STOCKS
Equities look mixed. Dow and Nikkei have room to move slightly up from here while the DAX, Sensex and Nifty have tested their resistances already and are attempting to come down. Shanghai on the other hand seems to be gaining momentum and can stage a strong rally if it breaks above the immediate resistance that is coming up now. We continue to retain our cautious stance in equities and would prefer to approach the market from the sell side even if a further rise is seen from current levels.
Dow (31375.83, −9.93, -0.03%) remains higher and stable. Our view remains the same. 31500-32000 will be an important resistance zone from where we expect a corrective fall to 31000-30000 or even lower. As such we continue to remain cautious.
DAX (14011.80, −48.11, -0.34%) has dipped further and seems to be losing momentum. As mentioned yesterday, a break below 14000 will increase the chances of seeing a fall to 13600 and 13400-13200 from here itself. It will also negate the chances of seeing an extended rise to 14500 that we were expecting last week.
Nikkei (29531.48, +25.55, +0.09%) sustains higher and has risen above 29500. This keeps our view intact of seeing an extended rise to 30000 in the near-term. Thereafter we expect Nikkei to reverse lower towards 29000-28000.
Shanghai (3626.50, +23.01, +0.64%) has surged towards the 3600-3635 resistance region. It will have to be seen if it can rise past 3635 decisively from here which will pave way for a test of 3700-3800. Such a break will also be bullish from a long-term perspective as it will open doors to target 4400.
Sensex (51329.08, −19.69, -0.04%) has come-off from just below 52000 and Nifty (15109.30, −6.50, -0.04%) made a high of 15257.10 and reversed lower from there. A further fall below 51000 on Sensex and 15000 on Nifty will give an early sign of a reversal and can drag them to 50000-49000 and 14800 respectively. Sensex will have to breach 52000 and Nifty has to break above 15250 in order to move further higher from here.
COMMODITIES
Copper prices surged as participants increased bets on spot demand. We may expect a rise in Copper to 3.80/90 in the near term before a corrective dip sets in. Gold and Silver look stable today but we may expect a test of 1880 and 28-29.50 respectively in the near term. Crude prices are rallying upwards and could be headed towards 65 (both Brent and WTI) soon. Overall near term view for commodities look ranged to bullish.
WTI (58.30) is almost stable near levels seen yesterday while Brent (61.10) has risen. A rise towards 65 looks likely for both Brent and WTI in the near term.
Gold (1840.40) is stable too and could be headed towards 1880 in the near term. We expect the broad 1880-1820 range to hold for now. Unless a break above 1880 is seen, we would not look for bullish possibilities on Gold towards 1920 or higher.
Silver (27.43) has dipped a bit but while above 27, we do not negate chances of a possible rise towards 28.0-29.5 in the medium term.
Copper (3.7595) has surged well towards our expected 3.70/80 levels. A break above 3.80 could take it higher to 3.90 before a corrective dip is seen from there. Immediate view is bullish on Copper.
FOREX
Dollar Index continues to trade lower and could test support at 90 while Euro may extend gains upto 1.22. EURJPY may test 127.20/25 on the upside before any corrective dip is seen. Dollar Yen is gfalling along with Dollar Index but could bounce from support near 104.50-104 in the near term. Aussie and Pound looks bullish in the near term. USDCNY may test 6.42 but looks overall bullish in the longer run. USDINR may continue to trade within 72.75-73.10 before moving up sharply in the medium term.
Dollar Index (90.39) has fallen sharply and could test support at 90 before bouncing back from there in the near term. Euro (1.2125) has risen well and if t manages to rise to 1.22 and higher, we may expect the rally to continue for the medium term. Watch out for possible resistance at 1.22 in the next few sessions.
EURJPY (126.83) now has resistance near 127.20/25 which if holds could produce a dip to 126.75 or lower in the near term. But a break above 127.25 could lead to a rise to 128 on the upside before a dip could be seen in the medium term. Watch price action near 127.20/25 now.
Dollar-Yen (104.61) has dipped sharply along with the fall in Dollar Index. The pair may face support at 104.50 or lower at 104 which if holds may produce a bounce back towards 105+ levels in the medium term. Watch price action near 104.50 in the near term.
Aussie (0.7738) is rising well boosted by a rise in Copper prices. AS copper may extend its rise towards 3.80/90, we may expect a bullish Aussie towards 0.78 in the near term.
Pound (1.3822) has broken above crucial resistance at 1.38 on the weekly charts and while the rise sustains, we may not negate a rise to 1.40 in the near term. Immediate view is bullish while above 1.38.
USDCNY (6.4380) has broken below 6.44 but may not sustain for long as it may bounce back towards 6.48/50 in the medium term. Note that a sustained trade below 6.44 may drag the pair down to re-test crucial long term supports near 6.42/40 in the medium term.
USDINR (72.8950) managed to close lower yesterday, keeping the 72.75-7305/10 range intact. We may expect the sideways consolidation to continue for some more time before a sharp break on either side (break on the upside seems more likely) is seen.
INTEREST RATES
The US Treasury yields remain stable and higher. There is an early sign of a turn-around in the charts. A further fall from here will confirm the same and drag it lower in the coming weeks. The US inflations numbers today will need a close watch to see how it can impact the yields. The German Yields sustain higher and keep intact our near-term bullish view. The yields can move up from current levels. The 10Yr GoI is likely to consolidate sideways for some time and then resume its upmove.
The US 2Yr (0.12%), 5Yr (0.47%), 10Yr (1.16%) and 30Yr (1.95%) Treasury yields remain stable and higher. The 10Yr and 30Yr are signaling a turn-around from their crucial resistance levels of 1.20% and 2% respectively. As mentioned yesterday, a further fall from here can drag the yields to 1% (10Yr) and 1.8% (30Yr) from here itself. In that case, the chances of seeing an extended rise to 1.25% (10Yr) and 2.05% (30Yr) mentioned last week will get negated.
The German 2Yr (-0.72%), 5Yr (-0.69%), 10Yr (-0.45%) and 30Yr (0.02%) yields remain stable across tenors. The near-term bullish view of testing 0.40% (10Yr) and 0.05% (30Yr) on the upside remains intact. The 30Yr has room on the upside to see an extended rise to 0.15%-0.20%. The 10Yr on the other hand has to breach -0.40% in order to move further higher towards -0.25% going forward.
The 10Yr GoI (6.1105%, 05.77 GS 2030) remained stable yesterday. Our view of seeing a sideways consolidation between 6.06/05% and 6.16/18% remains intact. Eventually, we expect the yield to break this consolidation on the upside and move up to 6.25%-6.28% in the coming weeks.
