STOCKS
Equities continue to look positive in the near-term with little upside left to be tested before we see a fall again. Though the Dow has come-off from 24500, it is likely to move back again while it remains above 24000. DAX can break the range on the upside now and move up in the coming days. Shanghai is back into its 2800-2850 range thereby reducing the danger of a fall that we had mentioned yesterday. Sensex and Nifty seem to gain strength slowly and could move higher in the coming days. Nikkei is closed today on account of a public holiday.
Dow (24101.55, −32.23, -0.13%) tested 24500 and has come-off from there. 24000 will be an immediate and important support to watch. While above 24000, our view of seeing 24700-25000 on the upside will remain intact before we see a fresh leg of fall.
DAX (10795.63, +135.64, +1.27%) has risen past 10700 and is likely to breach further above 10800 in line with our expectation. Such a break will open doors for our preferred rise to 11000 and 11300. As we had been mentioning for some time, we will be looking for a fresh fall from the 11000-11300 region.
Nikkei (19771.19, −12.03, -0.061%) is closed today.
Shanghai (2824.39, +14.36, +0.51%) is managing to hold above 2800 after bouncing from yesterday’s low of 2758. This has reduced the danger of seeing 2750-2730 on the downside that we had mentioned yesterday. We may now see the Shanghai continuing to trade in the 2800-2850 range again. Also while above 2800, the chances of seeing 2880-2900 on the upside on a break above 2850 is still alive.
Nifty (9380.90, +98.60, +1.06%) tested 9400 and has closed just below it yesterday. We see increased chances of the Nifty breaking above 9400 which will then pave way for 9500-9700. However we expect the Nifty to reverse lower again from 9700. As such we will be watching closely the price action around 9700.
Sensex (32114.52, +371.44, +1.17%) has closed above 32000 yesterday. While it manages to sustain above 32000, a further rise to 34000-34500 and even higher levels is possible in the short-term.
COMMODITIES
Slight recovery is seen in crude prices just now but is likely to remain volatile in the near term. Gold has moved up and could have scope to move higher. Silver and Copper also trade higher but may test crucial resistances above current levels.
Brent (21.40, June futures) and Nymex WTI (14.30, June futures) are both stable just now and could see some sideways movement in the $25-15 and $20-$10 region respectively. Unless a sharp upmove is seen above immediate respective resistances near $25 and $20, we may expect range trade for the near term within above mentioned levels.
Gold (1725.50) is bullish while it can manage to stay above 1720 and move up from there. Only a sharp fall from 1720 dragging it further below 1700 would bring in bearish sentiment for the near term. Till then Gold could remain fairly bullish towards 1780-1800.
Silver (15.43) is bearish while below immediate resistance at 16 and could fall towards 14.50 in the medium term. Lack of sharp movement could keep prices in the 15-16 range for now.
Copper (2.3570) could trade in the 2.30-2.40 region for the near term with an attempt to break above 2.40. View is stable for now.
FOREX
Fall in Dollar Index has pulled up Euro and dragged USDJPY lower. EURJPY and USDCNY also trades lower just now but while EURJPY looks bearish, USDCNY could remain stable while above 7.05. Aussie and Pound attempt to move up and could soon trade higher. USDINR may move up in the next 1-2 sessions.
Dollar Index (99.67) has finally broken below 100 and could possibly test 99 before again bouncing back from there. On the downside there is room to fall towards 99-98 for the near term.
Euro (1.0848) has risen and could be headed towards 1.09-1.10 in the near term. View is bullish for the coming sessions.
Dollar-Yen (106.55) finally dipped below 107 after trading in a narrow range for almost 2-weeks. A further decline to 106-105 could be on the cards with maximum downside of 104 within the current move. View is bearish while below 107.
EURJPY (115.60) has dipped again below 116 and there is room for a fall towards 114 before a possible bounce is seen. Above 114, 115 could be an interim support. Overall EURJPY looks bearish.
The rise in Aussie (0.6529) could possibly indicate near term bullish signal that could take it higher towards 0.66-0.68 in the next 1-2 weeks. Watch for a sustained move above 0.64 to keep the upmove intact.
Pound (1.2471) needs to break above 1.25 to move higher towards 1.27 gradually. Failure to break above 1.25 just now could drag it lower towards 1.22/20. Watch price action near 1.25 over the next couple of sessions.
USDCNY (7.0756) has dipped a bit but is likely to remain volatile while above 7.05. Bullish sentiment remains intact unless a fall below 7.05 is seen.
USDINR (76.20) may continue to trade in the 76.50-76.00 region for the near term with some possibilities of seeing a dip towards 75.80/90 in the near term. Watch price action near 76 just now to see a bounce back towards 76.50 in the next few sessions.
INTEREST RATES
The US Treasury yields have failed to sustain the bounce seen on Monday and has come-off again. The broader bearish view remains intact. Market will be waiting to see the outcome of the US Federal Reserve meeting tonight. While further rate cuts are not expected, it will have to be seen if the Fed has anything more and new on the stimulus front. The German yields remain lower and keep the bearish view intact to see further fall in the coming weeks. The 10Yr GoI can dip to revisit the crucial supports and then can bounce-back again.
The US 2Yr (0.21%) Treasury yield remains stable while the 5Yr (0.38%), 10Yr (0.61%) and 30Yr (1.20%) yields have dipped yesterday failing to hold on to the bounce seen on Monday. This keeps alive the chances of seeing a fall to 0.50%-0.40% on the 10Yr and 1.10% on the 30Yr. As mentioned yesterday, 10Yr has to breach 0.75% and the 30Yr has to break above 1.30% in order to negate this bearish view and turn positive.
The German 2Yr (-0.71%), 5Yr (-0.66%), 10Yr (-0.47%) and 30Yr (-0.07%) yields remains stable and lower. The bias is negative to see a fall to -0.70% on the 10Yr and -0.30% on the 30Yr in the coming weeks. As mentioned yesterday, the 10Yr has to break above -0.40% and the 30Yr hs to breach 0.04% to negate the bearish view.
The 10Yr GoI (6.1370%) has come-down and remains below 6.20% as expected. Our view of seeing a test of 6% on the downside again remains intact. As mentioned yesterday, we can look for a range of 5.95%-6.20% for some time.
