STOCKS
Dow and Dax rose fairly yesterday and could be headed higher towards 36250 and 16400 respectively before again declining from there. Nikkei can test 30000/30250 while above 29500 while Shanghai is ranged within 3475/3500-3550/75 for the near term. Nifty and Sensex needs to remain above 17800/600 and 60000 respectively to move up eventually.
Dow (36142.22, +54.77, +0.15%) has risen yesterday. Seems to be confused whether to rise above 36250 or to fall below 35900 and needs to break on either side to indicate near term direction. Till then we may consider for a fall towards 35000 while below 36250.
DAX (16247.86, +99.22, 0.61%) has risen significantly today and if sustains can head towards 16400 in line with our expectations before a reversal from there is seen. As mentioned earlier, 16400 is a crucial medium term resistance.
Nikkei (29674.74,-133.38, -0.45%) has come down today but is trading above the crucial support at 29500. While above 29500 a test of 30000/30250 is possible in the very near term. View is moderately bullish while above 29500.
Shanghai (3529.54, +7.75, +0.22%) is still hovering between 3475/3500-3550/75 , a strong break above 3575 would be needed to take the index towards 3600. While a break below 3500/3475 can take it towards 3400. Price action within the mentioned range needs a close watch.
Nifty (17999.20, -110.25,-0.61%) opened higher yesterday at 18127 but came down sharply to close below 18000. While below 18000 a dip towards 17800/600 cannot be negated before we see a bounce towards 18200 or higher in the longer run. For now 17800/600-18000/200 could be a broad range, unless we see a sharp rise above 18200 today itself.
Sensex (60322.37, -396.34, -0.65%) fell sharply yesterday and can test the support at 60000 before we see a bounce from there towards 61000/62000 in the medium term.
COMMODITIES
Brent and WTI have rise from immediate supports and have limited upside indicating a possible sideways movement before a sharp fall is seen. Brent can test 79/78 while below 83/85. WTI on the other hand can fall to 75 on a break below 79. Gold is trading within 1850-1880 within an overall uptrend. Silver needs to hold above 25 to move up else can fall to 24. Copper needs to bounce from support at 4.30 else could be vulnerable to a sharp fall. Watch price action near immediate support and resistance levels.
Brent (81.97) has bounced back from $80. It has resistance at $83/85 which can hold and produce a fall towards $79/78 on the downside.
WTI (80.26) has come down to test 79 again. A further fall below 79 can trigger a fall towards $75 in the coming sessions.
Gold (1857.90) has dipped a bit on Dollar strength and can be ranged within 1850-1880 for sometime before again moving higher in the medium term. Overall trend is bullish.
Silver (25.04) has immediate support at 25 which if holdsc an produce a bounce back to 25.50-26 in the medium term. Failure to hold above 25 can take the price down to 24 before a bounce is seen from there. Watch price action at 25.
Copper (4.3555) has fallen and could test support at 4.35/30 from where a bounce looks possible. Failure to hold above 4.30 will be bearish for the medium term. Watch price action near 4.30.
FOREX
Dollar Index tested 96 without any pullbacks that we have been expecting over the past couple of sessions. Euro can hold above 1.13 while the dollar index holds below 96. Any break on the upside can take dollar index to 98 opening chances of a fall to 1.12/1.10 for Euro. Watch price action in the very near term. EURJPY is ranged above 129.60 while Aussie and pound look bearish. Dollar Yen can rise to 115.00-115.50 before reversing from there. USDCNY has risen back well from levels below 6.3750 seen yesterday. While below 6.40, view continues to remain bearish. USDINR can test 74.25/20 while below 74.60.
Dollar Index (95.89) rose to 96 without any pullbacks that we had been expecting over the past couple of days. We now need to see if it pauses near 96 or rises further to test 98 on the upside before reversing. Preference would be to see a corrective fall from 96 in the next few sessions.
Euro (1.1322) continued to fall sharply yesterday to test 1.1308. Immediate support is seen at 1.13 which if holds can produce a bounce towards 1.1350-1.1380 on the upside. Watch price action near current levels closely.
EURJPY (129.97) has broken below 130 but while above 129.60, there is scope for some more bounce towards 130.40/60. A broad range of 129.6-130.40/60 is possible in the near term.
Aussie (0.7287) has immediate support at 0.7280 which if holds can produce a rise towards 0.73-0.7350 in the near term. But we cannot negate a fall to 0.7260 before such a rise is seen.
Pound (1.3428) tested 1.3472 yesterday but came off sharply from there. While the Poundis unable to sustain above 1.3450, it can trade lower within 1.3450-1.34 just now. A decisive break above 1.3450 is needed to make it bullish.
Dollar-Yen (114.82) tested 114.10 yesterday but has bounced well from there and broken above 114.75. Our expected target of 115.50 can be met soon before a corrective dip is seen from there.
USDCNY (6.3838) rose to test 6.3950 from levels below 6.37 seen yesterday. Immediate resistance is seen at 6.40 and while the pair trades below that, view is bearish for a fall to 6.37-6.36 eventually. A sustained break above 6.40 is needed for the pair to negate bearishness and to head higher towards 6.41/42 or beyond. Watch price action while below 6.40.
USDINR (74.3775) can fall to 74.25/20 while below 74.60. Deeper support visible at 74.00. Surprisingly the Rupee has not shown any strong reaction to weakness in Euro or to the sharp fall in USDCNY yesterday.
INTEREST RATES
The US Treasury yields have moved up further. The 10Yr and 30Yr have limited room on the upside and we expect them to reverse lower going forward. We will be watching closely the movement in the coming days. The German yields have come closer to their first level resistance. It will have to be seen if they are reversing lower from here itself or after an extended rise up to the second level of resistance. The 10Yr and 5Yr GoI have bounced-back yesterday and can see some more uptick within their broad range before reversing lower again.
The US 2Yr (0.52%), 5Yr (1.27%), 10Yr (1.64%) and the 30Yr (2.03%) have moved up further. The 30Yr has room to test 2.1% while the 10Yr can extend the rise up to 1.68%-1.7% on a break above 1.65%. We will have to wait and watch if our expected reversal is happening anywhere from here or not.
The German 2Yr (-0.75%) and 5Yr (-0.57%) yields have declined sharply while the 10Yr (-0.25%) and 30Yr (0.09%) remains higher and stable. Our view remains the same. -0.2% on the 10Yr and 0.1% on the 30Yr are key resistances from where we expect the yields to reverse lower. In case if they break above these levels an extended rise to -0.1% (10Yr) and 0.2% (30Yr) can be seen and then reversal can happen.
The India 10Yr GoI (6.3636%) has inched up slightly and could retest the resistance at 6.38% and then come down towards 6.3%. As mentioned yesterday, 6.3%-6.45% is the broader range of trade and the bias is bearish to see a downside break below 6.3% eventually going forward.
The 5Yr GoI (5.7129%) has risen back above 5.7% and needs to see if it can sustain and break above 5.72% from here. Such a break can then bring back the chances of testing 5.75%-5.76% on the upside before seeing a fall to 5.66% eventually.
