STOCKS
Asian indices continue to remain strong while the Dow looks vulnerable to dip in the near-term before moving up again. Shanghai, Sensex and Nifty has risen above their key near-term resistances and looks bullish to extend the upmove. Nikkei is bullish and can gain momentum on a strong rise past its immediate resistance. DAX is stuck in a narrow range within its broader uptrend.
Dow (25871.46, −208.64, -0.80%) has dipped and closed below 26000 on Firday. Our view of seeing a dip to 25000 on the downside first remains intact. In case of a break below 25000, the downside can extend up to 24600-24500 (less preferred). But from a bigger picture, 25000 and 24500 are important supports. While above 24500 (revised lower from 25000 mentioned last week), the broader view is bullish to see a rise to 27000-28000 in the coming weeks.
DAX (12330.76, +49.23, +0.40%) continues to remain stuck in between 12200 and 12500. As mentioned on Friday, a breakout on either side of 12200 or 12500 will decide whether the index will fall to 12000 and 11600/11500 first and then resume the uptrend or will go up to 12800 and 13000-13200 from here itself. We reiterate that the bigger picture is bullish as long as the DAX reamisn above 11500 to see a rise to 13500-13800 in the coming months.
Nikkei (22499, +20.21, +0.09%) sustains above 22000 but will need a strong rise past 22500 in order to gain momentum and move up to 23000-23200 in line with our expectation. 22000 and 21500 are important supports while above which the broader picture will continue to remain bullish to see a test of 23800-24000 on the upside. As mentioned on Friday only a break below 21500 will negate the bullish view and turn the outlook bearish. But that looks less likely.
Shanghai (2977.64, +10.01, +0.34%) has sharply towards 2975 in line with our expectation. Our bullish outlook is intact. The corrective dip from 2975 to 2950 mentioned on Friday seems to be not happening. Instead, the Shanghai can move up straight away to 3000-3025 from current levels. 2960-2950 can be a good immediate support zone.
Sensex (34731.73, +523.68, +1.53%) and Nifty (10244.40, +152.75, +1.51%) have risen and made a strong close above 34000 and 10200 respectively. The view is bullish. Sensex can rise to 36000 while above 34000 and the Nifty can target 10500-10750 while it trades above 10000 now.
COMMODITIES
OPEC+ countries are attempting to adhere to the production cut agreement in a better way and could come up with a better compliance over Jul-August compared to about 87% seen for May. Crude prices trade higher just now but could be limited on the upside as interim resistances look likely to hold in the medium term leading to another corrective dip before a sharp rally sets in later on. Gold Silver and Copper are all up with significant rise seen in Gold breaking above resistance at 1760. If it manages to sustain above 1760, it could head towards 1780-1800 in the near term. Silver and copper are bullish for the near term.
Brent (42.40) and Nymex WTI (40.01) trades higher and could head towards 45 and 44 respectively from where another corrective dip could be possible in the near to medium term.
Gold (1771.20) and Silver (18.09) have both risen sharply as Silver did not break below our mentioned support at 17.5 and instead rose back towards 18+ levels. While Silver could still have some room towards 19, Gold could be bullish too for the near term targeting 1780-1800 while above earlier resistance turned support at 1760. Sustenance of Gold above 1760 is bullish for the medium term.
Copper (2.6265) has also risen along with the rise in other commodities, targeting 2.70/80 on the upside (revising earlier resistance of 2.65 that we were looking at) in the next few weeks.
FOREX
Dollar Index is bullish for the near term and Euro could test 1.1145 on the downside. EURJPY could have interim support but overall looks bearish for the longer term. Aussie and Pound too have immediate supports just now from where a bounce looks possible. Dollar Yen is likely to remain stable for sometime before moving up towards 108. Weakness in Euro and Yuan could keep Rupee weak too in the near term. A rise in USDCNY towards 7.10 is possible while USDINR could be ranged above 76 while we look at 76.25 to see price action for further clarity.
Dollar Index (97.58) is trading in the red, coming off from 97.74 just now but we are bullish on the index for an eventual rise to 98.50 in the near term. A corrective dip from 98.50 is possible before another rise seen in the longer run. For now, the index is bullish with some interim short corrective dips.
Euro (1.1188) has fallen below 1.12 in line with our expectation and could test 1.1145 before again bouncing back from there. Overall view is bearish.
EURJPY (119.62) has immediate support at 119.45 which if holds could produce a short corrective upmove in the near term. But a fall below 119.45 could take the pair down towards 119 or lower in the longer run. View is bearish for EURJPY.
Dollar-Yen (106.87) is almost stable above support at 106.67 which if holds could take the pair higher towards 108 in the medium term. Repeating our view mentioned on Friday, view is bullish while above 106.67.
Aussie (0.6849) has immediate support near 0.6770-0.6755 (revised lower from 0.68) which if holds could produce a bounce towards 0.68-0.69. Additionally the rise in copper could boost Aussie to move up in the near term. In the longer run, we do not look for a sharp rise above 0.71.
Pound (1.2368) has support near 1.2320/15 below current levels which could hold and produce a bounce back towards 1.2450. Failure to bounce from 1.2315 could take Pound down to 1.22.
USDCNY (7.0778) is holding above 7.0704 and could see a bounce from here towards 7.08-7.10 in the near term. View is bullish while above 7.07.
USDINR (76.19) came down to close at 76.19 although it moved up above 76.25 on Friday. While below 76.25, we may expect a narrow sideways trade in the 76.0-76.25 region but a break on the upside could open up chances of testing 76.40. We are cautious to see a bullish USDINR in the near term.
INTEREST RATES
The US Treasury yields continue to trade lower and have dipped further. We expect the Treasury yields to come down further this week and then move back up again thereafter. The German yields continue to trade weak and look vulnerable to dip in the near-term. Our expected bounce is not happening. The 10Yr GoI can remain in a narrow range for a few sessions and can dip within this range now.
The US 2Yr (0.19%) and 5Yr (0.33%) Treasury yields remain stable whiel the 10Yr (0.69%) and the 30Yr (1.46%) have dipped slightly. Our view of seeing a dip to 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr remains intact. Thereafter the yields can reverse higher again. We reiterate that a strong rise past 0.75% on the 10Yr and 1.55% on the 30Yr is needed to negate the above mentioned fall.
The German 2Yr (-0.69%), 5Yr (-0.66%), 10Yr (-0.42%) and the 30Yr (0.01%) remain lower. The yields look weak in the near-term. The 10Yr can dip to -0.50% while the 30Yr can test -0.10% on the downside. The bounce-back move that we had been expecting over the last week seems to be not happening.
The 10Yr GoI (5.9803%) remained stable below 6% on Friday and keeps our view of testing 5.95% on the downside intact. We expect the 10Yr GoI to remain in the range of 5.95%-6.05% for a few days.
