STOCKS
Dow, DAX and Nikkei have recovered well above the key levels of 28500, 12800 and 23500 respectively. While this bounce sustains, the danger of seeing a deeper fall that we had mentioned on Friday stands reduced. Instead, a further rise is possible in the short-term before a corrective fall comes into play. Shanghai can move up within its 3180-3450 range. Sensex and Nifty have bounced slightly but will have to breach their key resistances to become bullish and wipe out the danger of seeing a sharp fall. A sideways range of 11650-12100 on Nifty and 39500-41000 on Sensex looks possible for now.
Dow (28606.31, +112.11, +0.39%) has risen above 28500 thereby reducing the danger of seeing an immediate fall to 27500. However, 29000-29100 resistance is there which will have necessarily broken in order to wipe out the chances of seeing 27500 on the downside completely and turn the outlook bullish. While below 29100 our bias is inclined towards bearishness.
DAX (12908.99, +205.24, +1.62%) has bounced back above 12800 and needs to be seen if it can sustain. While above 12800, the chances of testing 13200-13400 on the upside will remain alive before a sharp corrective fall happens. The danger of breaking below 12350 and seeing a fall to 12000 and lower levels mentioned on Friday stands reduced now.
Nikkei (23673.90, +263.27, +1.12%) had closed below the key support level of 23500 on Friday, but has recovered sharply today. A test of 24000 on the upside is possible if the index breaks above 23800 (revised higher from 23700 mentioned last week). But the upside is likely to be capped at 24000-24500 and a sharp corrective fall is possible from this 24000-24500 resistance zone.
Shanghai (3338.90, +6.71, +0.2%) is attempting to bounce after inching lower last week. Our view remains the same. The 3180-3450 range remains intact and the index can move up towards the upper end of this range now.
Nifty (11762.45, +82.10, +0.70%) had recovered slightly on Friday.The support at 11650 is holding as of now. But a strong rise past 11800 is necessarily needed to reduce the danger of seeing a break and a deeper fall below 11650 and pave way for a revisit of 12000-12100 levels. 11650-12100 could be a possible range that can be seen now and a breakout of this range will determine whether Nifty will move up to 12250-12500 or fall to 11500-11300.
Similarly, Sensex (39982.98, +254.57, +0.64%) is managing to hold above 39500. While above 39500, a range-bound move between 39500 and 41000 is possible. A breakout on either side of 39500-41000 will then decide whether the Sensex will go up to 42000 or fall to 39000-38500.
COMMODITIES
Most commodities look stable but Copper, Silver and Crude prices look bullish for the medium term if they sustain above crucial levels while Gold may continue to remain stable for some more time.
Brent (41.01) and Nymex WTI (42.80) look stable within a very narrow range. WTI will have to break above 42.0-42.50 in order to move up towards 44-45 while Brent needs to sustain above 42.50 to move up towards 45-47.50 soon. Overall view would be bullish on a rise above 42.50 on both Brent and WTI.
Gold (1904.40) has been stuck around 1900, maintaining the 1920-1880 range intact for now. AS mentioned on Friday, we see important resistances at 1920 and 1930 respectively which may hold and gradually push the prices down to1860-1840 in the medium to longer term. Overall view is bearish while below 1930 and would bring in bullish possibilities only on a sustained break above 1930.
Silver (24.28) also looks stable above support at 24. As we have been mentioning in the last week’s editions, we remain fairly bullish on Silver while above support at 24. We may expect a target of 26-27 eventually.
Copper (3.0765) has risen a bit from levels seen on Friday near 3.0480. While the rise sustains, we continue to look for a rise towards 3.15/20.
FOREX
Dollar Index could rise towards 94.0-94.50-95.0 which are crucial resistances and may produce a rejection back towards 93-92 in the medium term. Euro can rise to 1.1785 if it remains above 1.17; else a sharp dip towards 1.16 could be seen. EURJPY may be ranged within 123-124.35, USDJPY too can be ranged within 105-106.12. USDNR could test 73.45/47 before again seeing a dip to 73.20.
Dollar Index (93.72) has not broken above 94 yet which is a crucial resistance on the 3-day candles. Note that 94.0-94.50-95.0 are all important resistances that may push the index down towards 92 in the near term. View is stable to bearish while below 95.
Although Euro (1.1711) trades above 1.17, we need to remain cautious of a sustained fall below 1.17 in the medium term on a break above 94 on the Dollar Index. On the upside, immediate scope for a test of 1.1785 looks possible before a fall is seen from there.
EURJPY (123.46) could be ranged in the 123-124.35 region for the near term with possibility to test the upper end of the mentioned range in the next 5-6 sessions.
Dollar-Yen (105.40) has risen from last week’s low of 105 and while that holds we may expect a rise towards 106.0-106.12 in the near term before falling back from there. Overall, the pair could be ranged within 105.0-106.12 in the near to medium term.
Aussie (0.7090) looks stable just now but could rise towards 0.71-0.72 again while above 0.70. View is stable within the broad 0.70-0.72 region.
Pound (1.2929) has crucial support at 1.28 which if holds could take it1.30-1.31 again in the medium term.
USDCNY (6.7028) looks bullish while above 6.6840. Trade within 6.7170-6.6840 looks possible for the near term. Overall long term view is bullish while above 6.7080.
USDINR (73.3450) may rise to test 73.45/47 on the upside before again falling off towards 73.20. We continue to look for a range of 73.20-73.47 for the next 1-2 sessions.
INTEREST RATES
The US Treasury yields have risen well across tenors following the strong US retails sales data released on Friday. Key resistances are ahead which will have to be broken in order to see an extended rise before a fresh fall happens. We will have to wait and watch. The German Yields remain bearish and are looking vulnerable to extend the fall without seeing a corrective bounce. The 10Yr GoI has risen within the 5.88%-5.95% range as expected. A further rise is possible before the downtrend resumes.
The US 2Yr (0.15%), 5Yr (0.33%), 10Yr (0.76%) and the 30Yr (1.55%) Treasury yields have moved up across tenors on Friday. The 30Yr and 10Yr are managing to sustain above 1.50% and 0.70% respectively. This keeps alive the chances of seeing 1.72% (30Yr) and 0.90% (10Yr) on the upside. However a strong break above 1.60% (30Yr) and 0.80% (10Yr) is necessarily needed to trigger this rise and avoid the fall to 1.40% (30Yr) and 0.60% (10Yr). We will have to wait and watch.
The German 2Yr (-0.78%), 5Yr (-0.80%), 10Yr (-0.62%) and the 30Yr (-0.21%) yields remain lower. The 30Yr and 10Yr are holding below -0.60% and -0.20% respectively. As mentioned earlier, inability to bounce above -0.60% (10Yr) and -0.20% (30Yr) can drag the yields lower to -0.70% (10Yr) and -0.35% (30Yr) straight away from here itself without seeing a corrective bounce that we had earlier expected to happen.
The 10Yr GoI (5.9272%) has moved up within the 5.88%-5.95% range. as expected. A test of 5.95% looks likely now before the overall downtrend resumes. In case of a break above 5.95%, the upside can extend upto 5.98% and then the expected reversal can happen.
