STOCKS
Equities continue to remain subdued. However, the price action since Friday indicates that the market lacks strong selling interest. This keeps the broader bullish view intact on equities. Global indices like the Dow and DAX can consolidate for some time and then are likely to resume their uptrend. Shanghai is coming closer to a key support which we expect to hold and trigger a reversal. On the domestic front, the Sensex and Nifty have declined below their key supports and are vulnerable for further fall.
The dip in the Dow (26806.14, -115.98, -0.43%) is not showing momentum. Though a test of 26600-26500 is possible in the near term, the broader view remains bullish. As mentioned yesterday, Dow can consolidate between 26500 and 27000 for some time before a fresh rally to 27200-27500 is seen.
DAX (12543.51, -25.02, -0.20%) has support at 12450 which can limit the downside. It can consolidate between 12450 and 12650 for some time. The bias is bullish to see a break above 12650 and rise to 12800-13000 in the coming weeks.
Nikkei (21587.95, +53.60, +0.25%) has bounce after testing 21500 and can consolidate between 21500 and 21750 as mentioned yesterday. A rise to 21700-21750 is likely now while it remains above 21500. A breakout on either side of 21500 or 21750 will decide the next move.
Contrary to our expectation Shanghai (2925.16, -8.2, -0.28%) has declined further below 2950. However a strong support is coming up at 2900 which may halt the current fall and trigger a bounce to 2950 and 3000 in the coming days.
Sensex (38720.57, -792.82, -2.01%) and Nifty (11558.60, -252.55, -2.14%) tumbled over 2 per cent yesterday breaking below their crucial support levels of 39000 and 11800 respectively. The outlook is bearish. Nifty can fall to 11500-11470 while below 11635 in the near term. Sensex on the other hand can test 38100 on the downside while it remains below 39100 in the coming days.
COMMODITIES
Strong dollar continues to weigh on commodities. Gold has come-off and can test a crucial support in the coming sessions. Silver looks mixed. Copper is range bound with a bullish bias. Oil looks weak and can dip in the near term within its broad sideways range.
The resistance at 1410 mentioned yesterday is holding well on Gold (1393). A test of 1380 looks likely in the near term. As mentioned yesterday, the level of 1380 is a crucial support, a break below which will confirm a double top reversal pattern on the daily chart.
Silver (15.01) oscillates around 15. The immediate outlook is mixed. It has equal chances for either a rise to 15.20 or fall to 14.75 from current levels.
Copper (2.66) is stuck between 2.63 and 2.69 over the last few days. While above 2.64, the bias is bullish to see a break and rise above 2.69 targeting 2.72-2.73 on the upside.
Brent (63.92) has come-off after testing 65 yesterday. The near-term outlook is mixed. Brent can trade sideways between 62 and 65 for some time. While below 65, the possibility is high for it to decline towards 62.
Nymex WTI (57.49) spiked to 58.46 and has come-off from there. While below 58, WTI can fall to 56.5 and 56 in the coming sessions.
FOREX
Dollar is retaining its strength and has room to rise further. Major currencies look weak. Euro, Pound, Yen and Aussie have declined on the back of strong dollar and looks vulnerable for further fall. The broader strength in the dollar can keep the rupee weak in the near term.
Dollar Index (97.42) has inched further higher and keeps the bullish view intact to test 97.80 and 98. A break above 97.50 will trigger this rise.
As expected, Euro (1.1210) has dipped to test 1.12. The near-term view is negative for it to break 1.12 and fall to 1.1175 and 1.1150. Even a revisit of 1.11 levels cannot be ruled out now. Resistance is at 1.1250.
Dollar-Yen (108.87) has risen further and keeps our bullish view intact for a test of 109. It can test 109.20 on the upside and then a pull-back to 108.80 is possible.
Euro-Yen (122) remains mixed within its 121-123.5 sideways range. Within this range the possibility is high of it to move up to 123-123.5 in the coming sessions.
Aussie (0.6960) is heading towards the crucial support level of 0.6950 as expected. Though an intermediate bounce to 0.6975 from 0.6950 is possible. the broader bias is negative for it to break 0.6950 and fall to 0.6900 eventually.
Pound (1.2512) is continuing to hold above 1.25 but is not gaining strength. The outlook is bearish for it break 1.25 and fall to 1.2350 in the coming days. Resistances are at 1.2550 and 1.2600.
USDCNY (6.8857) has come-off from its high near 6.8950. The resistance around 6.90 seems to be holding well. A break below 6.88 can drag it to 6.86 and 6.85 in the coming sessions. Broadly, the pair is retaining its 6.83-6.90 sideways range.
As expected, the Dollar-Rupee (68.6625) bounced towards 68.80 yesterday. A break A break above 68.80 can take it further higher towards 69 in the near term. We expect the Dollar-Rupee to remain range bound between 68.30 and 68.80 (narrow) or 68.30-69 (broad) for some time before we see a fresh fall to our preferred level of 68.
INTEREST RATES
Yields sustain higher. The US Federal Reserve Chairman Jerome Powell’s testimony on Wednesday and Thursday will be watched closely by the market to get hints on the rate cut front. The outcome of this event could influence the yield movement for the rest of the week.
The US 2Yr (1.88%), 5Yr (1.85%) and 10Yr (2.04%) yields were up yesterday while the 30Yr (2.52%) was marginally lower. The view remains the same. The yields can move higher/consolidate in the near term before the overall downtrend resumes. The 10Yr has room to test 2.08%-2.10% on the upside in the near-term while it remains above 2%. Similarly, the 5Yr can rise to 1.88%-1.90% in the near term.
The German yields remained stable at the near-end while the far end has dipped slightly. The 2Yr and 5Yr yields were stable at -0.75% and -0.63%. The 10Yr and 30Yr were down 1 bps each and are trading at -0.37% and 0.23%. Yields on the near end have room to move higher in the near-term. The 5Yr can move up to -0.60% and the 10Yr can test -0.30% on the upside.
The 10Yr GOI (6.5621%) tumbled to test the 6.60%-6.55% support zone again yesterday. As mentioned yesterday, the current fall can halt around 6.55%. The 10Yr GoI is likely to reverse higher from around 6.55% and rise to 7.0% and 7.10% in the coming weeks.
