STOCKS
Confusion and then a clarification on the news about the US-China trade deal has ended had caused a very short-lived volatility in the market. But broadly our view remains intact. The Asian indices look relatively stronger than the Dow and DAX. Nikkei, Shanghai, Sensex and Nifty continue to show strength to move higher in the coming days. On the other hand, Dow will still be vulnerable to see a dip first before resuming the upmove if it fails to see a follow-through rally today. DAX is mixed and stuck in a narrow range within its broader uptrend.
Dow (26024.96, +153.50, +0.59%) has bounced-back well from the low of 25667.68 yesterday. However, it will have to be seen if it manages to sustain higher and get a follow-through rise today in order to negate our preferred fall to 25000 first before resuming the uptrend to target 27000-28000 on the upside.
DAX (12262.97, −67.79, -0.55%) is still stuck in 12200 and 12500. Our view remains the same. A breakout on either side of 12200 or 12500 will decide whether a fall to 12000 and 11600/11500 will happen first before a fresh rally begins or will the index go up to 12800 and 13000-13200 from here itself. The broader picture remains bullish to see a rise to 13500-13800 in the coming months while the DAX remains above 11500.
Nikkei (22574.56, +137.29, +0.61%) has risen above 22500 and keeps our bullish view intact of seeing 23000-23200 We reiterate that from a bigger picture a rise to 23800-24000 is on the cards while the Nikkei trades above the important support levels of 22000 and 21500.
Shanghai (2963.69, −1.58, -0.05%) has come-off from the high of 2983.48 yesterday. However, it is getting support at 2950 as expected. While above 2950, our bullish view is intact of seeing 3000-3025 on the upside in the coming days.
Nifty (10311.20, +66.80, +0.65%) has moved up further and is keeping our bullish view intact. Nifty can test 10500 and then can see a short-lived dip to 10250 before surging to 10750 and higher levels eventually.
Sensex (34911.32, +179.59, +0.52%) on the other hand can find intermediate resistance at 35500 from where a dip to 34500 is possible before we see a fresh rally targeting 36000 and higher levels.
COMMODITIES
Commodities trade higher overall. Crude and Copper prices could move up in the near term while Gold and Silver have dipped slightly but continue to trade above support levels. While we keep upside possibilities intact for Gold and Silver in the near to medium term, any dip below near term supports could indicate a sharper fall just now before rebounding later. We wait to see price action from here for the next 1-2 days.
Brent (43.03) and Nymex WTI (40.61) have moved up and could test 45 and 44 respectively in the near term before a dip is expected again. Overall near term looks bullish just now with short corrective dip likely to follow by end of this week or the next. Longer term outlook for crude prices however points to the upside.
Gold (1762.50) and Silver (17.80) have both dipped slightly after a sharp rise seen yesterday. But we continue to look at supports near 1760 and 17.5 respectively which needs to break on the downside to turn bearish for the medium term. Till then we may not fully negate chances of testing 1780 and 18.50-19.00 levels again in the near term.
Copper (2.6515) has moved above 2.65 and is now headed towards 2.70/80 in the medium term. Near term looks bullish. We may look for a corrective dip either from 2.70 or from higher levels of 2.80 in the medium term.
FOREX
Dollar Index has dipped slightly but could again resume to rise in the near term. EURO and EURJPY have risen but we would have to see if Euro manages to rise above 1.13 and EURJPY above 121.30 in the near term. Aussie and Pound have also moved up on Dollar weakness. USDCNY looks bullish while above 7.07. USDINR could see some fall just now while below 76.10; a dip to 75.75 could be on the cards.
Dollar Index (97.01) may find it difficult to rise above 98.50/85 just now. The index fell from 97.74 not attempting to rise above 98 yesterday. However, the index could pick up upward momentum in the near term and target to rise to 98.50/85 before another dip is seen. Immediate downside could be limited to 96.80/70.
Euro (1.1273) bounced back from 1.1168 itself, higher than our mentioned 1.1145. A sustained rise above 1.1293-1.1300 if seen could again open up bullishness for the medium term but we would be cautious for another dip from 1.13 or slightly higher in the near term.
EURJPY (120.82) has moved up as expected. A rise to 121.0-121.3 is possible in the near term before another dip is seen. Immediate view is bullish within the longer term bearishness.
Dollar-Yen (107.20) has moved up and while above immediate support at 106.74, the pair looks bullish towards 108+ in the near term.
Aussie (0.6923) has moved up as expected but faster than our immediate view of a rise to 0.69 mentioned yesterday. A further rise to 0.70/71 is on the cards for the near term. Aussie to move up in the near term. In the longer run, we do not look for a sharp rise above 0.71.
Pound (1.2482) has risen to higher than pour mentioned 1.2450. A test of 1.23 or higher could be possible before another dip sets in.
USDCNY (7.0730) has dipped slightly but overall looks bullish while above 7.07.
USDINR (76.0250) came down to close at 76.0250 after failing to sustain a rise above 76.25 the previous week. Our mentioned test of 75.95-76.00 was seen yesterday and we may expect a break below 75.95/900 today heading towards 75.75 on the downside. Else a bounce back to levels above 76.05/10 could negate any near term hope of Rupee strength. Range for the next 2-3 sessions could be seen in the 75.75-76.10 region.
INTEREST RATES
The US Treasury yields remain lower but stable. There is support near current levels and it will have to be seen if the Treasury yields manage to bounce from here itself or after a slightly deeper dip. The German yields have dipped further as expected and can move down further in the coming days. The 10Yr GoI retains its narrow sideways range and can oscillate within this range for some more time.
The US 2Yr (0.19%), 5Yr (0.33%), 10Yr (0.69%) and the 30Yr (1.45%) Treasury yields remain lower but stable across tenors. The 10Yr has support at current levels and the 30Yr has at 1.40%. It will have to be seen if the yields can reverse higher from here itself or after a slightly deeper fall to 0.60%-0.58% (10Yr) and 1.30%-1.25% (30Yr) that we had been mentioning for some time. A strong rise past 0.75% on the 10Yr and 1.55% on the 30Yr is needed to bring back the strength.
The German 2Yr (-0.70%), 5Yr (-0.68%), 10Yr (-0.44%) and the 30Yr (0%) have dipped further as expected across tenors. remain lower. Our view remains the same as mentioned yesterday and the bounce-back that we had been expecting is not happening. The 10Yr can dip to -0.50% and the 30Yr can test -0.10% on the downside.
The 10Yr GoI (6.0066%) has risen above 6% yesterday. We expect the yield to retain the 5.95%-6.05% narrow range for a few more days. A rise to 6.05% – the upper end of the range is possible while the 10Yr manges to sustain above 6%.
