STOCKS
Equity indices seem to have hit a near-term hurdle and are looking vulnerable for a corrective fall. Though there is little room left on the upside for the indices like the Dow, a strong rise from current levels is unlikely. Nikkei, Sensex and Nifty can consolidate in a narrow range for some time. Shanghai has come down and can see a corrective fall. DAX looks relatively stronger among the lot and can move up in the coming days.
Dow (26870.10, +227.51, +0.85%) tested 27000 as mentioned yesterday. Though there could be room to test 27500-28000 on a break above 27000, the upside is likely to be capped. From a broader picture 27000 and 27500-28000 are key resistances on the Dow from where we expect a fresh leg of fall going forward.
The DAX (12930.98, +233.62, +1.84%) has moved up well above 12800 and keeps our bullish view intact of testing 13200 on the upside.
Nikkei (22831.96, −113.54, -0.49%) continues to trade below 23000 and can see a dip to 22500-22400 and can remain in a narrow range of 22400-23000 for some time. As mentioned yesterday, a strong rise past 23000 will be needed to take the Nikkei up to 24000.
Shanghai (3321.71, −39.59, -1.18%) has moved down and could see a corrective fall to 3300-3200 will be seen first before a fresh rally is seen. 3350 can now be a good resistance that ca cap the upside for now.
Nifty (10618.20, +10.85, +0.10%) has come-off after testing the resistance at 10830. The index can consolidate between 10500 and 10830 for sometime before we see an eventual break above 10830 and a further rise to 11000-11250 levels.
Sensex (36051.81, +18.75, +0.05%) on the other hand will have to breach 37000 decisively to move up to 38000. A sideways consolidation between 36000-37000 is a possibility for a few sessions before we see a break above 37000.
COMMODITIES
Crude prices have moved up as US stock inventory saw a sharp decline against analyst expectations. Gold and Silver look bullish for the near term with Silver having immediate resistance above current levels. Copper has dipped and could continue to fall for some more time before a decline is seen.
As expected, Brent (43.67) and WTI (41.01) have moved up aided by the strong crude draw as seen in the US weekly stock inventory report. The EIA reported a fall in crude inventories by 7.5mln barrels last week against analyst expectation of a 2.1mln drop. This has led to a sharp rise in Brent and WTI breaking above immediate resistances near 43.50 and 41 respectively. We may now look for a possible rise to 45 and 44 respectively. Immediate view is bullish.
Gold (1811.20) is almost stable but while above support near 1797 view is bullish for a bounce towards 1850/60 or even higher in the near term.
Silver (19.74) has risen a bit and could test 20 on the upside again. We will have to be cautious to see if Silver manages a break above 20 or comes off from there in the near term. Any attempt to rise above 20 again, can take it higher to 21.
In line with our expectation, Copper (2.8705) has fallen below 2.90 and could be headed towards 2.80 in the near term.
FOREX
Dollar Index (96.12) has risen after testing 95.78 yesterday and needs to some upward momentum to rise further from here. For now we may expect some sideways trade in the 97.0-96.0-95.70 region.
Euro (1.1404) is holding above 1.14 and a lower Dollar Index in the near term could take it higher towards 1.15. Note that on the medium term charts 1.14-1.15 is a crucial resistance zone which if holds, could soon produce a dip back towards 1.13 or lower. We are cautious while Euro trades above 1.14.
EURJPY (121.99) has dipped back to levels below 122 but could soon bounce back in the near term while above 121.50.
Dollar-Yen (106.95) has dipped back below 107 and while the fall sustains, it could head again towards 106.50-106.00 in the near term; although preference would be to see a rise towards 107.55.
Aussie (0.6990) is almost stable at levels seen yesterday. It needs to break above 0.70 and sustain in order to test 0.71/72 on the upside. Else a dip towards 0.68 may again come into the picture. We would wait and watch price action at current, we may expect a rise towards 0.71/72 as mentioned earlier. Our expected dip from 0.70 may not be levels for more confirmation.
Pound (1.2554) looks bearish for a fall to 1.24.
USDCNY (6.9962) has been ranged in the 7.0239-6.98 region and could continue to remain so for a few more sessions. Upside could be limited to 7.03 while we may expect a dip from there towards 7.00.
USDINR (75.1450) dipped exactly as expected yesterday and only if it sustains the fall, we may expect a test of 75 before bouncing back from there. Else we may expect a re-test of 75.50 in the near term from current levels itself.
INTEREST RATES
The US Treasury yields remain lower but stable. Key supports are coming up near current levels which we expect to hold and produce a fresh rise going forward. The German yields are also hovering above their key supports. A bounce is possible in the near-term while the manage to sustain above the supports. The 10Yr GoI has a strong resistance at 5.85% which can cap the upside and keep the broader bearish view intact.
The US 2Yr (0.15%), the 5Yr (0.28%), 10Yr (0.62%) and the 30Yr (1.32%) continue to remain stable. 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr are crucial supports which can be tested in the near-term. Thereafter we expect the yields to reverse higher and begin a fresh leg of rally going forward.
The German 2Yr (-0.68%), the 5Yr (-0.66%), the 10YR (-0.45%) and the 30Yr (-0.03%) continue to hover above their key supports at -0.05% (30Yr) and -0.45% (10Yr). While these supports hold, we expect the yields to move up to 0.05% (30Yr) and -0.35% (10Yr) in the coming days.
The 10Yr GOI (5.8154%) has key resistance at 5.85% which we expect the cap the upside and keep our overall bearish view intact. While below 5.85%, a fall to 5.78%-5.75% can be seen in the coming days.
