STOCKS
Equity segment continues to remain mixed. Indices like the Nikkei and DAX are showing lack of strength to move up further from current levels. We expect the Nikkei and DAX to see one more leg of rise before a sharp correction. 24000-24500 and 13800 are important resistances on the Nikkei and DAX respectively. Dow is getting support at 27500 but will need to break above 28500 to bring back the bullishness. Sensex and Nifty have intermediate supports near current levels which will have to hold to keep the chances alive of seeing a rise to 40000-40500 (Sensex) and 11600-11800 (Nifty) from here.
Dow (27993.33, +327.69, +1.18%) is getting support at 27500 (as seen from the 3-day candles) and has moved up. A strong rise past 28000 and a subsequent move above 28500 will bring back the bullishness of seeing 29000-29500 into the picture. It will also negate the danger of seeing a break below 27000. The next few sessions will need a close watch.
DAX (13193.66, −9.18, -0.07%) continues its struggle to get a strong follow-through rise above 13200. As mentioned yesterday, a fall below 13100 from here will put the index back into the 12800-13200 range. While above 13100, the bias is bullish and the chances are high to see a rise to 13800 from in the coming days. Thereafter a sharp corrective fall can happen. The above mentioned bullish view will get negated only on a break below 12800.
Nikkei (23427.30, −132, -0.56%) has come-back into the 23000-23500 range again failing to sustain the break above 23500 seen yesterday. Intermediate support is at 23350. While that holds, the chances are high for the Nikkei to break above 23500 again decisively and move up to 24000. As mentioned yesterday, 24000-24500 is a strong resistance zone from where a sharp corrective fall is possible.
The bounce-back from 3220 in Shanghai (3282.80, +3.99, 0.12%) seems to lack momentum. A strong rise past 3300 from here will strengthen the case for a further rise to 3400-3450 again. On the other hand, a break below 3250 will drag the index to 3200-3180. Broadly, the 3180-3450/70 range is intact now and the index has equal chances of moving on either side within this range from current levels.
Nifty (11440.05, -24.40, -0.21%) had come-off sharply yesterday from the 11568.90 thereby giving back all the gains made during the day. However, it is managing to hold above 11400. While above 11400, the view is bullish to see 11600-11800-12000 in the coming weeks as mentioned in the Evening Comments yesterday. A sharp fall below 11400 will delay this rise and will keep the index in the 11200-11400 range for some time.
Sensex (38756.63, −97.92, -0.25%) failed to sustain the break above 39000 yesterday. A fall below 38640 will increase the chances of testing 38000 on the downside. In that case the Sensex can remain in the 38000-39000 range for some time. As we have been mentioning over the last few days, a strong rise past 39000 is needed to strengthen the bullish view of seeing 40500-41000 on the upside and also to avoid a fall below 38000-37000.
COMMODITIES
Precious metals and Copper look bullish and seems poised for a further upmove. Only Crude has dipped back below immediate support levels and while the dip sustains, we may look for a sharper decline in the near term. Watch supports near 39.32 and 36.43 on Brent and Nymex WTI while Gold and Silver could be headed towards 1990-2000 and 28 respectively. Copper is bullish towards 3.10.
Brent (39.61) and Nymex WTI (37.27) have dipped again after a short corrective upmove seen for the last 2-3 sessions. Brent trades below 40 and if it fails to bounce back immediately above 40 and sustain higher, we may look for a test of 39.32 a break below which woill initiate a faster fall towards 37.50 in the coming weeks. Nymex WTI could also head towards immediate support near 36.43 while below 38.00-37.50. Only on a sustained rise above 40 (Brent) and 38 (WTI) would increase chances of further upmove from here.
Gold (1973.20) has finally moved up, trading well above 1940/20 support and could spoon move higher to test 1990/2000 in the near term. View is bullish above 1920.
Silver (27.60) needs to break above 28 to gather a faster upward momentum. While above 27, view is bullish towards 28-29; but failure to sustain above 27 could drag the price down to 26. Watch price action above 27.
