STOCKS
Equities have bounced-back as the impact of the US-Iran tensions on the market seems to be easing. We will have to see if the global indices can sustain higher and there is no further escalation on the US-Iran front which can take the market further up. Broad ly the near-term supports on the Dow and DAX seems to be holding well and keeps alive the chances of seeing a rise. Nikkei has to break above an intermediate resistance to regain strength. Shanghai continues to hover around its crucial resistance region. Sensex and Nifty have tumbled yesterday and have to see if they can take cues from the global markets and bounce-back today.
Dow (28703.38, +68.50, +0.24%) has bounced from the low of 28418.3. The near-term outlook is mixed. If it manages to sustain above 28500, a rise to 29000-29050 can be seen in the coming days. However, we reiterate that 29000-29050 is a strong resistance which can cap the upside and trigger a corrective fall going forward.
DAX (13126.99, -92.15, -0.70%) declined as expected and indeed much beyond 13000 yesterday on intraday trades and has bounced-back well from the low of 12948.17. It is important now for the index to rise past 13200 in order to ease the downside pressure move up again to 13200-13400 levels and also to keep the sideways consolidation intact. Inability to breach 13200 in the coming days will increase the danger of seeing a fall to 12800-12700.
Nikkei (23554.44, +349.58, +1.51%) has bounced-back sharply. 23400 will now be a good support and 23670 is a key resistance. A strong break above 23670 will bring back the bullishness and take the index higher to 24000 again. The index will come under pressure only if it declines below 23400 from here. But that looks less likely.
Shanghai (3092.63, +9.22, +0.30%) continues to hover around the crucial 3100-3125 resistance region. We retain our view that a strong rise past 3125 will be bullish to see 3300-3400 and even higher levels in the coming months. But, while the 3100-3125 resistance zone holds, a dip to 3040-3035 is possible in the near term.
Nifty (11993.05, -233.60, -1.91%) and Sensex (40676.63, -787.98, -1.90%) tumbled yesterday breaking below their key support levels of 12100 and 41000 respectively. Nifty can now face resistances at 12070 and 12130 while the Sensex has resistance at 41300. They have to break above these hurdles to ease the downside pressure. While below these resistances, the outlook will be bearish to see a fall to 11900-11800 on the Nifty and 40100-40000 on the Sensex.
COMMODITIES
Commodities are in a corrective phase after the recent rally seen since last week. We may expect bearishness for the next few sessions.
Expected resistance near 70 has held on Brent (67.95) as it has come off sharply after briefly testing 70+ levels. The corrective dip could be limited to 66 on the downside from where another fresh bounce towards 69-70 cannot be negated in the medium term. Watch price action near interim support at 66.
Nymex WTI (62.40) has fallen too and could have scope for a test of 61-60.50 in the near term.
Gold (1561.70) has held below immediate resistance near 1590 and while that holds, we may see a corrective dip towards 1550/40 before a bounce is seen.
Silver (18.07) could test the earlier resistance turned support near 17.50. Near term looks bearish.
Copper (2.7915) has moved up slightly. But we cannot negate a test of 2.75/70 in the near term.
FOREX
Currencies could possibly see some corrective move as a brief period of cool off can be expected after the US-Iran tensions emerged last Friday. However, until any new developments are noted, we may expect a sigh of relief for the otherwise volatile markets for a couple of sessions at least.
Dollar Index (96.65) has dipped slightly and could come down towards 96 in the near term. That has kept the Euro (1.1193) higher but it is likely to trade below 1.1239 for the next few sessions.
Dollar-Yen (108.45) has bounced back well from 107.77 and could move up towards 109 in the near term. Near term is bullish for the rest of the week.
EURJPY (121.40) has risen as expected and could rise further towards 121.90-122 in the near term before falling back from there.
Pound (1.3172) has bounced higher and could be ranged in the 1.30/2950-1.32 region for now.
Aussie (0.6931) is heading towards support near 0.69 and looks bearish in the near term.
USDCNY (6.9598) has come down towards support near 6.95. It would be important to see if it breaks lower or bounces back from 6.95 itself. That would be the driver for the next course of movement in the medium term.
Dollar-Rupee (71.94) came off from expected 72.15 and while that holds we may expect some corrective dip towards 71.80/60 over the next 1-2 sessions. However, charts have room to allow for a rise towards 72.30/50 on the upside which cannot be negated while USDINR trades above 71.50.
INTEREST RATES
The US Treasury yields have bounced-back yesterday as the impact of the US-Iran conflict seems to be fading out. If the Treasury yields manage to sustain higher, they can move up further in the coming days and negate the bearish view mentioned yesterday. The German Yields remain lower and needs to be seen if they can bounce from current levels itself or after a near-term dip. The Indian 10Yr GoI has risen further and keeps our bullish view intact.
The US 2Yr (1.55%), 5Yr (1.61%), 10Yr (1.81%) and 30Yr (2.29%) Treasury yields have bounced back yesterday. The support at 2.20% on the 30Yr has held very well. It will have to be seen if it can sustain above 2.25% now. While above 2.25% a rise again to 2.35%-2.40% can be seen and it will reduce the danger of seeing 2.13% on the downside that we had mentioned yesterday. The 10Yr on the other hand has to breach 1.85% to regain strength and move up to 1.9% again. We will have to wait and watch.
The German 2Yr (-0.63%), 5Yr (-0.56%), 10Yr (-0.29%) and 30Yr (0.24%) yields remain subdued. A bounce from current levels will reduce the danger of seeing a fall to 0.15% on the 30Yr and -0.35% on the 10Yr. It will also bring back the bullishness into the picture and take the 10Yr higher to -0.20% and the 30Yr to 0.35%. We will have to wait and watch.
The 10Yr GoI (6.5690%) has risen and closed above 6.55% yesterday. The bullish outlook remains intact. While above 6.55%, the yield can rise to 6.60%-6.65%. Also the current upmove may have the potential to take the 10Yr GoI back to 6.70% again over the medium term.
