STOCKS
Correction in most equities seems to have ended and the indices can now rally to the upside soon while above respective supports. Dow and Dax are bullish towards 36000 and 15800/900 while Nikkei and shanghai can rise to 29000/500 and 3600+ while above 28000 and 3550 respectively. Nifty and Sensex have also tested supports yesterday and now look bullish for a rise to 18400/600-18800 and 61000-62000 respectively.
Dow (35603.08, -6.26, -0.018%) tested 35442 before bouncing back to close higher. Narrow movement seen overall over the last 2-days. We continue to look at a possible rise to crucial resistance at 36000 before any reversal is seen.
DAX (15472.56, -50.36, -0.32%) tested 15406, falling to support at 15400 that we have been mentioning for the past few days. While above 15400, a rise back to 15800/900 is possible in the coming sessions. View is bullish while above 15400.
Nikkei (28892.11, +183.53, +064%) has risen well today but while below 29500, we do not negate a fall towards 28000 before a bounce is seen. We need a strong break above 29500 to again resume bullishness. A range of 28000-29500 can hold for the near term within which a test of lower support is possible initially.
Shanghai (3581.36, -13.42, -0.39%) has fallen again below 3600. While above support at 3550, view is bullish.
Nifty (18178.10, -88.50, -0.48%) tested 18048 yesterday, coming down to our expected 18000 while below 18200. Now a bounce back to 18400/600 and even 18800 looks possible while the index sustains above 18000. View is bullish for the medium term.
Sensex (60923.50, -336.46, -0.55%) fell to test 60485 before bouncing back to close higher. View is bullish towards 61000-62000 in the medium term.
COMMODITIES
Most commodities see a corrective fall which may sustain for the next couple of sessions before reversing by the end of next week possibly. Crude prices have fallen but we need to keep a close watch to see if it can continue to decline further. Gold and Silver have dipped too but has scope to rise after a brief sideways range. Copper can rise from support near 4.55 and head back to test 4.90.
Brent (84.06) and WTI (82.05) have both fallen sharply. We need to see if the pull off sustains over the next few sessions. Brent needs to fall below 83 to negate further upside again.
Gold (1786.80) fell from 1790 and trades lower just now. A possible test of 1770/65 is possible before again attempting to bounce higher. Unless a sustained break above 1790 is seen Gold could remain within the sideways consolidation range with limited downside to 1740 just now.
Silver (24.29) has dipped slightly today from levels seen yesterday. But while above 24, view is bullish towards 25. Any break below 24, if seen will bring in a possible pull back on the precious metals including Silver.
Copper (4.5770) has support near 4.55 which if holds can produce a bounce back towards 4.90 soon.
FOREX
Dollar Index has risen slightly to test 93.75 but still has scope to fall to 93 which could hold on first testing. Euro has fallen but while above 1.16, we keep intact chances of seeing a rise to 1.17-1.1710 in the near term. EURJPY is bearish towards 132-131.50 while below resistance at 134. Aussie and Pound are in a corrective fall and could soon rise higher. USDCNY can re-test 6.3750-6.36 while below 6.44/41. Dollar-Yen has bounced well from expected support at 113.65 and the pair can now rise sharply towards 115 or higher towards 117-118 in the medium term. USDINR can range within 74.50/60-75.00/25 for the near term. A bounce from 74.50/60 can take it to the upper end of the mentioned range.
Dollar Index (93.74) is stable near 93.75. The index still has scope to fall to 93 before a bounce is seen from there. Only a break above 94, if seen will negate a fall and indicate bullishness for the near term which looks less likely just now.
Euro (1.1626) declined from 1.1667 seen yesterday. Failure to sustain above 1.1650 has brought down Euro but while above 1.16, we keep possibility of rising towards 1.17-1.1710 intact for the near term. Break below 1.16 if seen and sustains would again indicate bearishness but we would wait for confirmation on that.
EURJPY (132.59) faced stiff rejection from 133.50 and while below that a slow fall to 132-131.50 is possible before bouncing back again. Overall trend is bullish towards crucial resistance at 134. Downside could be limited to 131.50 for now.
Aussie (0.7475) has dipped from 0.7550 and while that holds, a decline to 0.74 is possible before seeing a bounce. Watch price action near current levels.
Pound (1.3794) has dipped a bit and while below immediate resistance at 1.3850, Pound could fall in a corrective dip towards 1.3750 or 1.37 before attempting a bounce back to higher levels.
Dollar-Yen (114) tested 113.65 before bouncing from there. The pair can now rise sharper towards 115 and then towards 117-118 while above 113.65. Trend is bullish.
USDCNY (6.3984) has been bouncing well this week from low of 6.3784 and while that holds, the pair seems to be in a corrective rise and can extend to 6.41 before again falling back to re-test 6.37/36. Watch price action near 6.40/41 in the near term. In the longer run, a break below 6.3750/36 looks possible while below 6.44. We watch narrow range of 6.41-6.3750/36 and broad range of 6.44-6.3750/36 with possible break on the downside eventually.
USDINR (74.8650) bounced sharply from 74.70 yesterday to close higher at 74.8650. We expect support at 74.60/50 to be tested from where a rise back towards 75-75.25 can be possible in the near term. Broad range of 74.60/50-75.0/25 can hold for now.
INTEREST RATES
The US Treasury Yields continue to move up. It will have to be seen if the expected reversal from 2.2% on the 30Yr can drag the 10Yr also lower or a further rise in the 10Yr above 1.75% towards 2% can take the 30Yr also higher breaking above 2.2%. The German yields have limited room on the upside and are likely to see a fresh fall in the coming days. The 10Yr and 5Yr have come-off sharply yesterday. The 5Yr can fall towards the lower end of its 5.66%-5.76% range and the 10Yr can see a deeper fall on a break below 6.3% which in turn will negate the chances of a rise mentioned yesterday.
The US 2Yr (0.45%), 5Yr (1.22%) and the 10Yr (1.69%) Treasury yields have risen further sharply while the 30Yr (2.14%) remains stable. The 10Yr can test 1.75% as expected and the 30Yr has room to test 2.2% – an important resistance on the charts. Will the 30Yr turn down from 2.2% and drag the 10Yr also down along with it? Or will the 10Yr continue to rise breaking above 1.75% towards 2% and take the 30Yr also up above 2.2%? We will have to wait and watch.
The German 2Yr (-0.65), 5Yr (-0.44%) and the 10Yr (-0.10%) yields have risen back while the 30Yr (0.27%) has dipped slightly. The -0.1%/-0.05% resistance region on the 10Yr is likely to hold and trigger a reversal towards -0.2% initially and then even eventually. On the 30Yr, the resistance at the 0.35%-0.45% region is holding well as of now. A dip to 0.2% and then to 0.1%-0% subsequently over the medium-term is possible.
The Indian 10Yr GoI (6.3384%) has come-off sharply below 6.35%. A further fall below 6.3% from here will bring back our earlier bearish view of seeing 6.2% and lower levels into the picture. In turn that will negate the chances of seeing 6.45%-6.5% on the upside.
The 5Yr GoI (5.7141%) has declined sharply and keeps the 5.66%-5.76% range intact. A break below 5.7% can drag it to the lower end of this range in the coming days.
