STOCKS
Equities look mixed. Dow has come-off yesterday and has to sustain above 34000 to keep the chances alive of seeing 35000 on the upside. DAX has limited upside from here and is likely to reverse lower after testing 15700 on the upside. Nikkei is coming down within its 28000-31000 range as expected. Shanghai is coming closer to the upper end of its 3350-3500 range and is likely to reverse lower in the coming sessions to keep the sideways range intact. Sensex and Nifty can see a short-lived bounce in the coming days before witnessing a further fall eventually.
Dow (34077.63, −123.04, -0.36%) has come-off yesterday and needs to be seen if it can sustain above 34000 or not. As mentioned yesterday, while above 34000, a test of 35000 is possible and the chances of seeing 32000-31000 that we had been expecting earlier will stand negated. Dow has to fall below 34000 and then subsequently below 33000 in order to come under pressure to see a sharp correction.
DAX (15368.39, −91.36, -0.59%) tested 15500 as expected and has come-off from the high of 15501.84. We reiterate that 15700 is a strong resistance that can cap the upside. DAX is likely to see a corrective fall from 15700 towards 14500 and even 14000 in the coming weeks.
As expected, Nikkei (29119.79, −565.58, -1.91%) has broken below 29500 and keeps our bearish view intact of seeing a fall to 28500-28000 in the coming days. We reiterate that 28000-30500/31000 is the range that can be seen and Nikkei can fall within this range.
Shanghai (3481.72, +4.17, -0.12%) sustains higher and is heading up towards 3500. A pull-back from 3500 can drag Shanghai to 3400-3350 again and will keep the 3350-3500 range intact. Also while below 3500, the broader view is negative to see a test of 3250-3200 on the downside over the medium-term. The price action near 3500 will need a close watch.
Nifty (14359.45, -258.40, -1.77%)) has bounced from the low of 14191.40 yesterday and can move up to14600 on a break above 14400. However, the broader view remains bearish to see 14000-13800 on the downside. 14600-14800 can cap the upside from here.
Sensex (47949.42, −882.61, -1.81%) on the other hand can face resistance near 49000 and remain pressured on the downside to test 47000-46000 going forward.
COMMODITIES
Commodity are all up today and trade in the green except Gold and Silver which has dipped from higher levels seen yesterday. Copper may head towards 4.40/60 while above 4.10/20 while Gold is bullish towards 1800-1820 while above 1760. Silver may remain ranged between 25-26 while crude prices look bullish towards 67-70 (Brent ) and 65-67 (WTI)
Brent (67.53) has moved up and could test 68-70 soon. Note that 70 is an initial and immediate resistance on the monthly charts which if breaks could take it higher to 75-77 which is the next resistance above 70. While we prefer 70 to hold, any break above 70 could open up chances of testing 77 in the longer run before a sharp decline is seen. Watch price action near 70 in the near term. View is bullish for the next few sessions towards 70.
WTI (63.83) has also risen and could rise towards 65-67 in the near term. Immediate view is bullish.
Gold (1766.80) has dipped slightly but while above 1760, view is bullish to target 1800-1820 initially.
Silver (25.83) has dipped slightly and could trade sideways within 25-26 for a few sessions before breaking on either side of the range.
Copper (4.2575) has risen sharply exactly in line with our expectation and could test 4.30 in the near term. Further break above 4.30 would make the prices more bullish for the medium term opening up chances of a possible rise towards 4.40-4.60 in the longer run. View is bullish above 4.10/20.
FOREX
Dollar Index is falling sharply in line with our broader view, pulling up Euro, EURJPY, Aussie, Pound, Chinese Yuan and Japanese Yen. Most currencies trade strong today and are likely to move up in the near term. USDINR may test 75.00-75.20 before again falling sharply towards 74.60/50. View is bullish for currencies while Dollar trades weak.
Dollar Index (90.896) continues to fall and could test 90.50-90.00 in the near term from where a failure to bounce could keep the trend strongly down. But we prefer to see a bounce from 90.50-90.00 on first testing before resuming the medium term downtrend.
Euro (1.2070) has risen well and could now face rejection from 1.2115 over the next few sessions. Immediate view is bullish while above 1.19.
EURJPY (130.54) has been pulled up by a strong Euro and needs to rise above 131 to move up sharply. Our mentioned fall towards 129 or lower is now negated.
Dollar-Yen (108.13) continues to fall to test 108. Note that a break below 108 is needed to take the pair sharply down towards 107-106 in the coming weeks; else a sharp bounce from 108 could take the pair back towards 109. Watch price action near 108.
Aussie (0.7799) is strongly up and needs to break above 0.78 to head further up towards 0.79. View is bullish while above 0.77/78.
Pound (1.4005) has risen sharply breaking above 1.40. If this rise sustains we may expect Pound to rise further towards 1.41/42 in the coming weeks. View is bullish while above 1.40.
USDCNY (6.4938) has fallen sharply contrary to our expectation of a rise while above 6.52. The sharp fall is indicative of near term bearishness and could now turn focus to test 6.45/42 possibly before again bouncing back.
USDINR (74.8825) bounced well yesterday to test 75.05 in line with our expectation before closing lower. A test of 75.0-75.20 looks possible in the near term while support is seen near 74.60/50 now. A break above 75.20 could help the pair gain bullish momentum.
INTEREST RATES
The US Treasury yields have risen back sharply especially at the far-end. The supports are holding well and are keeping the broader uptrend intact. A sideways consolidation is possible within the overall uptrend. The German Yields have broken their sideways range on the upside as expected and can move up in the coming days in line with our expectation. The 10Yr GoI is bearish to fall further from current levels.
The US 2Yr (0.16%) Treasury yield remains stable while the 5Yr (0.84%), 10Yr (1.61%) and 30Yr (2.31%) have bounced-back sharply. The 1.55%-1.50% (10Yr) and 2.25%-2.20% (30Yr) support zone seems to be holding well. As mentioned yesterday, while above these supports, the yields can consolidate in a range of 1.50%-1.80% (10Yr) and 2.20%-2.50% (30Yr) and the overall uptrend will still remain intact. A strong break below 1.50% (10Yr) and 2.20% (30Yr) is needed to indicate a trend reversal.
The German 2Yr (-0.69%), 5Yr (-0.59), 10Yr (-0.24%) and the 30Yr (0.31%) have risen further across tenors. The 10Yr and 30Yr have just broken above their -0.35/-0.25 (10Yr) and 0.2%-0.3% (30Yr) ranges respectively on the upside as expected. This keeps our bullish view intact of seeing -0.20%/-0.15% (10Yr) and 0.35% (30Yr) on the upside.
The 10Yr GoI (6.0777%) remained stable below 6.10% yesterday and keeps the broader bearish view intact of seeing 5.90% on the downside. As mentioned yesterday, the resistances in the 6.16%-6.18% region and at 6.20% can cap the upside in case of a strong rise above 6.10% from here.
