STOCKS
Dow (21963.92, +0.33%) is moving up in line with our expectation and could move higher towards 22100-22250 in the medium term before seeing a corrective dip to 21750. Near term looks potentially bullish.
Dax (12251.29, +1.10%) rose well from the support that we have been mentioning for the last couple of days and the index has risen to 12300 as expected. The current rise may continue towards 12400-12500 before a pause is seen. There is some room on the upside for the coming sessions. .
Shanghai (3289.11, -0.11%) is trading near previous highs of 3288 and 3295 seen in Nov’16 and Apr’17 respectively. In case 3300 acts acts as a decent support, we could see a rise towards 3325-3350 in the next few sessions; else a corrective fall could start from current levels.
Nikkei (20069.88, +0.42%) continues to trade within 19700-20280 levels and unless there is a break out on either side of this range, it is difficult to get any directional clarity for the medium term. We wait for a clear directional signal with some bullish bias for the near term.
Nifty (10114.65, +0.37%) has closed near important resistance near 10115 and could possibly see some correction in the next few sessions before again trying to move up. Overall the long term uptrend is intact.
COMMODITIES
Gold (1266) is still struggling to rise above the 1270-75 regions and only a break above that may open up the higher target of 1290. Crucial supports are poised at 1260 and 1245 levels. We are not confident about the sustainability beyond 1270 regions due to short term overbought condition. In case the Support at 1245 breaks, there will be a further dip to 1230 and 1210 levels respectively.Silver (16.61) somehow manages to hold above 16.50 levels, but a close below 16.50 could open up 16.20 and 15.90 levels respectively. We might see significant fall in Silver if there will be any short term price correction in Copper.
Copper (2.87) is hovering around 2.90 levels. We might see price correction towards 2.78-80 levels due to short term overbought condition. But we will remain bullish on Copper in midterm time frame while it s trading above 2.70-75 regions.
This is the 6th consecutive week when market is anticipating a fall (-3.2M B) in weekly U.S crude oil inventory.If the anticipation of shortage will match the actual outcome (8:00 PM IST) then that could be beneficial for the ongoing bullish trend in Brent (52.63) and WTI (48.70). We will remain bullish on Brent and WTI, while they are trading above 48.70 and 45.50 levels on an weekly closing basis. But a surplus in U.S oil inventory could bring near term bearish possibilities into consideration.
Gold-WTI ratio (25.23) had broken the crucial support at 25.90-92 and came down. At the same time, Brent-WTI ratio (2.46) also had found support at 2.16 and moved higher. Both the ratios had moved in line with our expectation (dated 28th July 2017) so far.
FOREX
RBI today to determine the near term path for Rupee while BOE tomorrow and US NFP data on Friday to set the path of the majors this week.
Little change in the market for Dollar Index (93.10) and Euro (1.1803) as both remain in a minor consolidation phase at their respective extreme ends. The downside target of 92.00 for Dollar and upside target of 1.20 for Euro remains unchanged.
Dollar-Yen (110.54) is testing the resistance of 110.50-80 but even a rise above the resistance may not push it above 111.00-10. The downtrend is likely to resume by the end of the week with the downside target/support staying the same at 109.50.
Pound (1.3202) is wandering about the resistance of 1.3200 waiting for the BOE decision tomorrow. If the current pause phase stays limited to 1.3170 to the downside, the bullish momentum remains intact which may take it to 1.3330 and even 1.3420.
Aussie (0.7950) has entered a corrective phase even after the RBA held rates as expected. If the support at 0.7900-0.7875 holds, it may see a sharp bounce back above 0.80 levels. Higher targets of 0.8100-70 will be negated only on a break below 0.7875.
Dollar Rupee (64.08) closed below 64.10 ahead of the RBI policy meet conclusion today which may determine the near term path. We don’t expect any upside for Dollar Rupee till the resistance of 64.25-30 holds but the downside remains open. Initial target remains unchanged at 63.90.
INTEREST RATES
The US yields have come off slightly from levels seen yesterday. The 5YR (1.80%), 10YR (2.25%) and the 30YR (2.87%) are all trading lower from previous levels of 1.83%, 2.29% and 2.90% respectively.
The UK-US 10YR (-1.04%) has moved up from -1.06% seen yesterday. There is scope of testing -0.98% in the coming sessions which could take the Pound up towards 1.33.
The UK yields have started to rise after quite some time and we could expect some more rise in the coming sessions.
The Indian 10YR GOI (6.4450%) has bounced from support near 6.40% and could move up towards 6.50-6.55% in the next few sessions. Near term looks bullish.
