STOCKS
Equities continue to trade mixed. While there are attempts made over the last couple of days to bounce-back, there is a lack of momentum in the equity section. Indices like the DAX and Nikkei are keeping alive the chances of seeing one more leg of rise from current levels to test 13800 and 24000-24500 respectively before a sharp corrective fall begins. But the Dow will need to breach 28500 from here to see an upmove from here. Sensex and Nifty are trying to move up but seem to lack strong follow-through buying. Shanghai is showing signs of rising towards the upper end of its broad 3180-3470 range. Overall the equity segment will need to be watched closely to decide whether one more leg of rise is still pending or the correction can come in without seeing this upmove.
Dow (27665.64, +131.06, +0.48%) remains below 28000. This keeps alive the danger of seeing 27000 on the downside. As we had mentioned last week, a strong break below 27000 will confirm that a top is in place and will be bearish to see 26000-25000 on the downside. A strong rise past 28500 is needed from here in order to negate the danger of seeing a break below 2700.
DAX (13202.84, −6.05, -0.05%) is struggling to get a strong follow-through rise above 13200. A fall below 13100 from here will put the index back into the 12800-13200 range. DAX will have to necessarily hold above 13100 and rise past 13200 decisively to strengthen the bullish view of seeing 13800 on the upside. The bullish view will get negated only on a break below 12800.
Nikkei (23577.07, +170.58, +0.73%) is attempting to break above 23500. A sustained break above 23500 will see a rise to 24000. The region between 24000-24500 (revised from 24000 that we had been mentioning so far) is a strong resistance that can cap the upside. We expect the Nikkei to see a sharp correction anywhere from the 24000-24500 region towards 22500 and even lower in the coming weeks.
Shanghai (3275.86, +15.52, +0.48%) has bounced back above 3250 again taking support from 3220. It will have to be seen if it can rise past 3300 decisively from here which will then reduce the chances of seeing 3200-3180 on the downside. Such a rise past 3300 can then pave way to move up towards the upper end of the 3180-3450/70 range.
Nifty (11464.45, +15.20, +0.13%)sustains above 11400 but seems to lack strong follow-through rise. While above 11400, the bias is bullish to see a rise to 11600-11800 from here. A break above 11500 can accelerate the rally. A fall below 11400 from here will take it to 11250-11200 again and will bring back the downside pressure. The price action for the next few days will need a close watch.
Sensex (38854.55, +14.23, +0.04%) on the other hand seems to lack momentum to break above 39000. As mentioned on Friday, a strong rise past 39000 is needed to negate the danger of falling towards 37000 and also to strengthen the bullish view of seeing 40500-41000 on the upside from here.
COMMODITIES
Commodities are trading in the green today and show some hope of positive movement in the coming sessions this week. Crude prices, Gold, Silver and Copper all are trading above important support levels which need to hold to keep the upside momentum intact. Overall view remain bullish for n=most commofdities.
Brent (40.00) and Nymex WTI (37.58) trade slightly higher today but we would look to see if Brent sustains above 40 and WTI above 37.50 to gradually move higher or have another dip to see in the near term. While above immediate supports at 39.32 and 36.43 (on Brent and WTI respectively) hold, we may expect eventual upmove in crude prices.
Gold (1958) is also up slightly and needs to sustain a break above 1960 to move up further. A break below 1940/20 would be needed to negate further bullishness from here.
Silver (27.13) also needs to sustain above 27 to move up further towards 28-29-30 levels in the coming 1-2 weeks. Watch immediate support near 27 which if breaks could make the price vulnerable to a fall to 26.
Copper (3.0595)} has bounced well after falling below 3 last week to test support at 2.95. While above 2.95, Copper has fair chances of bouncing back from current levels towards 3.10-3.15 soon.
FOREX
Dollar Index looks stable within 92.70-93.70 region while Euro may move up to test 1.19-1.20 while it remains above 1.1750/70. EURJPY is likely to trade within 125-127 while USDJPY may test support near 105.85 before attempting to rise higher towards 107. Aussie may rise in the near term if Copper manages to trade higher while Pound may have some scope for a fall towards 1.26. USDCNY looks bearish for a fall to 6.80. Dollar-Rupee may trade within 73.70-73.30 for now.
Dollar Index (93.19) is stuck in a range of 92.70-93.70 and could remain within this range for some more time (3-4 sessions). The Dollar Index has not fallen much but remains stable to move to either side of the range for now. View is stable for the near term.
Euro (1.1848) needs to hold above 1.1750/70 to keep the bullish possibilities intact for a rise to 1.19-1.20 soon. Watch price action near support for this week.
EURJPY (125.70) is also stuck in a broad range of 127-125 which is likely to hold for now. Overall view is bullish while above 124.
Dollar-Yen (106.08) has scope for a fall towards 105.85 before a bounce back is seen again from there towards 107. Within an overall broad range of 105-107, immediate support is seen near 105.85.
Aussie (0.7282) is trading near important near term support at current levels and needs to bounce higher in order to avoid a possible fall from here towards 0.7115. While Copper (refer to commodities section above) trades higher and remains above support at 2.95, Aussie may be expected to move higher too in the near term. 0.74 would be the immediate target on the upside.
Pound (1.2821) has scope for a fall towards 1.26 in the near term but is trading slightly higher today as other currencies remain positive against the US Dollar today. A fall to 1.26 could be on the cards by the end of this week or the next.
USDCNY (6.8287) trades lower and looks bearish on the charts for a fall towards 6.80 soon.
USDINR (73.54) may trade within 73.30-73.70 region for the near term. We expect 73.70 to hold as a decent resistance for now. Watch price action for a break on either side of this range to confirm on further movement either towards 73.90 or down to 73.0-72.90.
INTEREST RATES
The Treasury yields have dipped on Friday and remain mixed in the near-term. A narrow range-bound move looks possible in the near-term with little chances of seeing one more leg of rise before the broader downtrend resumes. The German Yields have reversed lower on Friday and can remain in a narrow range in the near-term. The bias is bearish to see a downside break of the ranges and fall eventually in the coming days. The 10Yr GoI can move up in the near-term to test 6.10% and then can resume its overall downtrend.
The US 2Yr (0.13%), 5Yr (0.25%), the 10Yr (0.67%) and 30Yr (1.42%) Treasury yields have dipped across tenors. The 30Yr can oscillate in between its support at 1.40% and resistance at 1.50%. A breakout on either side of this range will decide whether the 30Yr will go up to 1.60%-1.65% or fall to 1.30%-1.25%. The 10Yr on the other hand is stuck in between 0.65% and 0.73% over the last one month. A strong rise past 0.73% will be needed to avoid a fall to 0.60% and see a rise to 0.80% going forward.
The German 2Yr (-0.71%), 5Yr (-0.69%), 10Yr (-0.48%) and the 30Yr (-0.04%) yields have dipped again across tenors and retain the downside pressure. The 30Yr is struggling to move above 0% and remains bearish for a fall to -0.10% and even -0.20% in the coming weeks. A strong rise past 0.05% will be needed to negate the bearish view. The 10Yr is range bound between -0.50% and -0.40%. While below -0.40%, the bias is negative to see a break below -0.50% and fall to -0.60% eventually.
The 10Yr GoI (5.9956%) sustains well above 5.95% itself within our expected range of 5.90%-6%. This keeps our near-term bullish view of seeing a rise to 6.10%. Thereafter we expect the 10Yr GoI to reverse lower and resume the broader downtrend.
