STOCKS
Equities continue to trade strong and retain their bullish momentum. Dow remains bullish to test 29000 and it will have to be seen if it can breach this key level this time. DAX has risen above 12400 thereby negating the danger of seeing a fall-back. It is bullish to move up to 12900 and 13200. Nikkei has a crucial resistance at 24500 which will need a close watch. Shanghai is moving up towards the upper end of its 3180-3450 range. Sensex and Nifty are gathering momentum and are keeping the bullish view intact of seeing a further rise to 42000 and 12200 respectively in the near-term.
Dow (28390.18, +542.52, +1.95%) is moving up in line with our expectation. A test of 28750-29000 is possible in the coming days. As mentioned yesterday, it is important to see if the Dow can breach 29000 from here or not to pave way for further rise. Inability to break above 29000 can keep the Dow in a broad range of 26000-29000 for some more time.
DAX (12568.09, +243.87, +1.98%) has risen past 12400 thereby negating the danger of seeing a fall-back that was cautioned yesterday. The outlook is now bullish to test 12900. Also while above 12400, the chances are high to revisit 13200 levels in the coming weeks.
Nikkei (24367.35, +262.07, +1.09%) has risen above 24000 and remains bullish to test the next crucial resistance level of 24500. As mentioned yesterday, a strong rise past 24500 will open the doors for a further rise to 27500-28000 going forward. We will have to wait and watch.
Shanghai (3308.36, −11.77, -0.35%) has risen above 3300 and can test 3350. The 3180-3450 range is intact and Shanghai is now moving up within the range. A strong break above 3350 will pave way for a further rise towards the upper end of the range and test 3400-3450 levels.
Sensex (41340.16, +724.02, +1.78%) has risen above 41000 and can remain bullish to head towards 42000 as mentioned yesterday. While above 41000, the upside could now be open to test 43000-44000 on the upside over the medium-term.
Nifty (12120.30, +211.80, +1.78%) can test 12200 and is bullish to target 12500-12750 on a strong rise past 12200 over the medium-term. An intermediate dip from 12200 to 12000 cannot be ruled out before seeing 12500-12750 on the upside.
COMMODITIES
Fall in the US Dollar has favoured a rise in Gold and Silver while Copper remains stable. Copper and Silver are bullish towards 3.20/25 and 26 respectively while Gold has broken above crucial resistance at 1920 (contrary to our expectation) and could test 1960-1980-2000 on the upside. Crude prices have dipped slightly and may remain within the broad mentioned range for some more time.
Brent (40.29) and Nymex WTI (38.12) have dipped slightly but could remain stale within 43.50-35.00 and 41.0-32.50 respectively for now.
Gold (1944.70) moved up sharply breaking above our expected resistance at 1920. This is crucial. If the trade above 1920 sustains, we may have to open up chances of a rise towards 1960-1980-2000 again on the upside. Watch if Gold manages to decline from 1950-1960; else view would turn bullish for the near to medium term.
Silver (25.32) has risen towards our expected 26 that we have been mentioning in our morning briefing editions for quite sometime now. A test of 26 is possible in the near term. Failure to face rejection at 26 could open up chances of further rise towards 27.
Copper (3.1085) remains stable near levels seen yesterday. While above 3.00, we are fairly bullish for a rise to 3.20/25.
FOREX
Most currencies are strong on a weaker Dollar. Aussie, Pound, Yen and Rupee could remain strong for the near term with possible targets of 0.74, 1.34, 102 and 74-73.80 respectively on the cards. EURJPY may remain stable. Euro has immediate resistance at 1.19 which needs to break to keep the upside intact; watch price action there.
Dollar Index (92.63) has declined sharply. Immediate support is seen at 92.15 below which there could be a possible dip towards 91.75. Failure to bounce from either of the mentioned levels would make the index vulnerable to further fall towards 90. Only a sustained rise above 92.70/80 again would make it bullish towards 94 in the medium term.
Euro (1.1821) has risen well but has immediate resistance at 1.19 which if holds could keep Euro lower for some more sessions. A sustained break above 1.19 is needed to make Euro bullish in the longer run. Watch price action near 1.19.
EURJPY (122.38) remains stable and could test 122-121 on the downside before bouncing back from there.
Dollar-Yen (103.43) has fallen as cautioned yesterday and could now be headed towards 102. Thereafter we may look for a bounce from 102.
Aussie (0.7258) tested 0.73 on the upside before dipping from there. The current dip is likely to be corrective and temporary. We may soon expect resumption of the upmove targeting .74-0.75 on the upside. View is bullish while above 0.72.
Pound (1.3131) has risen well breaking above 1.31, but now needs to sustain above 1.31 and eventually move above 1.32 to head towards 1.34 in the longer run. View is bullish while above 1.31.
USDCNY (6.6328) did test 6.60 as mentioned yesterday but has bounced from there. A re-test of 6.70-6.75 could be possible in the near term.
USDINR (74.3950) came down sharply below 74.50 yesterday and closed lower. Immediate support is seen near 74.15/20 which if holds could produce a bounce to 74.50 again. Break below 74.15 could drag it down to 74.00 or even 73.90/80 which looks more likely given the weakness in US Dollar and strength in Euro and Chinese Yuan.
INTEREST RATES
The US Treasury yields remain lower and stable. A break below the immediate support levels will confirm the end of the upmove since August and will drag the yields lower. The US Federal Reserve left the rates unchanged yesterday and had reiterated to use the tools to support the economy as long as needed. The German yields continue to trade lower and are keeping the broader bearish view intact. The yields have room to fall further. The 10Yr GoI has declined failing to break above 5.90% and looks bearish to fall further.
The US 2Yr (0.15%), 5Yr (0.33%), 10Yr (0.77%) and 30Yr (1.53%) Treasury yields remain lower and stable. As mentioned yesterday, 1.50% on the 30Yr and 0.70% on the 10Yr are crucial supports. A break below it will confirm that the upmove in place since August is over and will trigger a fresh fall to 1.40% (30Yr) and 0.60% (10Yr) in the coming weeks.
The German 2Yr (-0.80%), 5Yr (-0.82%), 10Yr (-0.64%) and the 30Yr (-0.23%) sustains lower and keeps the bearish view intact. While below -0.20% (30Yr) and -0.60% (10Yr), the yields can fall to -0.40% (30Yr) and -0.70% (10Yr) in the coming weeks. Thereafter a fresh bounce is possible.
The 10Yr GoI (5.8595%)has declined to test 5.85% as expected and this has reduced the chances of seeing 5.93%-5.95% on the upside. The outlook is bearish and the yield can extend the fall to 5.80% on a strong break below 5.85%.
