STOCKS
Equities look mixed. Dow is struggling to gain strength to breach 32000 decisively. We remain cautious as the upside is limited from here on the Dow. DAX can move up to test 14600-14900 and then can reverse lower. Nikkei is attempting to bounce but will have a strong resistance ahead that has to be broken to become bullish again and avoid a fall. Shanghai sustains the break below 3400 and confirms the trend reversal. The outlook is bearish. Sensex and Nifty can move up within its sideways range of 49000-52000 and 14600-15200/15400 respectively.
Dow (31832.74, +30.30, +0.09%) failed to sustain the break above 32000 for the second consecutive day. Our view remains the same. 32200-33000 is the broad resistance zone that is expected to cap the upside from here. We will continue to remain cautious to see a corrective fall from this resistance zone towards 31000-30000 or even lower going forward.
DAX (14437.94, +57.03, +0.4%) has moved up further and keeps intact our view of testing 14600 on the upside now. However, as mentioned yesterday, 14600 and 14900 are crucial resistances that can cap the upside. We expect DAX to reverse lower from there towards 14000-13800 going forward.
Nikkei (29040.82, +12.88, +0.04%) has inched above 29000 but needs to gain momentum and rise past 30000 to become bullish. While below 30000, the bias is bearish to see a fall to 27000.
Shanghai (3381.76, +22.47, +0.67%) sustains the break below 3400 and is confirming the reversal. The outlook is bearish. 3400 and 3450 will be important resistances to watch. While below 3450, a fall to 3250-3200 can be seen. The view of seeing 4400 over the long-term stands negated while below 3450.
Sensex (51025.48, +584.41, +1.16%) and Nifty (15098.40, +142.20, +0.95%) are attempting to move up. A test of 52000 (Sensex) and 15200/15400 (Nifty) looks likely now. However, 49000-52000 (Sensex) and 14600-15200/15400 (Nifty) could be a range that can be seen. A strong rise past 52000 (Sensex) and 15400 (Nifty) is necessarily needed to become more bullish from here and avoid a fall back.
COMMODITIES
Crude prices trade lower today. We may expect the dip to continue for a couple of sessions more before a bounce is seen. Copper needs to sustain above 4 to move up; else we cannot negate a fall to 3.8 in the near term. Silver is bearish while below 26. Gold may trade within 1720-1660 region for now. Overall mist commodities trade lower today and may continue so for a couple of sessions before rising higher.
Brent (67.02) and WTI (63.60) are trading lower today and may dip towards 66-65 and 63-61 respectively before a bounce is seen in the near term.
Gold (1708.10) and Silver (25.85) have risen slightly. While Gold may trade within 1720-1660 region for now, Silver is bearish while below 26.
Copper (4.0080) continues to fall and if a break below 4 sustains, we may expect the fall to extend towards 3.80 in the near term. Immediate view is bearish while below 4.20.
FOREX
Dollar Index held below 92.50 and Euro above 1.1850 yesterday but we would be cautious to see a breach of the mentioned levels in the near term which could take up the index towards 93 and Euro towards 1.1800. Watch price action for the next few sessions. Pound and Aussie may remain ranged for sometime while EURJPY could slowly inch up towards 130. USDCNY is ranged just now but overall view is bullish towards 6.55-6.60 in the longer run. USDINR came off from 73.25 contrary to our expected rise to 73.50/60. With the pair below 73, the chances of breaking below 72.90/80 looks possible to target 72.60. Watch price action near 72.90/80 today
Dollar Index (92.15) fell from 92.50 as expected but we would be cautious to see if it manages a rise towards 93 in the coming sessions. A sharp decline from 93 could be on the cards in the coming weeks.
Euro (1.1880) rose too test 1.195 yesterday but has fallen back from there indicating some more weakness. Watch for a possible test of 1.1850 a break below which would open up chances of a fall to 1.1800.
EURJPY (129.29) is rising steadily and could soon move up to re-test 130. From 130, a further rise or fall would be more important to see. For now we wait and watch for some clarity.
Dollar-Yen (108.81) came off from 109.23 yesterday but has again started rising towards the 110 target resistance. Note that 110 is a crucial resistance and may hold in the medium term.
Aussie (0.7683) may be ranged within 0.7750-0.7620 in the near term.
Pound (1.3864) his almost stable just now but while above 1.38, a bounce towards 1.39/40 could be possible in the coming sessions. Immediate view is bullish.
USDCNY (6.5143) tested 6.5439 before coming off from there. We may expect trade within 6.50-6.55 to hold for the next couple of sessions at least before rising up further towards 6.60.
USDINR (72.9350) came off from 73.25 itself yesterday contrary to our expectation of a possible rise to 73.50/60 mentioned yesterday. We would keep a close watch on 72.90/80 today, the immediate supports that we have been mentioning for the last 2-3 sessions. A break below 72.80, if seen could accelerate the fall towards 72.60 negating the upside rise to 73.50/60 mentioned yesterday. NDF quotes 72.88. Watch price action near 72.90/80 today to see if it holds or breaks.
INTEREST RATES
The resistance on the US 10Yr is holding well. A further dip from here can trigger the corrective fall that we had been expecting. The price action in the coming days will need a close watch. The German yields remain higher and stable. The outlook remains bullish and there is room to move up further before a reversal is seen. The 10Yr GoI can dip within its sideways range and the bias is turning bearish to see a downside break of its range.
The US 2Yr (0.15%), 5Yr (0.81%), (1.54%) and 30Yr (2.24%) Treasury yields have dipped across tenors. The resistance at 1.60% on the 10Yr is holding very well. As we have been mentioning for some time, while 1.60% holds, a reversal to 1.40% can be seen in the coming days. The 30Yr is currently facing resistance at 2.30% and can dip to 2.20%-2.15% in the near-term. However, as we had mentioned earlier, the 30Yr may still have potential to rise to 2.50% which has to be watched closely to see if such a rise can take the 10Yr beyond 1.6% or not.
The German 2Yr (-0.69%) and 5Yr (-0.61%) remain stable while the 10Yr (-0.30%) and 30Yr (0.20%) have dipped slightly. We reiterate that while above 0.40% (10Yr) and 0.10% (30Yr) the short-term outlook is bullish to test -0.20%/-0.15% (10Yr) and 0.35% (30Yr) on the upside. Thereafter the yields can reverse lower.
The 10Yr GoI (6.2058%) can dip to test the lower end of its 6.18%-6.24% range in the near-term. On the line chart there is an early sign of a turn-around. As such, a break below 6.18% will confirm the same and will drag the 10Yr GoI to 6.14%-6.10%. Such a fall will reduce the chance of seeing 6.28%-6.30% on the upside that we had been looking so far.
