STOCKS
Dow and DAX struggle to gain fresh momentum to extend the rise as their first level of resistance at 30000 and 13500 respectively itself are holding well for now. However, on the Asian front, the indices show signs of seeing an extended rise from current levels before reversing lower. Nikkei can test 27500 and Shanghai has chances of seeing 3500 on a break above 3450 now. Sensex and Nifty have room to test 45000-46000 and 13200/13250-13500. However, we continue to retain our cautious stance of seeing a sharp corrective fall going forward. As such we will continue to look at the equity segment from the sell side rather than becoming more bullish at the moment.
Dow (29638.64, −271.73, -0.91%) is still struggling to breach 30000. This keeps our cautious view intact of seeing a corrective fall in the coming weeks. 30000 and 30800-31000 are important resistances that can cap the upside from here. We expect a sharp corrective fall to 28000 and even lower in the coming weeks.
DAX (13291.16, −44.52, -0.33%) has come-off sharply from the high of 13445.11 yesterday. The resistance at 13500 is holding well as expected. The upside will be capped at 13800-13900 even if a break above 13500 is seen. As such we are nearing the top of the current upmove and a corrective fall to 12400 can be seen from 13500 itself or after an extended rise to 13800-13900.
Nikkei (26824.46, +390.84, +1.48%) sustains well above 26500 and is keeping alive the chances of seeing 27500 on the upside in the near-term. As we had mentioned earlier, 27500 is a strong resistance from where we expect a sharp corrective fall to 25500 and even lower going forward.
Shanghai (3421.91, +30.15, +0.89%) tested 3450, the upper end of its 3180-3450 range yesterday and has come-off from there. We expect the range to remain intact and Shanghai to reverse lower towards 3300-3250 in the coming weeks. In case of a strong break above 3450, the upside can extend up to 3500 – the next strong long-term resistance and then a reversal is possible.
Nifty (12968.95, −18.05, -0.14%) remains stable around 13000 and could consolidate in a range of 12750/12730-13200/13250 for some time. We expect the upside to be capped at 13500 in case of a break above 13250. However, our cautious stance remains intact and we will be looking at the market from the sell side as the Nifty heads to 13200 or 13500 for a corrective fall to 12500 and even lower.
Sensex (44149.72, −110.02, -0.25%) on the other hand has strong resistance at 45000 now and then at 46000 that can cap the upside from here. We will be looking for a sharp corrective fall to 42000 or even lower from the 45000-46000 region.
COMMODITIES
Crude pries see a corrective dip that could possibly extend towards 45 (Brent) and 43 (WTI) before bouncing back to higher levels. Gold and Silver have fallen further but we would watch for a possible bounce from interim supports near 1780 and 22 which if fail could drag the prices lower towards 1700 and 21-20 respectively. Copper has risen sharply but could dip from either current levels or from 3.50 back towards 3.35 before again attempting to rise in the longer run.
Brent (47.64) and Nymex WTI (45.03) are in a corrective decline phase just now and could remain subdued for now with possible extension to 45 and 43 respectively before we see a resumption of the upmove. Immediate view is bearish within the corrective move seen just now.
Gold (1784.60) and Silver (22.88) continue to fall. Gold has immediate interim support at 1780 which if breaks could take it lower towards 1700 from where a reversal could be expected. On Silver, 22 is an important support that could hold and produce a bounce. Failure to hold above 22 could make it vulnerable to a further fall towards 21 or even 20. For now watch price action near 22 in the near term. Overall view is bearish for both Gold and Silver.
Copper (3.4760) has surged sharply over the last few sessions to almost test daily trend resistance near current levels. A corrective dip from here or 3.50 is possible in the near term towards 3.35 before resuming the uptrend in the longer run. Watch price action near current levels or near 3.50.
FOREX
Dollar Index and Euro may remain ranged just now within 91.75-92.20 and 1.19-1.20 respectively. EURJPY may break above 125 to head higher towards 126-127. Aussie and Pound may re-test 0.74 and 1.34 but need to break above that to possibly target higher levels. USDCNY could test 6.60 before falling back to 6.56. USDINR may also have scope to test 74.25 while above 74.
Dollar Index (91.826) may test 92.20 on the upside but looks bearish for the medium term with a possible fall towards 90-89 on a sustained break below 91.75. For now we may expect a possible trade within 91.75-92.20 . Watch price action near 91.75 to see if it breaks lower.
Euro (1.1957) tested 1.20 on the upside yesterday before falling off from there. We may expect another attempt to test 1.20 while the 1.19-1.20 range holds for now.
EURJPY (124.79) needs to break above 125 in order to move up sharply towards 126-127 in the longer run. Watch price action near 125 in the near term.
Dollar-Yen (104.35) has bounced from 104 as expected and could test 105 on the upside before again declining from there. A break above 105 is needed for the pair to head higher in the longer run. For now view is bullish for the very near term towards 105. Medium term range of 103.95-105 may hold for now.
Aussie (0.7364) is holding well below 0.74 and while that holds, a dip to 0.72 looks likely. Only a sustained break above 0.74, if seen could take it higher towards 0.75. Watch price action near 0.74.
Pound (1.3355) could move up towards 1.34 within the broad range of 1.34-1.3284 that may hold for now. View is bullish for the very near term followed by a dip again from 1.34 after a couple of sessions.
USDCNY (6.5807) is likely to trade within 6.60-6.56 for now before a break on either side is seen. While above 6.56, we may have to negate a possible dip towards 6.50. For the very near term watch for a possible test of 6.60 followed by a dip to 6.56.
USDINR (74.0550) was pulled up by RBI intervention on Friday from levels near 73.75 taking it back to 74+. While the rise sustains, we may expect a rise towards 74.20/25 on the upside before any decline is seen further. The broad range of 73.75-74.25 continues to hold negating a possible fall to 73.50 mentioned earlier last week.
INTEREST RATES
The US Treasury yields remain stable. We retain our view of seeing a fall in the Treasury yields in the coming days. The upside is limited with the presence of key resistances. The German yields keep our bearish view intact and are moving down towards the intermediate supports. We expect the supports to break and the yields to fall further deeper. The 10Yr GoI has risen sharply on Friday and is poised at the key range resistance. Whether it manages to break this resistance today or not will determine the next direction of move.
The US 2Yr (0.15%), 5Yr (0.36%), 10Yr (0.85%) and 30Yr (1.58%) Treasury yields remain stable. We retain our view of seeing a dip to 0.78% (10Yr) and 1.50% (30Yr) in the near-term and 0.70%/0.60% (10Yr) and 1.25% (30Yr) over the medium-term. Any bounce from current levels will be capped at 0.92% (10Yr) and 1.65%-1.67% (30Yr).
The bounce in the German 2Yr (-0.75%), 5Yr (-0.76%), 10Yr (-0.57%) and the 30Yr (-0.17%) yields remain lower. The 10Yr is heading down towards -0.60% and the 30Yr to -0.20% in line with our expectation. The outlook is bearish and we expect the yields to extend the fall towards -0.70% (10Yr) and -0.35%/-0.40% (30Yr) in the coming weeks after which a fresh upmove is possible.
The 10Yr GoI (5.9114%) has risen sharply to test the upper end of its 5.85%-5.92% range. It will have to be seen if the yield manages to breach 5.92% today which will then open doors for 5.95% and even 6% on the upside. While 5.92% holds, a dip to 5.88% can be seen and the 5.85%-5.92% range will remain intact.
