STOCKS
Dow and DAX have bounced from their day’s low yesterday indicating buying interest at lower levels. This keeps our broader bullish view intact in the equity segment. A consolidation in the Dow and Nikkei looks like a possibility before a fresh rise is seen. On the other hand, DAX, Sensex and Nifty will need to sustain above their immediate supports and also should get a strong follow through rise today in order to avoid a corrective fall and see a rally from here itself. Shanghai is closed today.
Dow (25745.60, +299.66, +1.18%) has bounced from the low of 25200 yesterday. Our view remains the same. The broader picture is bullish to see 27000-28000. Immediate support is at 25000 and a slightly deeper one is at 24500 and they can limit the downside now. A sideways consolidation between 25000 and 26500 is a possibility before the rise to 28000 happens. As mentioned yesterday only a strong break below 24500 will turn the outlook negative to see a much deeper fall.
DAX (12177.87, +83.93, +0.69%) is getting support below 12000. But a strong rise past 12200 is needed to regain the strength. Else the corrective fall to 11900-11600 will still remain possible before we see a fresh leg of upmove. While above 11600, the broader picture remains bullish to see 12800 and 13000-13200 in the coming weeks.
Nikkei (22474.65, +214.86, +0.97%) continues to oscillate around 22500. Our broader bullish view remains intact to see a rise to 23000-23200 initially and then 23800-24000 eventually over the medium-term. A strong rise past 22500 can accelerate the rally. 22000 and 21500 are important supports that can limit the downside for now.
Nifty (10288.90, -16.40, -0.16%) managed to stay afloat rather than seeing a deeper fall below 10200 that we had feared yesterday. However, a strong rise past 10400 will be needed to completely negate the chances of seeing a break below 10200 and a fall to 10000. We will have to wait and watch the price action today to gauge whether the rise to 10500-10750 is going to happen from here itself or after a fall to 10000.
Sensex (34842.10, −26.88, -0.08%) on the other hand will need to rise past 35000 decisively in order to move up to 36000 and higher levels from here itself and also to avoid a deeper corrective fall to 34000 or 33000.
Shanghai (2979.55, +8.93, +0.30%) is closed today.
COMMODITIES
Slight recovery seen in crude and Copper while Gold and Silver remains stable. The rise in Copper comes in after Chile (biggest Copper producing nation) called for a 2-week shutdown at the Chuquicamata mine after the death of a second worker. While outlook on Copper supply and production remains unclear just now, Copper prices may tend to move higher in the near term.
Brent (41.49) and Nymex WTI (39.11) have risen again but is likely to remain stable in the 37.50-45 and 35-43.50 region respectively. Volatility within the mentioned region looks possible with some a dip towards the lower end of the range in the coming week. In the longer term, we may expect some consolidation or dip before further rally starts again.
Gold (1772.00) continues to trade higher and is holding well above 1760. Scope for a rise towards 1780/1800 still looks possible for the near term, 1800 being the next important level above 1760.
Silver (17.88) is up too. Although it has attempted to dip in several sessions in the last 1-2 weeks, it has managed to hold above 17.50 for now keeping our bullish view towards 19 intact. Only a break below 17.50 would force us to focus on lower levels. Till then price could be steady above 17.50.
Copper (2.6670) has held above 2.60, the support on the daily charts. We keep our earlier view of seeing a rise towards 2.70/80 intact for the coming week. View is bullish above 2.60.
FOREX
Dollar Index and Euro looks stable just now. Aussie may rise getting some boost from a strong Copper. Pound has some room for a dip before it can rebound. EURJPY looks weak while USDJPY could rise from current levels targeting 107.66.Yuan is stable but looks weak towards 7.10. Dollar Rupee is trading around the lower support near 75.60 and needs to move sharply on either side to give clarity on further direction. For now a range of 75.60-75.85 looks likely while we are on a look out for a possible break below 75.60.
Dollar Index (97.38) has scope to rise to 97.75/80 in the near term before another dip is seen. Overall some sideways trade in the 97.85-96.40 region looks possible for the near term.
Euro (1.1220) may get near term support at 1.12 which would need to break to head lower towards 1.1180/70. While Dollar Index looks stable, Euro could remain stable too in the 1.1355-1.1200 region for now with possible extension to 1.1170.
EURJPY (120.22) is almost stable and could trade within 121.20-119.80 region in the near term. Within the mentioned range, we may expect a fall to the lower end of the range initially before a rise is seen from there again.
Dollar-Yen (107.15) has scope for a near term rise to 107.56/66 within a broad range of 106-108 mentioned yesterday. Overall immediate view is bullish.
Aussie (0.6883) has moved u from lower levels seen yesterday. As mentioned yesterday, the support near 0.68 is holding well and we may expect a bounce back towards 0.6980 in the coming sessions next week. While Copper looks bullish, Aussie could get some positive boost as well in the near term.
Pound (1.2418) is almost stable and has not seen much of a movement. View is bearish for a test of 1.2350-1.2300 before a rise from there is seen.
USDCNY (7.0770) could be headed towards 7.10 while above support at 7.06. View is bullish.
USDINR (75.6650) tested 75.57 yesterday before moving up to close higher. While above 75.60, we may continue to see trade within 75.85-75.60 in the near term. We would keep a close watch to see if 75.60 breaks to the downside, which could then give some more room for Rupee strength.
INTEREST RATES
The US Treasury yields remain lower and have room to dip to test their supports in the near-term before reversing higher again. The German yields have dipped further and are turning weak. A further fall is likely in the coming days. The 10Yr GoI can continue to remain stuck in a narrow range.
The US 2Yr (0.18%), 5Yr (0.33%), 10Yr (0.68%) and the 30Yr (1.43%) Treasury yields remain stable. Immediate supports are at 1.40% for the 30Yr and 0.66% on the 10Yr. Slightly deeper supports are at 1.30% (30Yr) and 0.60%-0.58% (10Yr). A near-term dip to test these supports is likely and then the Treasury yields can reverse higher to begin a fresh leg of upmove. Whether the preferred bounce happens from the immediate supports itself or from the deeper ones will have to be seen.
The German 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.47%) and the 30Yr (-0.04%) have dipped further across tenors as cautioned yesterday. The 10Yr can now test -0.50% and the 30Yr can dip to -0.10% in the near-term. As mentioned yesterday, an extended fall below these levels can drag the yields further lower to -0.60% (10Yr) and -0.20% (30Yr) eventually.
The break above 6.05% that we had expected yesterday on the 10Yr GOI (06.45 GS 2029, 6.0035%) did not happen. Instead the yield remained stuck in a narrow range of 6%-6.05%. The near-term outlook is unclear and the 10Yr GoI can continue to trade in this narrow range. In case of a break below 6%, a dip to 5.95% is possible.
The 10Yr (05.79 GS 2030, 5.8922%) has room to test 5.8750%-5.86% on the downside before reversing higher again.