Copper (3.0725) is looking bullish and could test 3.10 initially followed by a further rise towards 3.15/20 eventually.
FOREX
Overall currencies trade strong on a weaker Dollar. While Dollar Index falls towards 92.70-92.00, Euro looks bullish towards 1.9-1.20, Pound may test 1.2925, USDCNY is sharply down to 6.7852 and could fall towards 6.70. Strength in Chinese Yuan and Euro could boost Rupee today. EURJPY looks stable while Aussie may rise towards 0.74. USDJPY is down in line with the movement in the Dollar Index and could fall towards 105.
Dollar Index (92.94) has fallen towards the lower end of our mentioned range of 93.70-92.70. It would be important to see if the index bounces back from 92.70 r dips lower towards 92. While 92.70 holds, our mentioned range may hold for some more time. Only a break below 92.70 would indicate further bearishness towards 92 or even 91 in the coming weeks.
Euro (1.1885) is sustaining well above 1.18 and is slowly inching higher in the last few sessions. A test of 1.19-1.20 is on the cards while Dollar Index also looks weak.
EURJPY (125.62) is stuck in a broad range of 126.50-124.40 (revised from 127-125 mentioned yesterday) and could continue to trade within this range for some more sessions. Overall view is ranged for at least the next 1-2 weeks.
Dollar-Yen (105.67) has indeed fallen but lower than our expected 105.85 mentioned yesterday. While Dollar Index trades low, we may expect Dollar-Yen also to dip towards 105 soon. The broad range of 105-107 remains intact.
Aussie (0.7309) has been boosted by a strength in commodities especially Copper. There is scope for a rise towards 0.74 on the upside. View is bullish while above 0.73.
Pound (1.2852) has risen further. With scope for a fall towards 1.26 still intact, a sustained rise above 1.28 could be bullish for Pound initially towards 1.2925 before a decline from there is seen. For now, trade within 1.2925-1.28 looks possible.
USDCNY (6.7852) has fallen sharply breaking below our mentioned 6.80. Sustained trade below 6.80 opens up chances for a fall towards 6.70 in the near term. View is bearish.
USDINR (73.48) tested 73.6050 yesterday before closing below 73.50. The sharp fall in USDCNY and rise in Euro could be supportive of Rupee today and could possibly lead to a fall towards 73.30. It would then be important to see if a further fall below 73.30 sustains to take it lower towards 73.00-72.90 in the near term. Failure to sustain below 73.30 could take it higher towards 73.50/70 again on the upside.
INTEREST RATES
The Treasury yields remain stable and could trade in a sideways range for some time. A breakout of the sideways range will determine the next direction of move. The German Yields can also trade sideways in the near-term. The bias is bearish for the German Yields to break the range on the downside and fall eventually. The 10Yr GoI has support at 6% from where it can bounce-back towards 6.10% in the coming days.
The US 2Yr (0.14%), 5Yr (0.26%), the 10Yr (0.67%) and 30Yr (1.41%) Treasury yields remain stable. Our view remains the same. The 10Yr and 30Yr can oscillate in the range of 0.65%-0.73% and 1.40%-1.50% respectively. A breakout on either side of these respective ranges will decide whether the 10Yr will move up to 0.80% or fall to 0.50% and the 30Yr will rise to 1.60%-1.65% or fall to 1.30%-1.25% going forward. We will have to wait and watch
The German 2Yr (-0.71%), 5Yr (-0.69%), 10Yr (-0.48%) and the 30Yr (-0.04%) yields remain flat across tenors. Our broader bearish view remains intact. The 30Yr can fall to -0.10% and -0.20% while below 0%. A strong rise past 0.05% will be needed to negate the fall. The 10Yr is expected to remain in the range of -0.50%/-0.40% with a bearish bias to break -0.50% and fall to -0.60% eventually.
The 10Y GOI (6.0324%, 05.77 GS 2030) has come-off from the high of 6.0730 yesterday. Supports are at 6% and a slightly deeper one at 5.95%. We expect the 10Yr GoI to bounce-back from 6% towards 6.10% in the coming days.
