STOCKS
Equities looks mixed as they hover at highs. Dow remains stable around 31000 and keeps alive the chances of seeing 31300-31500 on the upside before a reversal. Similarly, DAX holds above the near-term support and can see one more leg of rise before a correction. On the Asians, Nikkei has surged breaking above a key resistance and is bullish to rise further. Sensex and Nifty also remain bullish with no sign of seeing any reversal immediately. Shanghai has come-off from a crucial resistance and can fall while it remains below that resistance. Our overall stance remains cautious on equities although there is room for further rise from current levels.
Dow (31060.47, −8.22, -0.03%) continues to trade stable around 31000. Our view remains the same. The chance of a rise to 31300-31500 is still alive. But we remain cautious rather than becoming more bullish as a sharp corrective fall to 29500-29000 is possible thereafter.
DAX (13939.71, +14.65, +0.11%) is holding well above 13800. As mentioned yesterday, while above 13800, the chances are still there to see an extended rise to 14500 breaking above 14000. Only a strong fall below 13600 will confirm that a correction has begun.
Nikkei (28822.45, +365.86, +1.29%) has surged above 28300 contrary to our expectation to see a reversal from there. While this break sustains a further rise to 29600 is possible before the reversal happens.
Shanghai (3570.80, −27.85, -0.77%) has failed to sustain the break above 3600 and has come-off. The resistance at 3600 is holding well. While below 3600, a fall to 3525 can be seen again. A strong break below 3525 can drag it to 3450 and even 3420-3400 in the coming weeks.
Nifty (14564.85, +1.40, 0.01%) and Sensex (49492.32, −24.79, +0.05%) have come-off from their day’s high but are not giving any sign of reversal yet. Our stance is still cautious. But, while above 14000 (Nifty) and 49000 (Sensex) we will have to allow for a further rise to 15000 (Nifty) and 51500 (Sensex) on the upside.
COMMODITIES
Most commodities trade weak today but may have decent supports which needs to hold to re-produce a bounce in the near term. Crude prices are trading low and the corrective fall could extend for a few sessions before seeing a bounce. Gold, Silver and Copper could be headed towards supports near 1820-1800, 24.35 and 3.55 respectively which needs to hold to keep the view intact of seeing another bounce in the medium term. Watch price action near these supports closely.
Brent (55.91) and Nymex WTI (52.79) has come off after an initial sharp rise seen yesterday. Immediate weekly resistances of $58 and $55 seems to have held well on Brent and WTI respectively and we may expect the dip to continue for a couple of sessions more before resumption of the uptrend. Immediate view could be ranged with downside limited to $51-52 on Brent and $49-50 on WTI just now.
Gold (1834.50) has also dipped much before testing 1880 on the upside. We may expet Gold to remain bearish in the medium term targeting 1760-1740 on the downside. Before that a pause near 1820-1800 could be possible. On the upside, we do not look for a break above 1880 just now. Overall near term trade could be seen in the 1800-1880 region.
Silver (25.18) has also fallen sharply and could re-test 24.35 on the downside. If 24.35 holds, we may expect another rise from there, else it would open up a possible fall towards 22 eventually.
Copper (3.6145) has dipped a bit from levels seen yesterday. Failure to hold above 3.55 could take it down towards 3.45 gradually. Watch price action near support at 3.55.
FOREX
Dollar Index has bounced back well and could head towards 91.0-91.50 on the upside while Euro can dip to test 1.2050. EURJPY may test 125.78 while Dollar Yen can rise to 104.50. Aussie and Pound look ranged just now. Aussie can attempt a rise while Pound could remain below 1.37. USDINR may trade in the 73.00-73.25 range but a break below 73, if seen could take the pair down to 72.90.
Dollar Index (90.372) has bounced back to trade higher and could now attempt a possible test of 91-91.50 initially. View is bullish for the near term.
Euro (1.2150) has dipped again but has higher chances of falling towards 1.2050 in the near term. A maximum downside of 1.20 can be expected within the current corrective fall.
EURJPY (126.43) could test support near 126-125.78 from where a bounce looks likely. Overall the broad range of 125.78-127.50 is holding for now and needs to break on either side to give clarity on further direction.
Dollar-Yen (104.03) has bounced back sharply from 103.52 seen yesterday but we would keep a close watch near immediate resistance at 104.20 and higher at 104.40/50 levels to see if the pair manages to break higher or falls back from here in the near term.
Aussie (0.7740) has bounced well and could rise towards 0.7850 or even higher in the medium term.
Pound (1.3638) has dipped a bit as resistance at 1.37 seems to be holding well. While 1.37 holds, we may expect a ranged movement within 1.35-1.37 before a rise is seen towards 1.38 or higher.
USDCNY (6.4704) has moved up a bit but is likely to trade within the 6.4580-6.48 region for the near term while the broad 6.50-6.40 remains intact. Immediate view is ranged.
USDINR (73.15) traded lower yesterday falling towards 73.10 as expected. A test of 73.05-73.00 could be possible today from where a short bounce may be seen. In the medium term, we may expect a test of 72.90 if 73 breaks on the downside.
INTEREST RATES
The US Treasury yields have declined further and are indicating a turn-around. A further dip from here and a break below the near-term supports will confirm that the rally has ended. We will have to wait and watch closely the price action in the coming days. The German Yields have reversed sharply lower and keeps the bearish view alive. The chance of a rise mentioned yesterday has reduced. The 10Yr GoI can break above the immediate resistance and move up in the near-term.
The US 2Yr (0.14%), 5Yr (0.47%), 10Yr (1.08%) and the 30Yr (1.81%)have dipped across tenors. The turn-around in the yields seems to have happened from just below the lower end of the resistance zone itself. 1% on the 10Yr and 1.80% on the 30Yr are immediate support and a break below it can drag them to 0.90%-0.80% and 1.75%-1.70% in the near-term. However, a strong subsequent fall below 0.80% (10Yr) and 1.70% (30Yr) is needed to confirm that the rally has ended.
The German 2Yr (-0.71%) and 5Yr (-0.71%), 10Yr (-0.52%) and the 30Yr (-0.13%) have reversed sharply lower thereby negating the chances of seeing a further rise mentioned yesterday. This also keeps alive our bearish view of seeing -0.60% (10Yr) and -0.20% (30Yr) on the downside in the near-term. While below -0.50% (10Yr) and -0.10% (30Yr) the rise to -0.40% (10Yr) and -0.02%/0% (30Yr) is not possible.
The 10Yr GoI (5.9491%)has bounced-back sharply from the low of 5.9079% yesterday. The chance of seeing breaking above 5.95% looks high now. Such a break can take the yield higher to 5.98%-6% in the coming days. A strong break and a close below 5.90% is needed to turn the outlook bearish.
