STOCKS
The equity segment continues to trade stable as the US Federal Reserve failed to give any fresh trigger for the indices to move up sharply. The Fed left the rates unchanged as was widely expected. Dow and DAX continue to trade stable and can remain stuck in a narrow range. Nikkei is showing signs of weakness and can see a corrective fall from here itself. Shanghai has to break an immediate resistance to move up further within our preferred broad range. Sensex and Nifty have dipped yesterday but have supports that can limit the downside and keep the broader bullish view intact.
The Dow (26539.57, +160.29, +0.61%) is managing to hold above 26300 and remains stable. As mentioned yesterday a break below 26300 will be bearish to see 26000 and also a corrective fall to 25000 straight-away from here. A strong rise past 27000 is needed now to move up to 28000 first and then see a correction.
The DAX (12822.26, −13.02, -0.10%) has not gone anywhere since the beginning of this week and it continues to remain stuck above the immediate support level of 12800. The view remains the same. 12800-13200 can be the range seen for some time before a fresh rise to 13350-13400 happens. Our medium-term view of seeing 13800 on the upside also remains intact.
Nikkei (22408.29, +11.18, +0.05%) is hovering above the crucial support level of 22400. As mentioned yesterday, while below 23000 we see high chances for a corrective fall to 22000-21500 from here it self as against our earlier preference of seeing a rise to 24000 and then a correction.
Shanghai (3295.48, +0.93, +0.03%) has tested 3300 as expected and has come-off slightly. 3320 is an immediate resistance which needs to be broken to move further up to 3350 and 3400 level. Inability to breach 3320 can drag the index lower to 3200 again.
Nifty (11202.85, -97.70, -0.86%) has dipped below 11250 yesterday. However, the downside is likely to be limited to 11100-11000. The broader view continues to remain bullish to see 11400-11600 eventually in the coming days.
Sensex (38071.13, −421.82, -1.10%) has immediate support at 38000 and then in the 37700-37600 region which can limit the downside in the near-term. The broader view remains bullish to test 39500-40000 on the upside.
COMMODITIES
Gold continues its upward rally after taking a short pause yesterday while Silver is stable after facing rejection from 26 earlier this week. There could be more upside for Gold in the near term while Silver may trade in a steady range of 22.50-25.00. Copper is also likely to remain ranged while below resistance at 3. Crude prices are stable within a narrow range and could soon give a sharp break out on either side that would confirm further direction.
Brent (43.80) and WTI (41.31) both have risen to trade higher just now. But overall the prices trade within a sideways range and needs to break on either side too give further clarity on direction. For now, we continue to look at 45.27 on Brent and 43.50-44 to hold on WTI for the near term.
Gold (1980.20) saw a short corrective dip yesterday but has risen back today indicating a possible resumption in rally towards 2000. A test of 2000, if seen in the near term would be all time high for Gold and could keep upward pressure intact till the US Dollar starts to strengthen again.
Silver (24.34) looks stable just now near levels seen yesterday unlike a resumption of sharp upmove as seen in Gold. The horizontal resistance on the monthly candles seems to hold well now and could keep Silver in the 22.50-25.00 region for sometime.
Copper (2.9210) is up slightly but needs to move towards 3 and higher to confirm further upmove in the near term. While below crucial resistance at 3, we continue to look for trade in the broad 2.80-3.00 region for the medium term.
FOREX
Weakness in Dollar Index keeps the Pound, Yen, Euro and EURJPY higher. Aussie has immediate resistance that could hold and push the rate lower. USDCNY has dipped a bit but looks fairly stable within the near term range. USDIND also looks stable for the near term.
Dollar Index (93.36) tested 93.18 yesterday to make a fresh low within the current fall. While we expect a bounce from 93.20/10 just now, we need to see a sharp bounce back towards 94 and higher to confirm indication of an upmove. Till then, weakness in Dollar could continue to impact other major currencies.
Euro (1.1775) tested 1.1806 yesterday but has come off slightly from there. A short corrective dip is expected from current levels towards 1.17 or slightly lower in the near term. Such a fall needs to be accompanied by a bounce in dollar Index from current levels.
EURJPY (123.72) has risen from 123 and could trade within 123-124.30 region for the near term.
Dollar-Yen (105.02) needs to hold above 105 in order to move back to 106-107 again in the medium term and could occur only if the Dollar Index manages to bounce back from current levels. Any dip in Dollar Index to levels below 93, could drag down Dollar-Yen to levels below 105, targeting 104 on the downside. Preference would be to see a bounce from current levels.
Aussie (0.7178) seems to be holding below 0.72 just now and while that holds, a dip towards 0.71-0.70 cannot be negated in the near term.
Pound (1.2985) could be headed towards 1.30-1.31 in the near term before a corrective dip is seen towards 1.28. Immediate view is bullish while the Dollar trades weak.
USDCNY (6.9973) could remain within 6.977-7.0247 in the near term.
USDINR (74.80) may trade within 74.90-74.70 with a possible extension to 75.00 on the upside. Only a break below 74.70 would open up chances of testing 74.60/50 in the medium term.
INTEREST RATES
The US Treasury yields continue to trade lower. The outcome of the US Federal Reserve meeting yesterday turned out to be a non-event as there were no major changes or surprises to move the market. The Treasury yields have room to dip in the near-term to test their supports and then can bounce-back. The German Yields continue to trade lower and keep our bearish view intact. We expect the German yields to fall further in the coming days. The 10Yr GoI has dipped further but has support near current levels from where it can bounce-back.
The US 2Yr (0.13%), 5Yr (0.25%), 10Yr (0.57%) and the 30Yr (1.23%) Treasury yields have dipped slightly by 1bps each As mentioned yesterday 0.50% is a support for the 10Yr which seems can be tested now while the 10Yr sustains below 0.58%. We expect the 10Yr to bounce from 0.50%. The 30Yr on the other hand can test 1.18% while it remains below 1.25% and then can see a bounce possibly.
The German 2Yr (-0.70%), 5Yr (-0.70%) and 10Yr (-0.50%) German yields remain stable while the 30Yr (-0.08%) has inched back slightly higher. However, our broader bearish view remains intact. We expect the 10Yr to fall to -0.60% and the 30Yr t test -0.20% on the downside in the coming weeks.
The 10Yr GOI (5.8344%) has dipped further below 5.85% and is heading closer to the key support level of 5.82%. We expect the yield to bounce-back from this support to keep our bullish view intact of seeing 5.92%-5.95% on the upside. A break below 5.82% will negate our bullish view.
