STOCKS
Equity segment shows signs of strength. There is room to see some more rise in the coming days. However, we will continue to remain cautious as crucial resistances are coming up and the chances of a sharp corrective fall cannot be ruled out. Dow can move up to test the key 29000-29100 resistance zone on a break above 28500. DAX has room to test its next important resistance at 13400. Nikkei can rise to 24000. Shanghai can move up towards the upper end of its 2180-3450 range. Sensex can rise to 41000 while it sustains above 40000 now. Nifty can test 12000-12100.
Dow (28425.51, +122.05, +0.43%)sustains well above 28000 and has risen further. A test of 28800-29000 is possible now on a strong break above 28500. The next crucial resistance will be in the 29000-29100 region which will need a close watch to see whether the Dow will extend the current rally to 30000 levels or fall back to 28000-27000. For now, as mentioned yesterday, the fall to 27000-26500 that we had been expecting earlier will get delayed.
DAX (13042.21, +113.64, +0.88%) has risen towards 13000 and can now target 13200 next. The upside can extend even up to 13400 as against a reversal from 13200 that we had been mentioning so far. The price action at 13400 will need a close watch to see for the chances of a reversal.
Nikkei (23619.63, −27.44, -0.12%) has tested 23700 as expected. A strong break above 23700 will pave way for a further rise to 24000. As mentioned yesterday, 24000-24500 is a strong long-term resistance zone that can cap the upside. As such we will be looking for a sharp corrective fall anywhere from the 24000-24500 region going forward.
Shanghai (3272.62, +54.57, +1.70%) has reopened with a wide gap-up after a week of public holiday. While it manages to sustain above 3250 a rise to 3350-3450 can be seen over the next few weeks. The 3180-3450 range remains intact and the index can move up towards the upper end of this range now.
Nifty (11834.60, +95.75, +0.82%) has risen further and keeps our bullish view intact of testing 12000. As mentioned in the Evening Comments yesterday, 12000-12100 is an important resistance zone from where a corrective dip to 11800-11750 is possible.
Sensex (40182.67, +303.72, +0.76%) has risen and closed above the 40000-40100 resistance zone mentioned yesterday. While this break sustains a further rise to 41000 is possible in the coming days.
COMMODITIES
Commodities all trade higher and pose bullish possibilities for the near term. We look at immediate supports on the charts to hold for now while there is room for further rise from current levels. Watch price action on Gold near 1920 which if breaks could lead to a sharp rise towards 1940/50; Silver looks bullish towards 26-27. Copper has scope for 3.20 on the upside. Crude prices may rise towards 43 (WTI) and 45 (Brent) reducing chances of a fall below 39.30.
Brent (43.14) and Nymex WTI (41.00) have both moved up sharply extending the gains seen yesterday. On the daily charts there is scope for a rise towards 45 and 43 respectively.
Gold (1912.80) has risen sharply contrary to our expectation of a fall towards 1860/40 but the chances of a dip remains intact while below 1920. A break on the upside, if seen could be bullish towards 1940/50 on the upside. We would wait and watch for price action near 1920.
Silver (24.42) now has immediate trend support near 23.80-24.00 on the daily charts and while that holds, there is enough room on the upside towards 26-27 on the longer run. For now watch price action near 25.
Copper (3.07) has also risen sharply. While the rising momentum continues, we may expect a test of 3.20 on the upside which could be seen in the next 1-2 weeks. Overall view is bullish above 2.95.
FOREX
Dollar Index trades stable but could head towards 93.0-92.70 in the medium term. Watch Euro for a possible rejection from 1.18-1.1815. EURJPY, Aussie, Pound and Yen look strong for now and could test 126-126.80, 0.72-0.74, 1.30-1.31 and 105 respectively. Dollar Rupee could be ranged within 73.50-73.00 for now unless a break on either side is seen to decide on further movement.
Dollar Index (93.572) has dipped from higher levels and indicate a possible fall towards 93.0-92.70 again while below 93.80-94.00. Such a fall could be seen in the coming week itself.
Euro (1.1778) is almost stable but while below 1.18-1.1815, we would be cautious to see a sharp rise from here. A dip back towards 1.17 cannot be negated as such.
EURJPY (124.67) seems to be breaking above 125 which could trigger a sharper upmove towards 126-126.80 on the upside. While the Dollar Index trades lower, EURJPY could be headed higher.
Dollar-Yen (105.86) fell back from 106.11 as expected, declining in line with the fall in the Dollar Index. A fall towards 105 can be seen in the near term while the 105.0-106.11 range could hold for some more time.
Aussie (0.7185) needs to break above 0.72 to move up further towards 0.74 in the medium term. While below 0.72, we may continue to look for the 0.70-0.72 range to hold. A break above 0.72 now looks likely in the coming week.
Pound (1.2956) is headed upwards and could test 1.30 soon. A break on the upside would then be needed to take it higher towards 1.31.
USDINR (73.2425) closed below 73.50 yesterday but could remain within 73.0-73.50 region for now. As mentioned yesterday there are series of resistances in the 73.50-73.80 region which may prevent any sharp rise above 73.50.
INTEREST RATES
The US Treasury yields sustain higher. The 10Yr and 30Yr yields are coming closer to their key resistances. It will have to be seen if they can breach the resistances and extend the upmove before reversing lower again. The German yields seem to lack momentum to see the corrective bounce mentioned yesterday. The broader bearish view remains intact and the yields can fall from here itself. The 10Yr GoI remains stable and is bullish to test 6.08%-6.10% while it sustains above 6%. The Reserve Bank of India’s monetary policy meeting outcome is due today and that can cause some volatility in the market.
The US 2Yr (0.15%), 5Yr (0.33%), 10Yr (0.78%) and the 30Yr (1.58%) yields remain stable. The 30Yr can test 1.60% and the 10Yr can inch higher to 0.80% in the near-term. As mentioned yesterday if the 30Yr manages to breach 1.60%, an extended rise to 1.72% can be seen before a reversal happens. Similarly, the 10Yr can rise to 0.90% if it breaks above 0.80% and then reverse lower again.
The German 2Yr (-0.72%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.10%) yields have dipped back again. A further dip from here will reduce the chances of seeing the corrective bounce to 0% on the 30Yr and -0.42% on the 10Yr that we had mentioned yesterday. Broadly the trend continues to remain down and we retain our bearish view of seeing -0.60% (10Yr) and -0.20% (30Yr) on the downside in the coming weeks.
The 10Yr GOI (6.0155%)sustains and continues to trade stable above 6%. While above 6%, the outlook is bullish to see a gradual rise to 6.08%-6.10% in the coming days. 5.98% and 5.95% are important supports below 6%. Only a strong break below 5.95% will negate the bullish view mentioned above.
