STOCKS
Dow and DAX are holding above their near-term supports and have little room on the upside to test their crucial resistances at 30800/31000 and 13500-13800/900 respectively. Sensex and Nifty have come closer to their crucial resistance levels of 46000 and 13500 respectively. Nikkei has bounced-back well today and keeps alive the chances of testing 27500 before reversing lower. Shanghai retains its 3180-3450 range and can hover at the upper end of this range in the near-term before falling towards the lower end. We reiterate that the rally in equities is likely to halt in the coming days and we remain cautious to see a sharp corrective fall going forward. We continue to look at the equity segment from the sell side.
Dow (30173.88, +104.09, +0.35%) is holding well above 3000 and is likely to test 30800-31000 in the near-term. But as we have been mentioning for some time, the upside is likely to be capped at 31000 from here. We expect the Dow to see a sharp corrective fall from 31000 to 28000 or even lower going forward.
DAX (13278.49, +7.49, +0.06%) is managing to sustain above 13200. While above 13200, the chances are alive to revisit 13500 and also to see an extended rise to 13800/13900 in the near-term. But as we have been cautioning for some time, 13500 and 13800/900 are crucial resistances that can cap the upside. We expect DAX to see a sharp corrective fall to 12400 either from 13500 itself or from 13800/900.
Nikkei (26735.33, +268.25, +1.01%) has risen back well above 26500 again. This keeps alive the chances of testing 27500 on the upside. But a further rise beyond 27500 is unlikely and we will be looking for a sharp corrective fall thereafter to 25500-24500.
Shanghai (3415.40, +5.22, +0.15%) sustains above 3400 and can remain stuck in between 3400 and 3450 in the near-term. However, while below 3450, the 3180-3450 range remains intact and we expect the index to move down within the range to 3300-3250 in the coming days. A break below 3400 can trigger this fall.
Nifty (13392.95, +37.20, +0.28%) and Sensex (45608.51, +181.54, +0.40%) have come closer to their crucial resistance levels of 13500 and 46000 respectively. A high of 13435.45 (Nifty) and 45742.23 (Sensex) was made yesterday. We retain our cautious view of seeing a sharp corrective fall to 12800-12500 on the Nifty and 42000 on the Sensex in the coming weeks as we expect 13500 (Nifty) and 46000 (Sensex) to halt the current rally.
COMMODITIES
Most commodities are stable, trading within a range for now. Brent and WTI could trade within 45-52 and 44-50 respectively while Gold could dip towards 1840 while below 1880. This could then be followed by a rise towards 1920 in the medium term. Silver could test support at 24 if 25.0-25.5 resistance holds in the near term. Copper has risen back to levels above 3.50 and needs to break above 3.55 to keep the upmove intact. Watch price action closely for the next few sessions.
Brent (48.73) and Nymex WTI (45.47) have dipped slightly from higher levels of 48.98 and 45.74 respectively. We would continue to look for the broad range of 45-52 to hold on Brent for the near term, which if breaks on the upside could have scope for a test of 52-53. WTI could trade within $44-48 for the near term. View is stable to bullish for the near term.
Gold (1869.70) and Silver (24.55) are stable near current levels. Gold tested 1875.90 on the upside close to the interim resistance at 1880 before dipping from there. While 1880 holds, a dip to 1840 looks possible before rallying towards 1900-1920 in the medium term. Overall view is bullish for the medium term. Silver has immediate trend resistance near 25.00-25.50 and while that holds, a dip to 24 or lower cannot be negated.
Copper (3.5160) has not fallen and instead has risen back to 3.50+ levels. This has been contrary to our expectation of seeing a dip towards 3.40/35. While Copper trades above 3.50, it could re-test resistance near 3.55 which need to break in order to keep the upmove intact. But while 3.55 holds, we may expect a range of 3.55-3.47 to hold for now.
FOREX
Most of the currency pairs are stable and could spend some time in a ranged fashion before moving sharply. Dollar Index and Euro may trade within 90-91 and 1.2050-1.2130 region before moving sharply. EURJPY, Aussie and Pound are also ranged and could remain so for a few more sessions before rising sharply on the upside. USDCNY has started to dip again but could be contained within 6.50-6.55 region for now. USDINR is at crucial support of 73.50 and has scope for a test of 73.0-72.90 in absence of RBI intervention. Else a rise back to 73.80/90-74.00 would be on the cards.
Dollar Index (90.858) is bearish while below 91. We may expect some sideways ranged trade within 90-91 before further decline sets in. Overall longer term view is bearish for the index.
Euro (1.2119) is ranged above 1.21 for now and we may expect some trade within the narrow range before sharply picking up momentum to test and break above 1.22 soon.
EURJPY (126.21) could attempt to rise towards 127 before falling off from there. Trade within 127-125.75 could be possible for the near term before a sharp rise is seen towards 128 in the medium term.
Dollar-Yen (104.14) trades higher today. We continue to look at a broad range of 103.50-104.50 to hold for the near term.
Pound (1.3377) has bounced sharply from levels near 1.3289 and looks like it can trade stable within 1.34-1.3280 region for the very near term before deciding on further direction.
USDCNY (6.5279) could not sustain the bounce seen yesterday and the pair has again dipped lower. While below 6.53, there could be scope of falling to 6.52-6.50. Overall trade range of 6.55-6.50 looks likely for the near term.
USDINR (73.5250) sharply fell to test 73.50 yesterday. But the RBI needs to be away from its buying intervention at 73.50 to let the Rupee strengthen further towards 73.0-72.90. Only if RBI comes in, we may expect a bounce back to 73.80/90-74.00 which would make the support at 73.50 stronger for the near term. Watch price action near 73.50 today as the movement from here now depends on what the RBI chooses to do.
INTEREST RATES
The US Treasury yields remain stable. As long as the yields remain below their crucial long-term resistances we expect them to come down in the coming days. Only a strong break above 1% on the 10Yr and 1.75% on the 30Yr will negate the above mentioned will. The German yields have dipped further and are keeping our bearish view intact. The yields can fall further from current levels. The 10Yr GoI has risen as expected to test 5.94% and will have to see if it can break above 5.95% today or not. The price action at 5.95% will need a close watch.
The US 2Yr (0.15%), 5Yr (0.40%), 10Yr (0.93%) and 30Yr (1.68%) Treasury yields remain stable. Our view remains the same. As long as the yields remain below 1% (10Yr) and 1.75% (30Yr) the view is bearish to see a fall to 0.85%-0.80% (10Yr) and 1.55%-1.50% (30Yr) again. As being mentioned over the last two days, a strong and sustained break above 1% (10Yr) and 1.75% (30Yr) is needed to signal a long-term trend reversal which will be a major turn-around and needs a close watch.
German 2Yr (-0.78%), 5Yr (-0.80%), 10Yr (-0.61%) and the 30Yr (-0.19%) have dipped further and are keeping our bearish view intact. The bearish view is intact. The 10Yr has dipped below -0.60% as expected and can move down to -0.70% now. The 30Yr on the other hand can fall to -0.35%/-0.40% (30Yr) on a break below -0.20%.
The 10Yr GoI (5.9394%) has tested 5.94% as expected. It will have to be seen if it can breach 5.95% and extend the upside to 5.96% today. Inability to break 5.95% can drag the 10Yr GoI lower to 5.90% again and keep it inside the 5.88%-5.95% range for some more time. The price action at 5.95% will need a close watch today.
