STOCKS
The upmove in equities continues and the major global indices have moved up further. However, as mentioned last week, there is limited room on the upside as key resistances are ahead. As such we will continue to approach the equities cautiously. We reiterate that the Dow has resistance at 31500-32000 and for the DAX at 14500-14700. Nikkei has room to test 29500-30000 while Shanghai can consolidate sideways. Sensex and Nifty can rise to 51000-52000 and 14150-14200 respectively in the coming days. Thereafter the indices are likely to reverse lower.
Dow (31148.24, +92.38, +0.30%) has risen and closed above 31000 on Friday. Our view of testing 31300-31500 remains intact. Also as mentioned on Friday, the chances of the rise extending up to 32000 cannot be ruled out. However, we will remain cautious to see a corrective fall anywhere from the 31500-32000 resistance zone.
DAX (14056.72, −3.57, -0.02%) sustains above 14000 and keeps alive the chances of testing 14200-14500. We reiterate that 14200 and 14500 are important resistances from where we will be looking for a sharp corrective fall to 13400-13200 going forward.
Nikkei (29378.18, +598.99, +2.08%) has sharply above 29000 and can test 29500 and even 30000 from here. We will have to wait and see if Nikkei reverses lower from the 29500-30000 region (revised higher from 29000-29500 mentioned last week) going forward.
Shanghai (3516.10, +19.76, +0.57%) remains stable above 3500. As mentioned on Friday, 3450-3550 (narrow) and 3400-3635 (broad) can be the possible ranges that can be seen in the coming weeks. From a bigger picture, while above 3400, the long-term trend will continue to remain up.
Sensex (50731.63, +117.34, +0.23%) and Nifty (14924.25, +28.60, +0.19%) continue to trade high and retain their bullish view. Our view remains the same. Sensex can test 51000 and even 51500-52000 and Nifty can move up to 15150-15200. Thereafter we expect these indices to reverse lower and see a corrective fall.
COMMODITIES
Crude prices continue to surge and look bullish for the near term. Gold may remain bearish while below 1860 but as support near 1780 is holding for now, we may expect some ranged movement within 1780-1860 region. Copper if manages to break above 3.65, could rise sharply towards 3.70/75 on the upside. Overall view is bullish.
WTI (57.37) has moved up sharper as compared to Brent (59.81). While Brent has scope for a rise towards $62, WTI may face a short corrective dip from 58. Watch price action near 58 and 62 on WTI and Brent as overall trend remains up.
Gold (1811.60) has bounced well from 1784 rising back to 1800+ contrary to our expected fall towards 1760-1740. The bounce has come in as Dollar Index could not sustain above 91.50 and fell from 91.60 to test 91 on the downside. If the index re-attempts to bounce from 91 again, Gold could have some scope of falling back towards 1800-1780 again in the near term. Overall we cannot negate a bearish possibility while below 1860.
Silver (26.99) has bounced from support near 25 and while that holds, the metal price could head towards 29 before seeing a dip from there.
Copper (3.63) has moved to test the upper levels of the 3.55-3.65 range and if the prices manage to break above 3.65, we may expect a further upmove towards 3.70/75 in the near term. Failure to break above 3.65 may drag it down to 3.50 soon. Watch price action at 3.65 as a break on the upside looks more likely.
FOREX
Dollar Index has dipped from levels near 91.60, taking Euro up towards 1.2050 and other currencies like Aussie, Pound and Chinese Yuan to levels of 0.77, 1.3750 and 4.4580. We may expect USDINR to be ranged for sometime within 72.75/80-73.00/10 region. EURJPY looks bullish for a possible test of 127.50.
Dollar Index (91.087) dipped well from 91.60 instead of sustaining at higher levels. Important to note would be if the index continues to fall below 91 or re-attempts a bounce back towards 91.50-92.00 over the next few sessions. Watch support at 90.80 in the very near term.
Euro (1.2035) rose sharply from 1.1950 to test 1.2050 before again trading slightly lower. Watch price action near 1.2050 to see if the rise would extend upwards or dip back towards 1.20 in the near term.
EURJPY (126.92) has risen well from 126.10 but while below 127.50, there could be possibility of a dip back towards 126.50. Watch price action near 127-127.50 in the near term.
Dollar-Yen (105.44) tested 105.80 before coming off sharply. Note that 105.20 is an immediate support which if holds could keep the pair higher for the near term.
Aussie (0.7674) has bounced well to in line with the rise in Copper (refer to commodities section above). We may expect an immediate rise to 0.77 which if breaks could extend towards 07750 on the upside. Immediate view is bullish.
Pound (1.3730) has bounced well and could attempt a break above 1.3750 in the near term. Near term looks bullish.
USDCNY (6.4580) did rise last week but could not sustain above 6.48. We may expect immediate support at 6.44 to hold while 6.50 can cap the upside in the near term.
USDINR (72.9275) could be ranged within 72.75/80-73.00/10 region for the very near term.
INTEREST RATES
The US Treasury yields have moved up further in line with our expectation and are coming closer to their key resistances. We expect the yields to reverse lower after testing their resistance in the coming days. The German yields retain our near-term bullish view and are moving up as expected. The yields can rise further from current levels this week. The 10Yr GoI has risen sharply on Friday after the Reserve Bank of India’s (RBI) monetary policy meeting. The RBI announcing to provide direct access for the retail investors to the G-Secs has triggered this rise. This keeps our bullish view intact and the 10Yr GoI has room to move up further.
The US 2Yr (0.10%) Treasury yield has dipped on Friday while the 5Yr (0.47%), 10Yr (1.18%) and 30Yr (1.98%) have risen further well especially at the far-end. The 10Yr and 30Yr have come closer to 1.20% and 2% as expected. The upside can extend slightly up to 1.25% (10Yr) and 2.05% (30Yr) and then a reversal back to 1% (10Yr) and 1.8% (30Yr) is possible in the coming weeks.
The German 2Yr (-0.73%) and 5Yr (-0.69%) yields remain stable while the 10Yr (-0.45%) and 30Yr (0.01%) have inched up slightly. We retain our view of seeing the yields rising to 0.40% (10Yr) and 0.05% (30Yr) in the near-term. The 10Yr has to breach -0.40% to extend the upside to -0.25%. As mentioned on Friday, the 30Yr looks more bullish and can target 0.15%-0.20% in the coming weeks. This can aid the 10Yr to breach -0.40% and move further up going forward.
The support at 6.06%-6.05% mentioned on Friday on the 10Yr GoI (6.1515%). The yield has surged from 6.05% after the RBI’s monetary policy meeting to close on a strong note. This keeps our bullish view intact of seeing 6.25%-6.28% on the upside intact.
