STOCKS
Equities remain mixed and seem to need some fresh trigger to gain momentum and move up sharply from here. Dow continues to remain stable below 28000. A strong rise past 28200 is needed to avoid a corrective fall from here itself. DAX sustains above 12800 and could consolidate sideways in the near-term. Nikkie has dipped but is likely to find support at 22700 and can bounce-back again. Shanghai is trading near a crucial resistance which if broken could be bullish for a fresh rally. Sensex and Nifty need to sustain the bounce-back seen yesterday in order to remain sideways and also to avoid a fall within their overall uptrend.
The Dow (27844.91, −86.11, -0.31%) continues to trade stable below 28000. We continue to remain cautious and reiterate that inability to 28200 and a subsequent break below 27500 from here will be bearish to see a corrective fall to 27000-26500. A strong break above 28200 will be needed to negate the above mentioned fall and move higher.
DAX (12920.66, +19.32, +0.15%) remains stable above 12800. The near-term outlook is mixed. It can oscillate between the support at 12800 and resistance at 13200. A breakout on either side will determine whether the DAX will go up to 13600-13800 or fall to 12400-12200. We will have to wait and watch.
Nikkei (22968.73, −128.02, -0.55%) has dipped into the 23000-22700 support zone. A further dip to 22700 looks likely in the coming sessions. However, we expect 22700 to hold and keep the broader bullish view intact of testing 23800-24000 on the upside. As we have been mentioning over the last few days, we will be looking for a sharp correction from 24000.
Shanghai (3440.69, +1.89, +0.05%) has risen to test 3450 as expected. As mentioned yesterday 3450-3470 is a crucial resistance zone that needs a close watch now. A reversa from here will keep the broader 3180-3450 range intact. But a strong break above 3470 will indicate the upside breakout of the sideways range and will be bullish to see further rise to 3600-3700 going forward.. We will have to wait and watch.
Nifty (11247.10, +68.70, +0.61%) is getting support near 11100 and has bounced-back above 11200 again. While above 12200, a rise to 11400 can be seen in the near-term. 11200 and 11100 are important supports. We can look for a range of 11200-11400 (narrow) or 11100-11400 (wider) over the next few days.
Sensex (38050.78, +173.44, +0.46%) has bounced above 38000. But a strong rise past 38500 is needed to gain momentum and move further higher to our preferred 39000-39500 levels. While below 38500, the Sensex can trade in the range of 37700-38500 for some time. A break below 37700 can drag the index down to 37000 and then a fresh leg of rally can begin.
COMMODITIES
Crude prices remain stable while Copper may attempt to rise in the near term towards resistance near 3.00. Gold and Silver continue to move up and could re-test recent highs. While weakness in Dolalr continues, upward pressure on precious metals are also likely to continue.
Brent (45.16) and WTI (42.93) continue to remain stable within a narrow range. A rise towards 47.50 and 44 respectively would be initial signal of a possible rise.
Gold (2001) has moved up above 2000, again breaking above our expected immediate resistance at 2000. A rise again towards 2020-2040 seems to be on the cards for the near term.
Silver (27.92) is has moved back to 28 despite a short correction seen yesterday. Unless an immediate bounce is seen in the US Dollar, upward pressure is likely to continue on Gold and Silver that could take prices higher in the near term. Silver could re-test 29 on the upside if the rise sustains for few more sessions.
Copper (2.9005) has moved up sharply. The rise above 2.90 needs to sustain to further test 2.95-3.00 in the near term. Continuous attempts would be needed to eventually break above 3.00 in the medium term.
FOREX
Weakness in the Dollar Index could keep the strength in other currencies alive for some more sessions. Aussie, Pound, Euro and Yen look strong for the near term. We may expect eventual strength in Rupee too in the coming sessions.
Dollar Index (92.68) continues its fall. A break below 92.50 would indicate some more fall towards 91-90 in the near to medium term.
Euro (1.1891) has moved up further and could test 1.190-1.1920 over today or tomorrow. Failure to fall from 1.1920 would eventually take Euro higher towards 1.20. View is bullish for the near to medium term.
EURJPY (125.64) has fallen sharply from 126.75 and looks weak for the very near term. The sharp rise in Yen has dragged down the cross despite Euro strength seen in the last few sessions. A fall towards 125.5-125.0 is possible before a bounce back is seen in the longer run.
Dollar-Yen (105.65) fell sharply as investors are possible buying Yen as safe haven. As mentioned yesterday, a break below 106 has been indeed seen as Dollar continues its weakness. The fall if sustains could soon drag the pair down towards 105-104 in the near term.
Aussie (0.7214) trades above 0.72 and could be headed towards 0.74 in the near term. View is bullish for the near term.
Pound (1.3128) has moved up as expected while immediate support at 1.30 holds well. A rise to 1.32 or even higher is possible in the near term.
USDCNY (6.9328) has broken below 6.94 and could be headed towards 6.92 on the near term charts. Overall view is bearish for the near term while below 6.95. Any attempt to break below 6.92 would open up chances of testing 6.90 in the longer run.
USDINR (74.89) traded within a very narrow range yesterday. While we may see a test of 75 on the upside, the weakness in Dollar Index and corresponding strength in Euro and Yuan indicate possible fall in USDINR towards 74.70 or even lower. But while the pair chooses to remain ranged within 74.70-75.00, we have to wait for a breakout on either direction for confirmation.
INTEREST RATES
The US Treasury yields have dipped slightly but continue to remain bullish. The yields can move up in the coming days. The German yields are reversing lower from near their key resistances as expected. While this reversal sustains, a further fall is possible to keep the broader downtrend intact. The 10Yr GoI has moved up further and keeps our bullish view intact.
The US 2Yr (0.15%), 5Yr (0.28%), 10Yr (0.68%) and the 30Yr (1.42%) Treasury yields have dipped slightly across tenors. However, our bullish view remains intact of seeing 0.80% (10Yr) and 1.50% (30Yr) on the upside. Also, as we have been mentioning for sometime, the current leg of upmove may even have the potential to see the upside extending to 0.90% (10Yr) and even 1.65%-1.70% (30Yr) over the medium-term.
The German 2Yr (-0.67%), 5Yr (-0.66%), 10Yr (-0.45%) and the 30Yr (-0.02%) have reversed lower yesterday. The resistances at -0.35% on the 10Yr and 0.05% on the 30Yr seems to be holding well inline with our expectation. While below these resistances, the yields can fall-back to -0.55% (10Yr) and -0.15% (30Yr) in the coming days and keep the broader downtrend intact.
The 10Yr GoI (5.9749%) sustains higher above 5.95% and has risen further. The bullish view of seeing 6% on the upside remains intact. As mentioned yesterday while above 5.95%, the 10Yr GoI can break 6% and move further higher towards 6.10%.
