STOCKS
Equities are hovering at the crucial resistance levels. Dow is hovering below the crucial resistance level of 33000. DAX is holding below 14600 and has another resistance at 14900. Nikkei has an immediate resistance at 30000 which has to be broken to become bullish again and avoid a fall back. Shanghai lacks strength to break above 3450 decisively. Sensex and Nifty are falling within their preferred sideways range. The price action in the coming sessions will need a close watch to see if the indices can breach their resistances and move further higher from here. The outcome of the US Federal Reserve meeting tomorrow could possibly decide whether the equities can extend their rally or begin a sharp correction. Overall we continue to remain cautious and not very bullish at this moment.
Dow (32953.46, +174.82, +0.53%) has closed just below the crucial level of 33000. As we have been mentioning for some time, a corrective fall to 31000 is possible from here. A strong and sustained rise past 33100 from here will negate this view. The price action today will need a close watch.
DAX (14461.42, −40.97, -0.28%) is stuck in between 14400 and 14600 over the last few days. Our view remains the same. 14600 and 14900 are important resistances that are expected to cap the upside from here. We expect to see a corrective fall to 14000-13800 initially and then further deeper eventually either from here itself or after an extended rise to 14900.
Nikkei (29948.73, +181.76, +0.61%) is attempting to breach 30000. As we have been mentioning for some time, a strong rise past 30000 is needed to turn the view bullish for a test of 32000-33000 on the upside and negate the chances of seeing a corrective fall to 27000 that we have been expecting. The price action in the coming sessions will need a close watch.
Shanghai (3415.37, −4.58, -0.13%) is struggling to get a strong follow-through rise above 3450. While below 3500, the chances of seeing a fall to 3250-3200 are still alive. A strong break above 3450 and a subsequent rise past 3500 is necessarily needed to negate the above mentioned fall and pave way for further rise.
Sensex (50395.08, −397, -0.78%) and Nifty (14929.50, -101.45, -0.67%) fell further yesterday and can head down towards the lower end of their respective range of 49000-52000 and 14600-15400. Our broader view remains the same. While below 52000 (Sensex) and 15400 (Nifty), the bias is bearish to see a downside break of the range and see a fall to 48000-47000 (Sensex) and 14200-14000 (Nifty) eventually.
COMMODITIES
Most commodities look stable or may dip in the near term. A fall in WTI from monthly resistance near $70 may drag down Brent as well from 73-75 levels. Copper may trade in a broad range of 4.00-4.30 while Gold and Silver may rise a bit towards 1750 and 26.30. A break above 26.30 on Silver could be bullish for the near term.
Brent (68.07) and WTI (64.64) have both dipped sightly from levels seen yesterday. However, as mentioned yesterday we would keep a close watch at important resistance near 70 on the WTI and 73-75 on the Brent. A decline in WTI from thementioned resistance can drag down Brent as well in the medium term.
Gold (1729.40) is almost stable today. As mentioned yesterday, a sustained break above 1750 would be needed for the price to become bullish and move up further. Else a fall back towards 1700 or lower cannot be negated.
Silver (26.23) is up slightly and needs to break above 26.30 to move up further targeting 28.50 on the upside. Watch price action near current levels to see if Silver faces rejection or manages to rise above 26.30 and sustain in the near term.
Copper (4.1155) has dipped slightly but while above 4, overall near to medium term looks bullish for a rise towards 4.30. Broad range of 4.00-4.30 is possible for the medium term.
FOREX
Most currencies continue to look stable. Dollar Index needs to remain below 92.50/92.00 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 6.52/55 while USDINR could test 72.40/25 before bouncing back to higher levels. USDINR would need a close watch today for further directional clarity.
Dollar Index (91.85) can attempt to test 92.50 again on the upside but a decline from there back to 91 looks possible. Broad range of 92.50-91.00 may hold for now.
Euro (1.1925) needs to rise above 1.20 to move higher. Till then we may continue to see sideways range of 1.20-1.19 for a few sessions.
EURJPY (130.25) trades above 130 and is bullish for a rise towards 135 soon. Immediate view is bullish while above 130.
Dollar-Yen (109.21) has scope for a rise to 109.50-109.75 or even 110 before coming off sharply from there towards 108 or lower. Immediate view is bullish while above 109.
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 (1.3866) looks stable and is unable to break above 1.40 which could keep the Pound ranged within 1.40-1.38 region. A break above 1.40 is needed for the Pound to rise to 1.41 in the medium term. Overall view is ranged for now.
USDCNY (6.5010) looks stable today but while the pair sustains trade above 6.50, we may expect a further rise towards 6.52-6.55 soon. View is bullish for the near to medium term.
USDINR (72.4775) broke below our expected key support at 72.60 to test 72.3925 before closing at 72.4775. The pair needs a close watch today to see if it bounces back sharply from here or continues to trade lower which could eventually take it down to 72.25 or even 72 on the downside. Note that 72.40 and 72.25 are immediate supports which if hold could take the pair higher within the next few sessions.
INTEREST RATES
The US Treasury yields hovers at higher levels. They can continue to oscillate higher until the Fed meeting outcome tomorrow which could set the direction for the yields. A sustained rise above 1.60% on the 10Yr after the Fed meeting will pave way for further rise in the Treasury yields. The German yields are consolidating at higher levels within their overall uptrend. The view remains bullish to see further rise from here before a reversal is seen. The 10Yr GoI can test the lower end of its 6.18%-6.26% range and need to see if it can retain this range or not. The bias is to see a downside break of this range, if not immediately but eventually.
The US 2Yr (0.15%) remains stable while the 5Yr (0.82%), (1.59%) and 30Yr (2.35%) Treasury yields have dipped slightly. The 10Yr has dipped below 1.60%. We can expect it to hover around 1.6% until the Fed meeting outcome on Wednesday. A sustained rise above 1.6% will take the 10Yr to 2%. A fall below 1.5% is needed to bring it under pressure and negate any further rise. The 30Yr on the other hand has potential to target 2.5% on the upside.
The German 2Yr (-0.70%) yield remains stable while the 5Yr (-0.65%), 10Yr (-0.34%) and 30Yr (0.20%) have come-off yesterday. The 30Yr is oscillating around 0.20% and the 10Yr is hovering around -0.30%. We retain our bullish. The 10Yr can rise to -0.20%/-0.15% and the 30Yr can target 0.35% on the upside. The bullish view will get negated only on a strong break below -0.40% (10Yr) and 0.10% (30Yr).
The 10Yr GoI (6.2003%) fell sharply yesterday and can head down to test the crucial support level of 6.18%. As mentioned yesterday, a break below 6.18% can drag the yield to 6.14%-6.10% in the coming days. While 6.18% holds, the 10Yr GoI can continue to oscillate sideways between 6.18% and 6.26% for some more time before the above mentioned fall happens.
