STOCKS
Dow sustains above 26000 but will need to gain momentum in order to move up straight away from here without seeing a dip to 25000. DAX has broken the range on the upside and is bullish to see further rise. Nikkei and Shanghai remains strong and keep our bullish view intact to move up further. Sensex and Nifty are coming closer to their intermediate resistances from where a short-lived corrective dip is possible before extending the rally further.
Dow (26156.10, +131.14, +0.50%) sustains higher above 26000 but seems to lack strength. A strong rise past 26500 will be needed to confirm that our preferred rise to 27000-28000 can happen from here itself without seeing a fall to 25000 that we had been expecting for some time now.
DAX (12523.76, +260.79, +2.13%) has broken the 12200-12500 range on the upside and keeps our bullish view intact. While this breakout sustains the rise to 12800 and 13000-13200 can happen from here itself. That will avoid the chances of seeing a fall to 12000 and lower levels that we had been cautioning over the last few days.
Nikkei (22576.63, +27.58, +0.12%) sustains above 22500 but seems to lack strength to extend the upmove. 22500-22000 is a good support cluster that can limit the downside and keep our bullish view intact to see a rise to 23000-23200 in the near-term. Also as mentioned yesterday, the index remains bullish to see 23800-24000 on the upside over the medium-term.
As expected Shanghai (2,972.97, +2.35, +0.08%) found support at 2950 and has bounced-back very well. Our bullish view remains intact. While above 2950 a rise to 3000-3025 is likely in the coming days.
Sensex (35430.43, +519.11, +1.49%) can test 36000 in the near-term from where a short-lived corrective dip to 35000/34500 is possible. The broader picture remains bullish to see an eventual break above 36000 and a rise to 36800-37000 over the next couple of weeks or may be even earlier.
Nifty (10471, +159.80, +1.55%) on the other hand has resistance near current levels itself at 10500 which we expect to hold on its first test. A dip to 10250-10200 is possible before we see the current rally extending to 10750 and higher levels.
COMMODITIES
Crude prices see a short dip while Gold has surged higher holding above 1760 and possibly targeting 1800+ in the near term. Silver is also bullish and could move towards 19. Copper could be ranged near current levels for a few sessions with an eventual upmove possible in the near term.
Brent (42.41) and Nymex WTI (40.09) have both dipped a bit. A test of 45 and 44 respectively is still to be seen which is likely to hold for the medium term, leading to another decline before a faster rally sets in. Brent has immediate trend support above 40 while WTI has a similar support above 39. We repeat from yesterday’s reading that while near term looks bullish just now we may expect short corrective dips by end of this week or the next. Longer term outlook for crude prices however remains bullish.
Gold (1787.10) has risen well while support at 1760 is holding well for now. The breakout from the sideways consolidation in the 1680-1760 region has resolved to the upside contrary to our expectation of seeing a fall below 1680-1660 eventually. While that has been a surprise just now, we cannot negate a rise above 1800 going forward. While above 1760, Gold could target 1800-1820 initially and higher if the momentum sustains.
Silver (18.10) has also risen after a short corrective dip seen yesterday. We continue to keep our bullish view intact with a target of 18.50-19.00 in the near to medium term.
Copper (2.6570) is showing signs of bullishness and while above 2.60, there is room for a rise towards 2.70/80 in the near term. Overall view remains bullish.
FOREX
Dollar Index has dipped pulling up Euro higher. Dollar Yen looks stable. EURJPY, Pound and Aussie may have room on the upside for the near term. Yuan has strengthened but could be limited to 7.06 before again weakening towards 7.10. Dollar Rupee could see some downside move towards 75.50/40 while below 75.80/75.
Dollar Index (96.63) did not test 98.50-98.85 and instead continued the fall seen from 97.74 on Monday. A test of 96.37-96.00 looks possible before a possible bounce is seen. Failure to bounce from 96 could open up chances of further bearishness in the near term.
Euro (1.1318) has risen well above 1.1318 and while the dollar index remains weak, we may expect some more rise in Euro 1.1355-1.1370 in the near term. View is bullish.
EURJPY (120.61) has dipped slightly after testing 121.10 yesterday in line with our expectation of seeing a dip from anywhere within 121.0-121.3. Near term could be stable juts now within 121.20-119.80 region.
Dollar-Yen (106.55) is likely to remain above 106 just now and could trade in the 106-107 region for a few sessions. Only on a break below 106, we would look for lower levels to be seen in the longer run; else we may expect some sideways consolidation to be seen in the near term.
Aussie (0.6944) has support on the weekly chart just below 0.68 and while that holds, the currency looks bullish for the near term. A rise towards 0.70-0.71 looks possible for the near term.
Pound (1.2524) looks bullish for the near term with a possible rise towards 1.26-1.2730.
USDCNY (7.0673) has broken below 7.07 but could soon see a bounce back while trend support at 7.06 holds on the daily candles. Overall view remains bullish for USDCNY targeting 7.10 again in the coming sessions.
USDINR (75.65) came down sharply and closed below our expected 75.75 instead of bouncing back towards 76 again. While below 75.75/80, we may expect a test of 75.50/40 in the near term. For now the chances of again rising back to 76 or higher has reduced and we may expect a bounce from 75.40 towards 75.75 in the next few sessions. Overall Rupee strength looks likely just now. A stronger Nifty, Yuan and Euro could impact Rupee positively just now unless we again see any intervention from the RBI on the buy side.
INTEREST RATES
The immediate supports on the US Treasury yields mentioned yesterday have held very well and the yields have bounced yesterday. A further rise past the immediate resistances will be bullish to see more rise in the coming weeks. The German yields have also risen back thereby easing the danger of seeing a fall that we had mentioned yesterday. A follow-through rise today will be bullish to see further rise in the coming days. The 10Yr GoI can move up within the preferred narrow range.
The US 2Yr (0.19%) and 5Yr (0.33%) Treasury yields remain stable while at the far-end, the 10Yr (0.72%) and the 30Yr (1.50%). have risen sharply from levels seen in early Asian trades yesterday. The immediate supports are holding well and the near-term dip that we had been expecting seems not to be happening. As mentioned yesterday, a strong rise past 0.75% on the 10Yr and 1.55% on the 30Yr will confirm the resumption of the upmove and take the yields higher to 0.90% (10Yr) and 1.70% (30Yr) again in the coming weeks.
The German 2Yr (-0.68%), 5Yr (-0.66%), 10Yr (-0.41%) and the 30Yr (0.07%) have risen back across tenors. This has reduced the chances of seeing a fall that we had mentioned yesterday and also keeps alive the possibilities of moving higher again. A follow-through rise in the coming days will need a watch to see if the yields can move up to -0.30% (10Yr) and 0.25% (30Yr) again.
The 10Yr GoI (6.0302%) sustained above 6% yesterday and is moving up within our preferred 5.95%-6.05% range to test 6.05% in line with our expectation. We will have to watch the price action around 6.05% to see if the yield can break above it and move further up to 6.10% or falls-back to retain the 5.95%-6.05% sideways range.
