STOCKS
Dow has risen past 34000 and while this break sustains our view of seeing a corrective fall will get negated and a further rise to 35000 is possible. DAX is stuck in the narrow 15100-15300 range and looks mixed in the near-term. Nikkei and Shanghai can oscillate in the range of 28000-31000 and 3350-3500 respectively. Sensex and Nifty have resistances ahead at 49000 and 14800 which will have to be broken for them to move up further in the coming days.
Dow (34035.99, +305.10, +0.90%) has risen above 34000. While this break sustains, our view of seeing a reversal to 32000-31000 that we have been expecting will get negated. The Dow can then target 35000 and even higher levels.
DAX (15255.33, +46.18, +0.30%) retains its narrow 15100-15300 range and looks mixed in the near-term. Our view remains the same. A fall below 15000 will negate the chances of seeing 15500-15700 on the upside and will drag the DAX to 14600-14400 from here itself.
Nikkei (29682.66, +39.97, +0.13%) remains between 29500 and 30000. The broader 28000-30500/31000 range is intact. Within this range, while below 30500 we see high chances for Nikkei to break 29500 and fall to 28500-28000 in the coming days.
Shanghai (3407.69, +8.70, +0.26%) has risen back well from the low of 3373.09 yesterday. It has to rise past 3325 in order to avoid the fall to 3350 that we had mentioned yesterday. Such a rise to 3475-3500 again. Broadly, 3350-3500 seems to the range for now. Within this range while below 3500, the bias is negative to break 3350 and fall to 3300-3250 eventually over the medium-term.
Nifty (14581.45, +76.65, +0.53%) and Sensex (48803.68, +259.62, +0.53%)had recovered well from their day’s low yesterday. The indices will have to rise past 14800 (Nifty) and 49000 (Sensex) in order to gain momentum and move up further towards 15000-15200 (Nifty) and 50000-51000 (Sensex). We will have to wait and watch.
COMMODITIES
Commodity prices have moved up in line with our expectation. While Brent and WTI can move up to 68-70 and 65-67 respectively, Gold and Silver can rise to 1800-1820 and 26-27 on the upside. Copper has sharply risen to test 4.20 and while the rising momentum sustains, a test of 4.30 cannot be negated. Overall for the below mentioned commodities, view is bullish for the very near term.
Brent (66.89) has continued to rise and could be headed towards 68-70 before facing rejection from there. Note that 68-70 is a decent medium term resistance on the monthly charts and is likely to hold. WTI (63.42) has also continued to rise and could be headed towards 65-67 soon.
Gold (1760.50) has finally risen to test the upper end of the 1720-1760 range. It would be very important to see if the price manages to rise above 1760 and heads higher to 1800-1820 as that would be an initial signal of starting a fresh rise. View will be bullish while above 1760. Watch price action near 1760.
Silver (25.81) continues to move p and could rally towards 26-27 soon. View is bullish while above 25.
Copper (4.2010) has been rising as expected and above 4.20, we may expect a further rise to 4.30. Immediate view is bullish for Copper.
FOREX
Dollar Index has risen a bit while Euro is holding below 1.20. This could be short lived as we may soon see a fall in Dollar Index towards 91.50-90.50 and Euro to rise above 1.20. Pound and Aussie looks weak for the near term while below important near term resistances. EURJPY is likely to be ranged for some more time. USDCNY has bounced well and could be headed higher towards 6.54/56. A weak Euro and Chinese Yuan may lead to Rupee weakness as well taking the pair up from 74.70/50 levels back to 75.20-75.50 in the near term. Dollar Yen may rise to 109 before declining sharply from there.
Dollar Index (91.77) has risen slightly and could head towards 92 before resuming the fall towards 91.50-90.50 in the longer run. The corrective upmove is expected to be short lived.
Euro (1.1955) is falling while 1.20 holds as an immediate resistance. While below 1.20, we cannot negate a fall to 1.19 again before bouncing back again to 1.20+ levels. Immediate view is to see a corrective fall.
EURJPY (130.14) may continue trade within 131-129.80 in the near term.
Dollar-Yen (108.88) has just started to bounce from 108.61. While 108.50 holds, we may expect a slow bounce to 109.0-109.50 again in the near term. Failure to rise above 109 would indicate an eventual fall to 108 in the medium term.
Aussie (0.7734) may test 0.77 before rising higher towards 0.78 in the medium term.
Pound (1.3760) has dipped slightly and while 1.38 holds, we may expect Pound to fall back towards 1.37 soon.
USDCNY (6.53278) has bounced exactly from 6.52 as expected and could move higher to 6.54/56 soon.
USDINR (74.9250) tested 75.32 yesterday but could not sustain above 75.20 for long before it declined to close below 75. A fall to 74.70-74.50 could be possible on the downside before resumption on upward rally. The current correction is likely to be short while the medium to long term view remains intact t o see a test of 75.75-76.00 or even higher.
INTEREST RATES
The US Treasury yields have come-off sharply and are coming closer to their crucial support. The price action in the coming days will need a close watch to see if the yields can reverse higher from their supports and keep the uptrend intact or will break below the supports and indicate a reversal. German yields have reversed lower from their upper end of their sideways range. They can continue to consolidate for some more time within their uptrend. The 10Yr GoI has risen sharply contrary to our expectation and has room to move up further. The fall that we have been expecting will get delayed now.
The US 2Yr (0.16%) Treasury yield remains stable while the 5Yr (0.82%), 10Yr (1.57%) and 30Yr (2.27%) have come-off sharply. As mentioned yesterday, 1.55%-1.50% (10Yr) and 2.25%-2.20% (30Yr) are crucial supports which will have to be broken to indicate a reversal. A bounce-back from these support zone will mean that the current fall is just a correction within the overall uptrend and will still keep alive the chances of seeing 1.9%-2% (10Yr) and 2.9%-3% (30Yr) on the upside over the medium-term. The price action in the coming days will need a close watch.
The German 2Yr (-0.71%), 5Yr (-0.63), 10Yr (-0.29%) and the 30Yr (0.26%) have dipped across tenors failing the break the sideways consolidation on the upside. This keeps the -0.35/-0.25 (10Yr) and 0.2%-0.3% (30Yr) range intact and the consolidation can continue for some more time. We retain our bullish bias to see an upside breakout of this range and a rise to -0.20%/-0.15% (10Yr) and 0.35% (30Yr) over the medium-term.
The 10Yr GoI (6.1256%) has surged above 6.08%-6.10% contrary to our expectation. remains stable around 6%. This will delay the expected fall to 5.9% that we have been looking for. A further rise to 6.16% is possible in the near-term before the yield reverses lower again to resume the overall downtrend again towards 6% and 5.90% eventually.
