STOCKS
Equities manage to stay afloat for now. With limited upside left on major indices and strong resistances ahead, we continue to remain cautious to see a sharp corrective fall in the coming weeks. We will not be surprised to see the major indices beginning the expected correction from here itself after a near-term consolidation without extending the upside to test their respective resistances. We reiterate that 30000 and 30800-31000 on the Dow and 13500-13800 on the DAX are crucial resistances that can cap the upside. Nikkei has resistance 27500. Sensex and Nifty have resistances at 45000 and 13200/13250 respectively. Shanghai has the range resistance at 3450 and can retain its 3180-3450 range.
Dow (29872.47) was closed yesterday. It will have to be seen if we can get a close above 30000 today or not which is needed to keep alive the chances of seeing 30800-31000 on the upside before a correction comes into play. Else the Dow could consolidate sideways between 29000 and 30000 for some time and will remain vulnerable to see a fall to 28000 from here itself.
DAX (13286.57, −3.23, -0.02%) continues to hover around 13300. This keeps alive the chances of seeing 13500 and 13800 before the expected corrective fall to 12400 happens. We reiterate that 13500 and 13800 are strong resistances that can cap the upside.
Nikkei (26502.85, −34.46, -0.13%) hovers around 26500 and seems to lack strong follow-through buying to extend the upside to 27500. However, as mentioned yesterday, while above 26000, the chances of seeing 27500 on the upside is still there before the corrective fall to 25500 and lower levels happen.
Shanghai (3380.58, +10.84, +0.32%) has bounced from the low of 3344 yesterday. But we expect the upside to be capped at 3400 now and the view of seeing a fall to 3300-3250 mentioned yesterday remains intact. Broadly, the 3180-3450 range remains intact and the index can now move down towards the lower end of this range in the coming weeks.
Nifty (12987, +128.60, +1%) is managing to hold above 12750 and has bounced-back sharply yesterday. A sideways consolidation between 12750/12730 and 13200 looks possible in the coming days before the expected corrective fall to 12500 and lower levels happen eventually.
Similarly, Sensex (44259.74, +431.64, +0.98%) has also held well above 43500 and has bounced-back above 44000. Strong resistance is at 45000 which is likely to cap the upside. While below 45000 we retain our cautiousness to see a corrective fall to 42000 in the coming weeks.
COMMODITIES
Crude pries see a corrective dip that could possibly extend towards 45 (Brent) and 44-43 (WTI) before bouncing back to higher levels. Gold and Silver look stable near current levels as supports at 1800 and 23 are holding well for now. Copper may face rejection from resistance near 3.40 from where a fall to 3.25/20 cannot be negated.
Brent (47.95) and Nymex WTI (45.06) have dipped from near term highs seen yesterday. Brent has come off from levels below resistance of 49.50-50 and could possibly extend towards 46.50-45 on the downside before again attempting to rise back towards 50 or higher. As mentioned yesterday, the dip in Brent has dragged down WTI also which could limit its near term correction to 44-43 levels before a bounce back is seen.
Gold (1813.50) and Silver (23.33) trade stable near levels seen over the last couple of sessions. We may expect ranged movement around current levels for some more time. Immediate supports are seen near 1800 and 23.
Copper (3.3855) has risen to test weekly trend resistance near 3.40 from where a corrective decline is possible in the near term towards 3.25/20. Watch price action near 3.40.
FOREX
Dollar Index trades lower but needs to fall towards 91.75 to take Euro higher towards 1.20 and USDJPY towards 103.50-103.00. Aussie and Pound are stable just below resistance levels of 0.74 and 1.34 which needs to break to sustain the upmove for the medium term. For now, we expect some ranged trade. EURJPY looks bearish and USDCNY could trade within 6.55-6.60 (revised from 6.50-6.60 mentioned earlier). USDINR needs to sustain above 73.80/75 or break lower to give some directional clarity from here. On the charts, there is scope for a test of 73.50 on a break below 73.80/75. Watch price action near immediate supports.
Dollar Index (91.99) has risen slightly but has scope for a fall towards 91.75 in the near term. View remains bearish for the near term as any corrective bounce from here could be limited.
Euro (1.1916) trades higher just now, but the Dollar Index needs to fall towards 91.75 for the Euro to test 1.20. Note that immediate resistance is seen near 1.20 which could hold and produce a rejection back towards 1.19 or lower.
EURJPY (124.02) looks bearish towards 123 while it holds below 125.
Dollar-Yen (104.04) has fallen to 104 as expected. A break below 104 if seen on a weaker Dollar may drag the pair lower towards 103.50-103.00 in the coming week. Watch price action near current levels just now.
Aussie (0.7360) is stable just below 0.74 finding it difficult to break above 0.74. We may expect some ranged sideways trade around 0.74 before a possible break on the upside is seen in the longer run. For now, while below 0.74, we may expect ranged trade for the near term.
Pound (1.3364) is ranged below 1.34 and could either fall back from here or take some time to break above 1.34 eventually. Till then we may expect ranged trade below 1.34 for a few sessions.
USDCNY (6.5790) is not attempting to fall below 6.55 just now and hence we may revise our earlier 6.50-6.60 view to narrow to 6.55-6.60 for the next 3-4 sessions. View looks ranged just now without any major movement.
USDINR (73.89) needs to hold above 73.75/80 in order to keep alive chances of bouncing back to 74. Failure to sustain above 73.75/80 would open up chances of falling towards 73.50 on the downside. Watch price action near 73.75/80 today.
INTEREST RATES
The US Treasury yields are turning down and are likely to see a fresh fall in the coming days. The bias is bearish as we see limited upside for the Treasury yields from current levels. The German yields are coming down as expected and are keeping our bearish view intact. A deeper fall is possible on a break below the immediate support levels. The 10Yr GoI is coming down within the 5.85%-5.92% range and will have to sustain above5.85% in order to keep this range intact and also to avoid a deeper fall to 5.80%.
The US 2Yr (0.15%), 5Yr (0.37%), 10Yr (0.85%) and 30Yr (1.58%) Treasury yields are turning down again as expected. We retain our view of seeing a test of 0.78% (10Yr) and 1.50% (30Yr) on the downside initially and then to 0.70%/0.60% (10Yr) and 1.25% (30Yr) eventually in the coming weeks. The upside could be limited to 0.92% on the 10Yr and 1.65%-1.67% on the 30Yr from here.
The bounce in the German 2Yr (-0.77%), 5Yr (-0.77%), 10Yr (-0.59%) and the 30Yr (-0.18%) yields have dipped across tenors. The 10Yr and 30Yr are coming closer to -0.60% and -0.20% as expected and keep the broader bearish view intact. A break below -0.60% (10Yr) and -0.20 (30Yr) can drag them to -0.70% (10Yr) and -0.35%/-0.40% (30Yr) in the coming weeks. Thereafter a fresh rise is possible.
The 10Yr GoI (5.8723%) has dipped yesterday within the expected 5.85%-5.92% range. A test of 5.86%-5.85% is possible in the near-term. It will have to sustain above 5.85% in order to bounce-back and retain the 5.85%-5.92% range and also to avoid a deeper fall to 5.80%. The price action near 5.85% will need a close watch.
