STOCKS
Dow, Sensex and Nifty have seen some recovery on Friday. But the bigger picture remains weak and the resistances ahead can cap the upside on these indices this week. 27500-28000 on the Dow, 12250-12350 on Nifty and 38000-38500 on Sensex are the key resistance zones. DAX continues to trade weak and keeps the bearish view intact of testing 12000. Nikkei has moved up towards the upper end of its current range and is to be seen if it can break the range on the upside. Shanghai has room on the downside to test 3180-3150 in the near-term.
As mentioned on Friday, the intermediate bounce to 27500 mentioned on Friday seems to be happening on the Dow (27173.96, +358.52, +1.34%). 27500-28000 will be a strong support-turned-resistance now that can cap the upside. While below this resistance zone, we retain our bearish view of seeing 26000 on the downside.
DAX (12469.20, −137.37, -1.09%) has dipped further and remains under pressure. The bearish view of seeing 12000 on the downside remains intact. As mentioned on Friday, a break below 12400 can accelerate the fall.
Nikkei (23365.64, +161.02, +0.69%) continues to move up within its 23000-23500 range. It will have to be seen if the index can break above 23500 and move up to 23700-24000 in the coming days. We reiterate that from a bigger picture 24000-24500 is a strong resistance zone which is likely to cap the upside and trigger a fresh corrective fall eventually if a break above 23500 is seen just now.
Shanghai (3220.93, +1.52, +0.05%) remains lower. We expect it to test 3200-3180. As we had mentioned last week, there are chances for the downside to extend up to 3160-3150. The region between 3180 and 3150 is a crucial support zone which will need a close watch to see if the index bounces back from there or not.
Nifty (11050.25, +244.70, +2.26%) has recovered above 11000 on Friday. There is room to test 11200-11250 in the near-term. But 11250-11350 will be a strong resistance zone that can ccap the upside and trigger a fall to 11800-11750 again. Only a strong rise past 11350 (revised higher from 11250 mentioned on Friday) will bring back the bullishness and negate the chances of seeing a fall again.
Sensex (37388.66, +835.06, +2.28%) has risen back above 37000 but can face resistance in the 38000-38500 region. The broader picture remains weak to test 36000 and even lower levels in the coming weeks.
COMMODITIES
Commodities are mixed but stable just now. Crude prices may test immediate supports but eventually look bullish for the medium term. Gold is bearish below earlier supports turned resistances now and could fall further in the coming weeks. Silver may rise a bit while above near term supports but may eventually fall too. Copper has some hope of rising while above 2.95.
Brent (41.78) and Nymex WTI (40.10) have dipped slightly. While above immediate supports at 39.32 (Brent) and 36.43 (WTI) we continue to remain fairly bullish on crude prices.
Gold (1863.90) has fallen below 1880 and while the fall sustains, we may expect a test of 1840/20 soon. Immediate view is bearish for Gold.
Silver (22.98) is trading around the immediate trend support near 22-23 on the daily candles and while that holds, a small corrective upmove could be possible towards 24 before another fall is seen.
Copper (2.9810) trades above 2.98 and needs to see a sustained rise above 3.00 in order to keep scope of rising back towards 3.10/15 intact. While above 2.95/98, Copper may rise in the medium term.
FOREX
Currency pairs look mixed today. Dollar Index could move higher towards 95.15 and pull down Euro and EURJPY in the near term. Aussie and Pound may bounce higher while supports hold. Dollar-Yen is also attempting to rise from current levels. USDCNY may fall from immediate resistance but for Dollar-Rupee we would wait to see if it manages to break below 73.50 to come down further.
Dollar Index (94.52) is rising slowly towards our expected target of 95.15 from where a dip looks possible. For the next 2-3 sessions, the index is likely to trade higher.
Euro (1.1633) is holding above 1.16 for now but may have scope for an eventual fall towards 1.1540 in the medium term.
EURJPY (122.55) did rise above 123 on Friday but has not been able to sustain higher. We may expect a fall to 121.95 in the near term. View is bearish for the next 2-3 sessions.
Dollar-Yen (105.35) is stable for now. A test of 105.75-106.00 on the upside looks possible for the next few sessions.
Aussie (0.7054) may hold above 0.70 just now to rise towards 0.7120 but whether the rise would sustain to take the currency higher towards 0.72 is to be seen. Watch price action near 0.70.
Pound (1.2767) is trading within a range just now but while above 1.2670, we may expect a test of 1.29 in the medium term. Only if a break below 1.2670 is seen, we would look for lower levels.
USDCNY (6.8190) has risen well. Immediate resistance is seen near 6.84/85 which if holds could push the pair down to 6.80 or lower again. may attempt to test 6.85 in the near term which if manages to break further on the upside could lead to a gradual rise towards 6.90/95 in the coming 1-2 weeks.
USDINR (73.6050) came off well on Friday from 73.95 seen earlier last week. We need to see if the pair falls below 73.50 today or trades within 73.70-73.50 region. A sustained break below 73.50 needs to be seen to take the pair lower towards 73 in the longer run.
INTEREST RATES
The US Treasury yields have come-off at the far-end (10Yr and 30Yr) last week and are poised at key levels. A further fall from will drag the yields lower from here itself without seeing another leg of rise that we had mentioned last week. The German yields have dipped further and are keeping our broader bearish view intact. The chances of seeing an intermediate corrective rise that we had mentioned on Friday stands reduced now. The 10Yr GoI has risen above 6.03% and can test 6.05% now. The price action around 6.05% will need a close watch to see if the rise can extend beyond it.
The US 2Yr (0.13%) remains stable 5Yr (0.27%) Treasury yields remain stable while the 10Yr (0.65%) and the 30Yr (1.40%) had come-off by 5bps and 6bps respectively in the past week. The 10Yr can dip to 0.60% gradually if it fails to bounce-back from here. A strong rise past 0.70% is needed to bring the chances of seeing 0.80%-0.90% into the picture. The 30Yr on the other hand will come under pressure if it falls below 1.40%. That will negate the chances of seeing 1.50%-1.60% on the upside and in turn will drag it to 1.30%-1.25% from here itself.
The German 2Yr (-0.72%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.10%) yields have dipped across tenors thereby reducing the chances of seeing the intermediate bounce that we had mentioned on Friday. The broader bearish view is intact. As we have been mentioning for some time, the 10Yr can fall to -0.60%/-0.70% and the 30Yr can test -0.20% on the downside in line with our expectation in the coming weeks.
The 10Yr GOI (6.0384%) has broken the 5.98%-6.03% range on the upside on Friday. While this break sustains a test of 6.05% – the next important resistance is possible. A strong rise past 6.05% will be needed to become more bullish to see the rise extending towards 6.10% and even higher. The price action around 6.05% will need a close watch.
