STOCKS
Dow, Sensex and Nifty have moved up further and the DAX has also risen back sharply yesterday. The major indices are now poised in their respective key resistance zones which have to be broken in order to turn the outlook bullish and avoid a fall-back again. Dow has resistance in the 27500-28000 region and needs to breach 28000. Nifty has resistance in the 11250-11350 region and for the Sensex it is at 38400 and 39000. DAX has resistances at 13000 and 13200. Nikkei is at the upper end of its 23000-23500 range. Shanghai is getting support at the lower end of its 3180-3450 range and can see a rise within the range if it manages to sustain higher.
The Dow (27584.06, +410.10, +1.51%) has moved up further and is now poised in the 27500-28000 resistance zone. We expect the upside to be capped at 28000 and a fall to 27000-26500 again. A strong rise past 28000 is needed to negate our bearish view.
DAX (12870.87, +401.67, +3.22%) has risen sharply yesterday and has closed above 12800. This has eased the danger of seeing a fall to 12000 that we had been mentioning over the last few days. However, key resistances are at 13000 and then at 13200. A strong rise past 13200 is necessarily needed to bring back the bullishness of seeing 13800 on the upside and also to completely wipe out the chances of a fall to 12000 levels.
Nikkei (23426.86, −84.76, -0.36%) tested 23500 – the upper end of its 23000-23500 range yesterday and has come-off slightly today. We will have to see if Nikkei breaks above 23500 decisively or falls back from here to keep the sideways range intact. As mentioned yesterday, from a bigger picture 24000-24500 is a strong resistance zone that can cap the upside if a strong break above 23500 is seen just now and produce a sharp corrective fall.
Shanghai (3237.08, +19.55, +0.61%) is managing to hold above 3200. A strong rise above 3250 and a subsequent break above 3300 will reduce the danger of seeing an extended fall to 3160-3150. For now the 3180-3450 range remains intact and the index is attempting to move up from the lower end of this range.
Nifty (11227.55, +177.30, +1.60%)has moved up further yesterday and is coming near the 11250-11350 resistance zone. As mentioned yesterday, a strong rise past 11350 will be needed to turn the outlook bullish again and avoid a fall-back to 11000-10800. The price action in the coming sessions will need a close watch.
Sensex (37981.63, +592.97, +1.59%) has resistances at 38400 and then at 39000. Only a strong break above 39000 will bring back the bullishness of seeing 40000 levels again. While below 38400 and 39000, Sensex can fall back to 36500-36000 in the coming weeks.
COMMODITIES
Crude prices may remain within a sideways range for this week while Silver and Copper could attempt to move up from here. Gold may test 1900-1920 resistance on the upside and could see a rejection back towards 1880/40 over the next 1-2 weeks.
Brent (42.14) has immediate trend resistance near 42.5 on the daily candles and while that holds, we may expect a dip back towards 40 or even 39.50 before a bounce sets in. On the other hand, Nymex WTI (40.31) can rise towards 42.50-45.00 on the upside but we may expect some ranged movement within 37.50-41.00 before a sharp rise is seen. Overall near term view looks sideways ranged for sometime (1 week at least).
Gold (1891.50) has bounced well from 1840, rising back towards 1900 again. A rise to 1920 could be possible in the near term before another decline is seen in the medium term towards 1840/1820 again. Watch price action near 1900-1920 for now.
Immediate support near 22 is holding well on Silver (23.79) and while that holds, we may expect a bounce towards 24.0-24.5 in the near term. We may expect some ranged move in the next few sessions while above 22.
Copper (2.9895) trades slightly higher today. While above 2.95/2.98, we remain fairly bullish on Copper. A rise towards 3.0-3.05 is possible in the near term. In the longer run, we may look for a gradual rise to 3.15.
FOREX
Dollar index has dipped slightly while Euro, EURJPY, Aussie and Pound trades higher. USDCNY and USDJPY have moved up and could continue to trade higher for the next few sessions at least. USDINR could be broadly ranged within 74.0-73.50.
Dollar Index (94.24) has dipped a bit from levels near 94.78 but we may son expect a bounce back towards 95.15 before seeing a sharper corrective dip from there. While above 94, view is bullish for the index.
Euro (1.1671) has bounced back as the Dollar Index dipped from 94.78. While the index trades further low, we may expect a test of 1.17 on Euro before a dip is seen again from there. Immediate view is bullish towards 1.17.
EURJPY (123.13) has bounced back well and could have some scope for a gradual rise to 124 before again declining from there. Overall medium term view is bearish towards 121.95 while below 124.
Dollar-Yen (105.47) has risen slightly. A test of 105.75-106.00 on the upside looks possible for the next few sessions.
Aussie (0.7081) is slightly trading higher today. As mentioned yesterday, we may expect a rise towards 0.7120 while above 0.70.
Pound (1.2846) tried to rise towards 1.30 but came off from 1.2929 itself. We do not negate a test of 1.30 on the upside but may majorly see a ranged movement while below 1.30. 1.26-1.30 is likely to be the broad range.
USDCNY (6.8221) may attempt to test 6.85 in the near term which if manages to break further on the upside could lead to a gradual rise towards 6.90/95 in the coming 1-2 weeks. Failure to rise above 6.85 could drag it back towards 6.80 or lower.
USDINR (73.78) bounced from 73.50 as mentioned yesterday. While above 73.50, we may not negate a test of 74 on the upside. A broad range of 74.0-73.50 could hold for the rest of the week.
INTEREST RATES
The US Treasury yields remain stable and look mixed in the near-term. While the broader view is negative to see a fall, whether a rise can happen before that remains unclear. The German yields remain lower and are keeping our bearish view intact. The 10Yr GoI has risen past a key resistance and looks bullish to move up further.
The US 2Yr (0.13%) and 5Yr (0.26%) Treasury yields continue to trade stable while the 10Yr (0.66%) and the 30Yr (1.42%) have inched up slightly. We expect the 10Yr to dip gradually towards 0.60% in the near-term. As mentioned yesterday, a strong rise past 0.70% is needed to become bullish to see a rise to 0.80%-0.90%. The 30Yr has a crucial near-term support at 1.40% which needs to hold in order to avoid a fall to 1.30%-1.25% from here itself. While above 1.40%, there are chances to see a rise to 1.50%-1.60% before a reversal happens.
The German 2Yr (-0.71%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.10%) yields remain lower. Our bearish view remains intact. We expect the 10Yr to fall to -0.60%/-0.70% and the 30Yr to -0.20% in the coming weeks. As mentioned yesterday, the chances of seeing an intermediate bounce that we had expected towards the end of last week stands reduced now.
The 10Yr GoI (6.0571%) has risen further breaking above 6.05%. While above 6.05%, the outlook is bullish to test 6.10%-6.15% on the upside in the coming days. Support will now be in the 6.05%-6.03% region.
