STOCKS
Asians are trading weak failing to take cues from the rise in the Dow on Friday. Dow has risen past 33550 contrary to our expectation and can test 34000 while this break sustains. The expected corrective fall is getting delayed further. DAX keeps alive the chances of seeing 15500-15700 on the upside before seeing a reversal. Nikkei and Shanghai can fall within their sideways range. Sensex and Nifty can see a sharp fall today following the weakness in SGX-Nifty which is trading down over 1.5%.
Dow (33800.60, +297.03, +0.89%) has risen past 33550 contrary to our expectation. While this break sustains a test of 34000 is possible in the near-term. Dow will now have to fall below 33000 in order to come under pressure and bring into the picture of the fall to 32000-31000 that we have been expecting.
DAX (15234.16, +31.48, +0.21%) continues to oscillate around 15200. The view of seeing 15500-15700 on the upside remains intact before we see a strong reversal. We reiterate that DAX has to fall below 15000 to become bearish for a fall to 14600-14400 and even lower levels.
Nikkei (29631.80, −136.26, -0.46%) remains below 30000 and continues to lack strength to rise past 30000 from here. The 28000-30500/31000 range remains intact and Nikkei can fall towards the lower end of the range now.
Shanghai (3427.46, −23.22, -0.67%) is heading down as expected towards 3400 and can extend the fall to 3350. The broader picture remains weak to see an extended fall to 3300-3250 and even 3200 in the coming days.
Nifty (14834.85, −38.95, -0.26%) can fall sharply today taking cues from the weakness in the SGX-Nifty (14642.50, -229.50, -1.54%). A test of 14600 looks likely while below 14900. A break below 14600 will pave way for a test of 14400-14200 that we have been expecting for some time. The broader view is bearish.
Sensex (49591.32, −154.89, -0.31%) on the other hand, can fall to 48000 on a break below 49000. The broader view is bearish to see 47000-46000 on the downside eventually in the coming weeks while the Sensex remains below 51000.
COMMODITIES
Most commodities trade in a ranged manner but we would keep a close watch on key supports and resistances that could shape up the future course of movement. Brent and WTI could trade within the narrow 62-64 and 61-57 range respectively while Copper and Silver look bullish while above 4.0-3.9 and 25 respectively. Gold has dipped from 1760. Unless a sustained break above 1760 is seen, we may look for ranged movement to continue for some more time within an overall long term uptrend.
Brent (63.05) and WTI (59.34) continues to trade within a narrow sideways range. WTI could trade within 61-57 in the very near term while Brent could be stuck in the 62-64 region. However, we may expect a breakout on either side of the range possibly by the end of this week.
Gold (1744.10) has not been able to break above 1760 and has instead fallen from there. We may expect a ranged trade while below 1760 for a few sessions. In the longer term, overall trend is up. A sustained break above 1760 would be an initial signal for medium to long term bullishness.
Silver (25.33) needs to sustain above 25 in order to rise towards 26-27 in the medium term. Failure to sustain above 25 could take the pair down to 24-23 on the downside. Bullish sentiment prevails while the price trades above 25.
Copper (4.0450) continues to have immediate support near 4 and lower at 3.90 which if hold could produce a decent bounce in price in the medium term. View is bullish while above 3.90.
FOREX
Dollar Index trades above 92 and may sustain to trade higher for a few sessions. Euro is finding difficult to break and sustain above 1.19 but needs support of a weak Dollar Index below 92 for it to move up. Dollar Yen may test 110 before coming off from there. Pound and Aussie look bearish for the near term. USDCNY has risen and may continue to rise towards 6.58/60. USDINR also looks bullish while above 74.25 and may test 75.15/20 soon.
Dollar Index (92.274) is holding above 92 just now. A test of 92.75/80 looks possible on the upside before a sharp dip back to 92 is seen. Only a break below if holds could take the index further low towards 91.50-90.50 in the longer run. For now watch price action near 92.
Euro (1.1886) has dipped below 1.19 again after seeing a brief rise last week to 1.1927. A rise above 1.19 needs to sustain in order to move up towards 1.20 in the medium term.
EURJPY (130.21) has risen a bit but overall could trade within 131-129.50 for the near term.
Dollar-Yen (109.54) may test 110 before declining back from there again. Only a abreak above 110 would again establish a bullish movement. Watch price action near 110.
Aussie (0.7600) is trading near crucial levels and a break below 0.76 could take it down further to 0.7550. Immediate view is likely to be bearish.
Pound (1.3683) has fallen below 1.37 and may either bounce back from 1.3670/50 or continue to fall towards 1.36 in the near to medium term. View is bearish while below 1.37.
USDCNY (6.5569) has risen slightly but may continue to rise towards 6.58/60 in the near term. View is bullish.
USDINR (74.74) has moved up sharply last week and we cannot negate a test of 75.15/20 before a fall is seen from there towards 74.60/40 in the medium term.
INTEREST RATES
The US Treasury yields have bounced-back on Friday. The yields can consolidate sideways within their overall uptrend. A strong break below their immediate supports is needed to turn the outlook bearish. The Consumer Price Index (CPI) data release tomorrow will need a close watch. The German yields are also consolidating within their uptrend. We expect the uptrend to remain intact and the yields can move up further before a reversal is seen. The 10Yr GoI remains bearish but a corrective bounce is possible before a further fall is seen from here.
The US 2Yr (0.16%), 5Yr (0.87%), 10Yr (1.66%) and 30Yr (2.32%) Treasury yields have bounced-back across tenors. 1.60%-1.55% (10Yr) and 2.25%-2.20% (30Yr) are important supports above which the yields are consolidating now. We reiterate that a strong break below 1.55% (10Yr) and 2.2% (30Yr) is needed to signal a trend reversal. Until then the trend will remain up and the chances of a fresh rise to 2% (10Yr) and 2.9%-3% (30Yr) cannot be ruled out over the medium-term.
The German 2Yr (-0.71%), 5Yr (-0.64), 10Yr (-0.30%) and the 30Yr (0.24%) have bounced-back within their current sideways consolidation. -0.35/-0.25 (10Yr) and 0.2%-0.3% (30Yr) are the range which we can expect to break on the upside and see a rise to -0.20%/-0.15% (10Yr) and 0.35% (30Yr) over the medium-term. The 10Yr has to fall below -0.40% and the 30Yr below 0.20% in order to negate the bullish view and turn bearish.
A test of 6% on the 10Yr GoI (6.0147%) was seen on Friday as expected. The yield has bounced-back above 6% after making a low of 5.9591% on Friday. The bearish view of seeing 5.90% on the downside remains intact. However, if the 10Yr GoI breaks above 6.02% from here, then a corrective bounce to 6.06%-6.08% cannot be ruled out before the above mentioned fall happens.
