STOCKS
Dow continues to move up and keeps our near-term bullish view intact. However, we prefer turning cautious as the index moves up into the 29000-29500 region. DAX is still struggling to breach 13200 and could remain sideways before moving further higher. Nikkei has recovered the loss made on Friday (after the news of the Prime Minister Shinzo Abe’s resignation). It can move up to test 24000 in the near-term and then reverse lower. Shanghai has moved up and is coming closer to the crucial 3450-3470 resistance zone which will need a close watch. Sensex and Nifty have moved up and keep our bullish view intact.
Dow (28653.87, +161.60, +0.57%) has risen further above 28500 in line with our expectation. Our near-term bullish view of seeing 29000-29500 on the upside remains intact. Immediate support is in the 28500-28400 region. As mentioned on Friday, we will be looking for a corrective fall anywhere from the 29000-29500 region.
The resistance at 13200 on the DAX (13033.20, −63.16, -0.48%) continues to cap the upside. A dip to 12800 and a consolidation between 12800 and 13200 can be seen for a few days. However, while above 12800, we retain our bullish view of seeing a break above 13200 and a rise to 13800 eventually.
Nikkei (23327.86, +445.21, +1.95%) has recovered from the loss made on Friday following the news on the Prime Minister Shinzo Abe’s resignation. The index is back into the 23300-23400 resistance zone. We expect the Nikkei to break above 23400 and move up to 23800-24000 in the coming days. We continue to reiterate that 24000 is a crucial resistance from where a sharp corrective fall is possible.
Shanghai (3438.42, +34.61, +1.02%) has risen back above 3350 sharply thereby avoiding the danger of seeing a fall to 3250 that we had mentioned on Friday. 3450-3470 will now be the crucial resistance to watch. A strong rise past 3470 will indicate the resumption of the broader uptrend and will pave way for 3600-3700. Inability to breach the 3450-3470 resistance zone can drag it lower to 3350 again. We will have to wait and watch.
Nifty (11655.25, +96.00, +0.83%) has risen above 11600 and keeps our bullish view intact of testing 11750-11800 on the upside. As mentioned last week the upside can extend up to 12000. However, 11800-12000 will be a crucial region to watch from where a sharp corrective fall is possible.
Sensex (39467.31, +353.84, +0.90%) tested 39500 on Friday. It is likely to move up towards 40000 in the near-term in line with our expectation. 40000-41000 is an important resistance zone from where we would turn cautious to see a corrective fall.
COMMODITIES
Commodities trade higher today and seem to be on the verge of breaking above immediate resistances. An upside break in the near term would indicate fresh bullishness that could last for some more sessions. Watch price action near 3.05 on Copper, 29-30 on Silver, 47.50 and 45 on Brent and WTI respectively and 1980/85 on Gold as a break above these levels would trigger a sharp rise for the longer run.
Brent (46.09) and WTI (43.12) have finally risen after a long steady movement, in line with our expectation. But we continue to watch immediate resistances at 47.50 and 44-45 respectively which may hold for a very short term but finally give way to the upside for a sharp rise towards 50 and 48 respectively.
Gold (1978.90) has risen too exactly as expected and could rise towards 2000 if it does not dip from current levels. Failure to fall from here could make it bullish again for a possible test of 2000 or even higher.
Silver (28.35) has risen past 28 in line with our expectation and could be headed towards 29. Above current levels 29 and 30 are crucial resistances that can potentially push prices back towards 26 or lower. Failure to fall from 29-30 levels would be indicative of resumption in uptrend for the medium term. Watch price action above current levels.
Copper (3.0355) is attempting to break above 3.05 which could be seen over today or tomorrow. A sustained rise above 3.05 could take the price higher towards 3.15/20 in the near term. View would turn bullish above 3.05.
FOREX
Dollar Index looks weak just now with crucial support at 92 just now. A break below 92 could turn it more bearish for the near term. Euro trades above 1.19 and looks bullish for a test of 1.20. EURJPY, Aussie and Pound look bullish too for the near term. USDCNY is expected to bounce back from support near current levels. USDINR too has immediate support near 73.10/00.
Dollar Index (92.23) is down sharply to re-test support at 92. A bounce from 92 if fails could be indicative of further fall in the index towards 91-90 in the coming weeks. Watch price action at 92 for further directional confirmation.
Euro (1.1915) is back above 1.19 and has scope for testing 1.20 soon before seeing another dip. While above 1.1750, view is bullish for Euro.
EURJPY (125.70) is bullish above 125 and could re-attempt to rise back towards 127 soon. Only a break below immediate support at 125, if seen would make it bearish in the coming sessions. For noe, we may expect sideways consolidation in the 125-127 region.
Dollar-Yen (105.51) fell sharply from 107 on Friday but may now face support near 105.00-104.80 which could produce a sharp bounce back towards 107 soon. View is bullish while above 104.80.
Aussie (0.7368) needs to break above 0.74 to indicate more strength in the near to medium term.
Pound (1.3351) has broken above our expected 1.33 and could now head towards 1.3500/1.3515 in the near term which would be the next resistance levels.
USDCNY (6.8471) has immediate support near 6.84 which if holds could produce a short bounce back towards 6.85/86 in the near term. We may not look for an immediate break below 6.84 just now.
USDINR (73.39) closed lower on Friday but the current NDF offshore rate quotes 73.11, lower than the OTC close seen on Friday. We may expect a fall in the pair today towards 73.10 from where a bounce can be expected soon. Interim support is seen near 73.10 which could possibly limit further fall in USDINR.
INTEREST RATES
The US Treasury yields have dipped slightly from levels seen on early Asian trades on Friday. The outlook however remains bullish to see further rise in the coming days as the near-term supports can limit the downside. The German Yields sustain higher and are looking bullish to move up further in the coming weeks. The 10Yr GoI can consolidate sideways for a few sessions before resuming the uptrend.
The US 2Yr (0.13%), 5Yr (0.28%), 10Yr (0.74%) and the 30Yr (1.52%) Treasury yields have dipped across tenors from levels seen on Friday’s early Asian trades. However the bullish view remains intact. The 10Yr can move up to 0.80% and even 0.90% while it sustains above 0.70%. The 30Yr on the other hand can target 1.65%-1.68% on the upside while it remains above 1.50%.
The German 2Yr (-0.68%), 5Yr (-0.65%), 10Yr (-0.41%) and the 30Yr (0.06%) remain stable. The bias is tilting towards bullishness now with support at -0.05% on the 30Yr and in the -0.50%/-0.55% region on the 10Yr. While above these supports the outlook is bullish to see a rise to 0.25%-0.30% (30Yr) and -0.30%/-0.20% on the 10Yr in the coming weeks.
The 10Yr GOI (6.1795%) trades within our preferred 6.10%-6.23% range. The sideways move can continue for a few more sessions. Eventually, we expect the 10Yr GoI to break this range on the upside and rise 6.30%-6.35% in the coming weeks.
