STOCKS
Equities seem to be gaining momentum. There is room for the major indices to move up further from current levels. But we would remains cautious as some of the indices like the DAX and Nikkei have crucial resistances ahead that can halt the rally and trigger a sharp corrective fall. The Dow has risen towards 28300 and has potential to test 28500-29000 in the coming days. DAX has also risen back above 12800 thereby avoiding the danger of a fall. It can test its crucial resistance at 13800. Nikkei has bounced-back sharply and look bullish to move up further towards the key resistance level of 24000. Shanghai looks mixed within its sideways range. Sensex and Nifty has risen further yesterday and are keeping our bullish view intact. They have room to move up further in the coming days.
As expected Dow (28308.46, +378.13, +1.35%) has risen to test 28300 but much faster that we had expected. The bias is bullish to see a strong rise past 28300 and test 28500-29000 on the upside in the coming days. .
DAX (13066.54, +301.74, +2.36%) has risen back well above 12800 again. The danger of seeing a fall to 12400-12300 that we had been mentioning over the last few days has been negated now. While the momentum sustains, DAX can breach 13200 and then our preferred rise to 13800 can happen from here itself in the coming weeks.
Nikkei (23341.78, +356.27, +1.55%) has risen well above 23000 thereby keeping our bullish view intact. A further rise to 23800-24000 can be seen in the coming days in line with our expectation. However, we would remain cautious as 24000 is a crucial resistance from where we can see a sharp corrective fall.
Shanghai (3392.39, +6.75, +0.20%) is attempting to break above 3400. As mentioned yesterday, 3350-3450 is a possible narrow range that can be seen within the broad 3180-3450/70 range. For now we see equal chances of moving either up to 3450 or fall to 3350 from current levels. We will have to wait and watch for a couple of sessions.
Nifty (11466.45, +94.85, +0.83%) has risen breaking above 11400 as expected. This keeps our bullish view intact of seeing 11600 on the upside. Also as mentioned in our Rupee Comments yesterday, the upside can extend upto 11750-11800 while the Nifty sustains above 11400.
Sensex (38799.08, +364.36, +0.95%) is heading towards the upper end of the 37700-39000 range. As mentioned yesterday, the bias is bullish for the near-term to see a break above 39000 and a rise to 39500-40000 in the coming days. Thereafter a corrective fall is possible.
COMMODITIES
Crude prices trade higher today and may steadily move up in the near term towards immediate resistance levels. Gold and Silver could be in a corrective phase within which we may expect immediate supports below current levels to hold and produce a bounce soon. Copper looks bullish while above support at 2.90.
Brent (45.24) and WTI (42.58) are trading higher today and has scope of extending the upmove towards 47.50 and 44 respectively. A short corrective fall could be seen thereafter back towards current levels. Immediate view is to see a steady upmove towards the mentioned levels.
Gold (1941.50) remains stable and has scope to test support at 1920 from where a bounce back towards 1960/80 looks possible in the near term. Silver (26.83) also has support near 26 which if holds could produce a short bounce to 28 before again falling back towards 26 in the medium term. For the coming sessions a range of 26-28 looks possible.
Copper (2.9300) trades above trend support at 2.90 on the daily charts. We expect a bounce from 2.90 towards 3.00-3.05 in the medium term. View is ranged to bullish while above 2.90.
FOREX
Dollar Index trades around 93 and indicates some sideways ranged movement for other currencies as well. Euro, EURJPY, Aussie, Pound look stable for the near term. Watch if the USDINR bounces back from 74.20 or moves lower towards 74.0-73.80 in the near term.
Dollar Index (93.19) fell below 93 in the later half yesterday but has managed to rise back to current levels. A test of 94 is likely in the near term but we would keep a close watch to see if the index manages to break above 94 or faces stiff rejection to fall back towards 92. We wait for a move on either side of 92-94 to confirm on further direction.
Euro (1.1804) is holding above 1.18. On the downside, 1.17 is a crucial support which if holds could keep the currency within 1.17-1.19 region for the near term. However, only a break on Dollar Index above 94 would bring Euro sharply below 1.18/17 levels.
EURJPY (125.03) has bounced from 124.44, above our mentioned support at 124. A rise towards 126 could be on the cards for the near term.
Dollar-Yen (105.91) is likely to continue trade within 106.28-105.00 region. Direction thereafter is unclear just now.
Aussie (0.7166) is stable just now unable to decide on which direction to take. While above 0.70, view is bullish.
Pound (1.3099) is holding well below 1.33 but has not been able to fall sharply below 1.30. Some sideways ranged movement within 1.30-1.33 is possible for the near term.
USDCNY (6.9115) is looking bearish and could be headed towards 6.90. A break below that, if seen could be further bearish for the near to medium term targeting 6.88 or lower in the longer run.
USDINR (74.31) is likely to fall if the RBI does not come in to buy at 74.20-74.00 levels. NDF rate quotes 74.1690 indicating that the onshore rate could open lower and head towards 74.20-74.00. Note that 74.20 and 73.80 are two crucial supports on the downside. An initial short bounce from 74.20 or 74.00 is possible before resuming a fall towards 73.80.
INTEREST RATES
The US Treasury yields have inched higher and will have to be seen if the bounce can sustain. Broadly we retain the near-term bearish view of seeing further dip from current levels before reversing higher again. The German yields have bounced slightly yesterday but are unlikely to sustain. Our bearish view remains intact. The 10Yr GoI has surged further breaking above 6.15% and looks strong to target 6.30%-6.35%.
The US 2Yr (0.16%), 5Yr (0.29%), 10Yr (0.66%) and the 30Yr (1.36%) Treasury yields have bounced from levels seen in early Asian trades yesterday. It will have to be seen if this bounce sustains or not. Broadly we retain our view of seeing 0.60% (10Yr) and 1.35%-1.30% (30Yr) on the downside in the near-term and then a fresh leg of rise.
The German 2Yr (-0.69%), 5Yr (-0.69%), 10Yr (-0.49%) and the 30Yr (-0.06%) have inched up slightly but are unlikely to sustain the bounce. We retain our bearish view of seeing -0.55%/-0.60% on the 10Yr and -0.15%/-0.20% on the 30Yr. A break below the immediate supports at -0.50% (10Yr) and -0.1% (30Yr) can accelerate the fall.
The 10Yr GOI (6.2228%) has surged further breaking above the resistance level of 6.15% mentioned yesterday. The outlook is bullish and the upside is now open to test 6.30%-6.35% in the coming days.
