a rise back towards 2.90/95 in the near term.
FOREX
Dollar Index has fallen unable to break above 94. While the index trades lower, we may expect Euro to rise back towards 1.19. EURJPY, Aussie and Pound could rise a bit in the very near term. Dollar-Yen and Dollar-Rupee may see a dip from current levels.
Dollar Index (93.23) fell back from 93.91 unable to break above 94, indicating some more rally in precious metals and currencies for the near term. While the index remains below 94, we may expect trade within 94-92 in the coming sessions.
Euro (1.1813) bounced back from 1.17, failing to break lower. Rising back above 1.18, if the momentum picks up, we may expect a re-test of 1.19 in the near term. Our mentioned dip to 1.1630 may be delayed or negated while Euro remains above 1.17.
EURJPY (126.01) has broken above the interim resistance at 126 contrary to our expectation of seeing a dip towards 124. This rise has been boosted by a fall in Dollar Index and a subsequent rise in Euro. If the cross manages to sustain above 126, it could head towards 128 soon.
Dollar-Yen (106.67) has dipped slightly. The fall in Dollar index could prevent a rise in the pair and could take it down to 106.00 in the near tern before a bounce back is expected.
Aussie (0.7170) bounced back from 0.71 as expected and could rise towards 0.72-0.7360 in the near term while the bounce sustains. Immediate view is bullish while above 0.71.
Pound (1.3063) trades in the 1.30-1.32 region and may continue so in the near term. A break on either side is needed to decide on further direction from here.
USDCNY (6.9375) is heading towards the lower end of the 6.9350-6.97 region mentioned yesterday. If 6.9350 holds, we may expect a rise back towards 6.95/97 in the near term; else a break below 6.93 would open up chances of falling towards 6.90.
USDINR (74.8350) has been trading within a narrow range below 75. While 75-74.70 sustains, charts indicate a potential fall towards 74.50-74.25 in the near term. The current rise in Euro could aid Rupee strength in the near term.
INTEREST RATES
The US Treasury yields sustain higher and can move up further on a break above their immediate resistances. The near-term outlook is bullish. The German Yields have moved up further in line with our expectation. They have room to test their resistances before reversing lower again. The Indian 10Yr GoI is struggling to breach 5.92% and keeps alive the chances of dipping to 5.85% before moving further higher.
The US 2Yr (0.15%), 5Yr (0.28%), 10Yr (0.64%) and the 30Yr (1.34%) Treasury yields remain stable and higher. The near-term view is bullish. As mentioned yesterday 0.65% on the 10Yr and 1.35% on the 30Yr are key levels to watch now. A break above these levels can take the 10Yr to 0.70% and even 0.80% and the 30Yr to 1.40% and even 1.50% in the near-term.
The German 2Yr (-0.67%), 5Yr (-0.66%), 10Yr (-0.45%) and the 30Yr (-0.01%) yields have moved up further as expected. As mentioned yesterday, the 10Yr can test -0.40% and the 30Yr can test 0% and even 0.05% in the near-term. Thereafter we expect the yields to come down again and retain the broader downtrend.
The 10Yr GoI (5.8853%) failed to sustain the break above 5.92% yesterday. The chances of seeing a dip to 5.85% (that we said had reduced yesterday) while below 5.85% is still there. The price action in the come sessions will need a close watch to see if the yield will dip to 5.85% and then move up again or will rise past 5.92% to test 5.95% on the upside from here itself.
