STOCKS
Equities remain higher but seem to need some fresh triggers to see further strong rise as mentioned on Friday. Dow looks mixed in the near-term and can see either 32000 or 31000 from here. DAX has risen back and can consolidate between 13800 and 14200. The chances of seeing a fall mentioned last week stands reduced. Nikkei has also risen back above 30000 and keeps alive the chances of moving up further before a corrective fall is seen. Shanghai has bounced but has resistance ahead that can cap the upside and drag it lower. Sensex and Nifty have declined below their key levels of 51000 and 15000 respectively. While this break sustains, a further fall is possible in the coming days. Overall equities are not looking convincingly strong at the moment although there is room to rise from here. We continue to remain cautious.
Dow (31494.32, +0.98, +0.003%) continues to oscillate around 31500. The near-term view continues to remain mixed with equal chances of seeing either 32000 on the upside or 31000 on the downside from here. However, from a bigger picture we retain the view that 32000 is a strong resistance which can cap the upside. We expect a corrective fall to 30000 and even lower levels going forward. A break below 31000 can trigger this fall.
DAX (13993.23, +106.30, +0.77%) has risen back on Friday thereby easing the danger of seeing the fall to 13600 that we had mentioned. 13800-14200 can be a range seen in the near-term. A strong rise past 14200 is necessarily needed to see 14500-14600 on the upside. Overall 14200 and 14500-14600 are strong resistances. We expect a corrective fall to 13600 and even 13400-13200 either from 14200 itself or after an extended rise to 14500-14600.
The break below 30000 witnessed on Friday did not sustain. Nikkei (30355.75, +337.83, +1.13%) has risen back well above 30000 again thereby reducing the danger of seeing a fall to 29000-28000 mentioned on Friday. It will have to be seen if it sustains above 30000 or not. While above 30000, the chances of seeing a rise to 33000-34000 will still be alive. We will have to wait and watch.
Shanghai (3689.33, −6.83, -0.18%) has risen back sharply from Friday’s low of 3634. But 3730-3750 can continue to act as a resistance and cap the upside from here for now. While below 3750, our view of seeing a corrective fall to 3600-3550 remains intact.
Nifty (14981.75, -137.20, -0.91%) has broken and closed just below 15000. Inability to see a sustained bounce above 15000 today can drag it to 14800 and 14600 in the coming days. It will also give an early sign of a reversal. 15200 can be a good intermediate resistance now.
Sensex (50889.76, −434.93, -0.85%) on the other hand has declined below 51000. While below a further fall to 49500-49000 is possible. 51600-51700 will be an important near-term resistance.
COMMODITIES
Gold and Silver have recovered from levels seen last week and may rise in the near to medium term towards 1800 and 28+ respectively. Copper has been the biggest gainer amongst the other commodities that could rally towards 4.6 soon. Crude prices are aso looking bullish for the near term.
Brent (63.53) and WTI (59.80) have bounced back well. Our expected dip to 60-58 on Brent and 55 on WTI has not happened. Crude prices look positive for a further rise from here towards 65 and 63.50 in the near term respectively.
Gold (1785.40) has risen from 1760 and while that holds in the very near term, a test of 1800 looks possible. From there we may either expect a further rise towards 1820-1840 or a sharp fall back to 1740 levels. Watch price action near 1800.
Silver (27.62) has risen well moving up above 27 again. View is bullish for a rise towards 28.0-29.50 in the medium term.
Copper (4.1485) has broken above resistance at 4 and while the upward momentum remains intact, we may expect a further rise towards 4.6 soon. View is strongly bullish for the near to medium term.
FOREX
Dollar Index is stable just now and needs to break on either side of 90-91 to give more clarity on direction. Euro may rise towards 1.22 but may face rejection from there. A break above 1.22 is needed to turn medium term bullish on the Euro. EURJPY, Aussie and Pound looks bullish for the near term. USDINR may test support near 72.50 but could bounce back from there. Failure to bounce from 72.50 may open up chances of testing 72.15. Watch price action near 72.50 just now.
Dollar Index (90.35) needs to break below 90 in order to move down further. While above 90, we may expect 90-91 range to hold well for now.
Euro (1.2119) needs to decisively break above 1.2150 to move up further towards 1.22 or higher. Watch price action near 1.22 in the coming sessions.
EURJPY (128) has bounced and looks bullish for a rise towards 128.50 in the very near term. A break above 128.5 could take the cross higher towards 129-130 in the longer run.
Dollar-Yen (105.60) has bounced back from 105.25 and could again rise back to 106.00-106.25 levels on the upside. Unless a break below 105 is seen, it would be difficult to expect a sharp decline in the pair. Immediate view is bullish.
Aussie (0.7877) has risen well above 0.78 and could be soon headed towards 0.80 while Copper continues its rally towards 4.6 (refer commodities section above). Immediate view is strongly bullish.
Pound (1.4017) is holding below 1.40 and may expect a rise to 1.41/42 soon. View is bullish.
USDCNY (6.4628) continues to hold within 6.44-6.50 region and may head higher towards 6.48/50 before a possible dip looks possible.
USDINR (72.6550) may test 72.50 in the very near term from where a bounce looks likely. Failure to bounce from 72.50 may take it lower towards 72.15 on the downside. We wait to watch price action near 72.50 before getting clarity on further direction.
INTEREST RATES
The US Treasury yields have surged breaking above their crucial resistances. Our view of seeing a reversal has gone wrong. While this break sustains, the yields have room to move up further in the coming days. The German yields are at their crucial resistances. A further rise from here will negate the reversal that we have been mentioning so far. The price action in the coming days will need a close watch. The 10Yr GoI looks bullish and can rise in the coming days.
The US 2Yr (0.11%), 5Yr (0.60%), 10Yr (1.38%) and 30Yr (2.13%)have surged breaking above their crucial resistances. Our view of seeing a reversal has gone wrong. While this break sustains, the yields can move up further to 1.45%-1.55% (10Yr) and 2.20%-2.40% (30Yr) over the medium-term.
The German 2Yr (-0.69%), 5Yr (-0.61%), 10Yr (-0.31%) and 30Yr (0.21%) have risen sharply especially at the far-end. The 10Yr has come closer to the -0.30%/-0.25% region and the 30Yr is testing 0.20% in line with our expectation. The 10Yr has room to test -0.25% from here. The 30Yr on the other hand can rise to 0.40% if it sustains above 0.20%. In that case our view of seeing a reversal from 0.20% will go wrong and can happen later from 0.40%.
The10Yr GoI (6.1850%, 05.77 GS 2030) sustains higher and keeps intact our view of testing 6.20% on the upside. As mentioned on Friday, the price action around 6.20% will need a close watch to see if a reversal is happening from there or not.
The 10Yr GoI (6.1234%, 05.85 GS 2030) is holding well above 6.10%. While above 6.10%, a rise to 6.15%/6.18% is possible in the near-term.
