STOCKS
Dow, DAX and Nikkei continue to consolidate at higher levels. Whether a corrective fall will happen after this consolidation itself or after one more leg of rise is not clear. We will have to wait and watch. Shanghai is attempting to break above its crucial resistance. A sustained break will be bullish from a long-term perspective. Sensex and Nifty are coming closer to their crucial supports which have to hold in order to avoid a much deeper fall. Broadly, we continue to retain our cautious stance on the equities.
Dow (30996.98, −179.03, -0.57%) still struggles to get a strong follow-through rise above 31000. Our view continues to remain cautious. 31500-32000 will be a cap on the upside from here. 30300-30000 will be a crucial support zone. A strong break below 30000 will indicate the beginning of the correction and drag the Dow to 29000 and even lower going forward.
DAX (13873.97, −32.70, -0.24%) continues to oscillate within the 13600 and 14000/14100 range as expected. Our view remains the same. The sideways consolidation can continue for some time. The bias is bearish to see a break below 13600 and fall to 13200. However, in case of a break above 14100, an extended rise to 14500 can be seen first before the above mentioned fall happens.
Nikkei (28767.43, +135.98, -0.47%) is stuck in between 28500 and 28850. As we had mentioned last week, a strong break below 28000 is needed to confirm a trend reversal towards and trigger a fall to 27000-26500 going forward.
Shanghai (3625.49, +18.74, +0.52%) has risen back above 3600 again. As mentioned last week, a strong close above 3625 will be bullish to test 3700 on the upside. It will also negate the chances of seeing 3475-3450 on the downside that we have been mentioned. Also such a move will be bullish from a long-term perspective to target 4400 on the upside.
Sensex (48878.54, −746.22, -1.50%) and Nifty (14371.90, −218.45, -1.50%) have declined sharply over the last two trading days last week. 14200 on Nifty and 48500-48000 on Sensex will be crucial to watch this week. A strong break below these levels is needed to indicate that a top is in place and also confirm a reversal. While these supports hold, a bounce-back to 14600-14800 on the Nifty and 50000-50300 on the Sensex is possible ahead of the Union Budget next week.
COMMODITIES
Commodities look stable and ranged as seen last week. Crude may remain above immediate supports just now while Copper, Gold and Silver may dip towards immediate supports in the next few sessions before bouncing well from there.
Brent (55.30) and Nymex WTI (52.25) have dipped slightly but overall look stable. While above immediate supports of 54 and 51, we may expect the prices to remain ranged. 54-58 for Brent and 51-55 for WTI remains an immediate range to look for.
Gold (1854.5) had dipped from levels seen on Friday and could move lower towards 1840/20 while below immediate resistance near 1880. A broad range of 1880-1820 is likely to hold for some more time.
Silver (25.64) is almost stable and needs to break above 26 and sustain in order to see a possible test of 27. Failure to break above 26 could drag it down back to 24 or even 22 in the longer run. For now we keep the 26-24 region intact for near term trade.
Copper (3.6255) is almost stable but is likely to be stuck within 3.66-3.60 region for the near term. While above 3.60, we do not negate slow and steady rise towards 3.75/80 in the longer run but we would first need an initial break above 3.66. Watch price action for a break above 3.66 in the near term.
FOREX
Most currencies look stable with a possibility of strengthening in the medium term. Watch a fall in USDINR and USDCNY soon towards 72.75 and 6.44 while Dollar Yen may dip towards 103.Pound and Auusie may remain stable just now but could slowly inch upwards in the medium term. Euro is holding below 1.22 just now but we cannot rule out a sharp rise soon. Dollar Index seems to have paused just now but while below 90.50, view is bearish for a gradual fall to 89.
Dollar Index (90.17) is bearish while below immediate resistance at 90.50. A slow dip towards 89 cannot be ruled out in the near term.
Euro (1.2173) has dipped slightly from 1.22 but we may expect any dip from here to be limited to 1.2120-1.2125 just now before an attempt to rise to 1.22+ levels is seen in the longer run. View is bullish for the medium to long term.
EURJPY (126.32) has risen as expected and could head towards 126.50 or even 127 on the upside. Near term trend is up.
Dollar-Yen (103.76) trades slightly higher today but while below immediate resistance at 104, we keep the near term view bearish for a steady fall towards 103.50-103.00.
Aussie (0.7731) could remain sideways within 0.78-0.7660 just now before indicating on further movement from there. Immediate view is to see a ranged movement.
Pound (1.3699) is trading near 1.37 and has to break higher and sustain to move up towards 1.38 in the very near term. Note that 1.38 and 1.39 are important medium term resistances which may hold and produce a rejection in the medium term.
USDCNY (6.4785) has risen above our mentioned 6.4775 on Friday. We may expect resistance near 6.48-6.4850 to hold and cap the upside just now while a rejection from there would take it down again towards 6.44 r lower in the medium term.
USDINR (72.98) tested 73.0875 on the upside before closing lower at 72.98. A break below 73 if seen and sustained would trigger a fall towards 72.75 initially that could drag lower towards 72.50 in the longer run. Watch price action near 73 today.
INTEREST RATES
The US Treasury yields are keeping alive the chances of retesting the crucial resistances before resuming the long-term downtrend. The yields can remain stable for now. The outcome of the US Federal Reserve meeting on Wednesday might give a clarity on whether the yields will fall from here itself or after a rise to test their resistances. The German Yields are poised at the crucial resistances which we expect to hold and trigger a fall that we had been mentioning for some time. A sustained break above these resistances is needed to negate our bearish view. The 10Yr GoI looks mixed in the near-term and has equal chances for a rise and fall from current levels.
The US 2Yr (0.12%) and 5Yr (0.44%) Treasury yields continues to trade stable while the 10Yr (1.09%) and the 30Yr (1.86%)have dipped back again.. From a medium-term perspective, the yields are likely to fall towards 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) and even lower levels in the coming weeks. But whether this fall happens from here itself or after a rise to 1.20%-1.25% (10Yr) and 1.95%-2% (30Yr) is not clear at the moment.
The German 2Yr (-0.72%), 5Yr (-0.72%), 10Yr (-0.51%) and the 30Yr (-0.10%) are poised at their crucial near-term resistances which we expect to hold. The price action over the next few days will need a close watch. A strong rise above -0.50% (10Yr) and -0.10% (30Yr) will negate our bearish view of seeing a reversal to -0.60% (10Yr) and -0.20% (30Yr). In turn that would take the yields up to -0.40% and 0%-0.05% in the coming days.
The 10Yr GoI (5.9492%) remains mixed in the near-term and has equal chances of seeing 6% and 5.90% on either side from here. But from a bigger picture, we see 6% as a strong resistance that can cap the upside. As such, the 10Yr GoI is likely to fall to 5.90%-5.88% eventually in the coming weeks.
