STOCKS
Dow is heading closer to the crucial resistance level of 33000. DAX has limited room on the upside from here. Nikkei and Shanghai also have key resistances ahead which will have to be broken in order to extend the current bounce-back move. Sensex and Nifty have declined sharply on Friday from just below their upper end of their respective 49000-52000 and 14600-15400 range. Overall the price action in the coming days will need a close watch to see if the equities are managing to breach their resistances that are ahead. We continue to remain cautious and our view is to see the resistances holding and trigger a corrective fall going forward. We will have to wait and watch.
Dow (32778.64, +293.05, +0.9%) has risen further and is heading towards 33000. As we have been mentioning for some time, 33000 is a crucial resistance which we expect to hold and trigger a corrective fall towards 31000 or even lower going forward. The price action around 33000 will need a close watch in the coming sessions.
DAX (14502.39, −67, -0.46%) has come-off slightly on Friday. The first resistance level of 14600 is holding for now but an extended rise to the next key resistance level of 14900 is still possible. We expect the upside to be capped at 14900 and DAX can see a reversal towards 14000-13800 initially and then further deeper eventually.
Nikkei (29823.16, +105.33, +0.35%) is heading higher towards the crucial level of 30000. As we have been mentioning since last week, a strong break above 30000 is needed for the view to be bullish to test 32000-33000 on the upside. While below 30000, the chances of seeing a fall back to 27000 cannot be ruled out.
Shanghai (3443.67, −9.41, -0.27%) is hovering around 3450. As mentioned on Friday, a strong rise past 3500 is needed to negate the view of seeing 3250-3200 on the downside and become bullish again. The price action in the 3450-3500 region will need a close watch in the coming sessions.
Sensex (50792.08, −487.43, -0.95%) and Nifty (15030.95, −143.85, -0.95%) fell sharply on Friday from just below 52000 and 15400 respectively. This keeps our view of seeing a sideways consolidation intact. 49000-52000 on Sensex and 14600-15400 on Nifty is the broad range that we expect to be in place. Within this range, unless a strong rise past 52000 (Sensex) and 15400 (Nifty) is seen, the bias is bearish to break the range on the downside and see a fall to 48000-47000 (Sensex) and 14200-14000 (Nifty) eventually.
COMMODITIES
Overall crude pries look bullish for the near term while Gold and Silver seem to have limited upside if the respective resistances hold and produce a rejection. Copper on the other hand may remain ranged unless a sharp and sustained break above 4.30 is seen.
Brent (69.88) and WTI (66.26) have risen well and could continue its upmove in the near term. A break above 70 on Brent could take it higher towards 73-75 while WTI may head towards important resistance near 70. If WTI manages to face rejection from 70 and decline from there, it could drag down Brent too from higher levels. Immediate view is bullish.
Gold (1726.60) trades higher but immediate upside could be limited to 1740/50 before again declining from there. A sustained break above 1750 is now needed to negate further fall back to levels below 1700.
Silver (26.13) needs to break above 26.20/30 to trigger a fresh upmove targeting 28.50. But while below 26.20/30, we may expect the near term sideways to downtrend to remain intact.
Copper (4.1690) has bounced well from 4 and while that holds, we may expect a rise towards 4.25/30 in the near term. A sideways range of 4.00-4.30 looks likely before a sharp rise is seen beyond 4.30.
FOREX
Most currencies look stable. Dollar Index needs to remain below 92 to eventually move down. Euro could be ranged within 1.19-1.20 for now. EURJPY has scope for a rise to 135. Aussie and Pound could be stable above 0.77 and 1.38. USDCNY is bullish towards 6.55 while USDINR may remain ranged within 72.60-72.90.
Dollar Index (91.69) looks ranged just now but needs to remain below 92 for the downmove to resume. A fall to 91 is needed to trigger bearish momentum again else we may expect a broad sideways range for few more sessions.
Euro (1.1946) tested 1.19 last week but has bounced back from there to trade higher. Immediate range of 1.19-1.20 may hold for now while we wait to see more cues for further directional clarity.
EURJPY (130.37) has risen well above 130 and if that sustains, we may expect a further upmove towards 135 soon. Immediate view is bullish while above 130.
Dollar-Yen (109.10) may rise towards 110 in the near term before falling off sharply from there. Immediate view is bullish.
Aussie (0.7748) may test 0.77 while below 0.78. Unless 0.78 breaks on the upside, it would be difficult for Aussie to establish a bullish momentum.
Pound (1.3921) needs to break above 1.40 to head higher to 1.41. Overall broad range of 1.38-1.41 may hold for the medium term.
USDCNY (6.5026) has risen again and could rise towards 6.52/55 in the near to medium term. Overall trend is up for USDCNY.
USDINR (72.7850) tested 72.62 on Friday before bouncing back from there. While below 72.90, there could be some scope for a possible re-test of 72.60 on the downside. A break above 72.90-73.00 is seen and sustains may negate any immediate fall to 72.60 again. Watch price action today which possibly looks stable within 72.60-72.90.
INTEREST RATES
The US Treasury yields have surged further. The outlook remains bullish. The 10Yr has risen past the crucial level of 1.60% which has now opened doors for further rise. The US Federal Reserve meeting outcome is due on Wednesday which will need a close watch to see how it is going to impact the yields. The German Yields have risen back and keep the broader bullish view intact. There is room for a further rise before a reversal is seen. The 10Yr GoI has limited room on the upside from here and is likely to see a reversal in the coming days.
The US 2Yr (0.15%), 5Yr (0.84%), (1.62%) and 30Yr (2.38%) had surged across tenors on Friday. The 10Yr has risen past the crucial level of 1.60%. While this break sustains a further rise to 2% is possible now. Also while above 1.60%, the chances of a corrective fall to 1.40% mentioned last week stands reduced. The 30Yr keeps our bullish view intact of seeing 2.5% on the upside.
The German 2Yr (-0.70%), 5Yr (-0.62%), 10Yr (-0.31%) and 30Yr (0.22%) have risen back well across tenors. Our bullish view of seeing -0.20%/-0.15% (10Yr) and 0.35% (30Yr) remains intact. Only a break below -0.40% (10Yr) and 0.10% (30Yr) will negate the above mentioned rise and turn the outlook bearish.
The 10Yr GoI (6.2316%) is holding higher above 6.20%. We reiterate that the upside is likely to be capped at 6.28%-6.30% from here. The 10Yr GoI is likely to fall towards 6.14%-6.10% in the coming days. A break below 6.18% can trigger this fall. But whether this fall will happen from here itself or after a rise to 6.28%-6.30% is not very clear at the moment.
