STOCKS
Equities continue to look broadly positive. Dow remains stable within its 33500-35000 range and is likely to break it on the upside. DAX is attempting to break its 14800-15500 range on the upside as expected and can rise to 15700-15800. Nikkei can rise to 29000-29500 in the near-term but has to breach 29500 decisively to become strongly bullish. Shanghai has risen as expected and keeps the bullish view intact. Sensex and Nifty have come-off from their highs yesterday. But with supports at 50500 (Sensex) and 15100 (Nifty) the outlook remains bullish to see 51500-52000 (Sensex) and 15400-15450 (Nifty) in the coming days.
Dow (34312.46, −81.52, -0.24%) is facing intermediate resistance at 34500 within its broad 33500-35000 range. While below 34500, a tight range of 34000-34500 is a possibility for a few sessions. The overall view is bullish to see a break above 35000 and a rise to 36000 eventually. 33500 and 33000 are crucial supports and only a break below 33000 will turn the outlook bearish.
DAX (15465.09, +27.58, +0.18%) failed to sustain the break above 15500 and has come-off from the high of 15568.6 yesterday. Our view remains the same. We expect DAX to break its current 14800-15500 range on the upside and rise to 15700-15800. Thereafter a reversal is possible.
Nikkei (28587.77, +33.79, +0.12%) oscillates around 28500 and keeps alive the chances of testing 29000-29500 on the upside. As mentioned yesterday, a strong rise past 29500 will be needed to become bullish and also to negate our bearish view of seeing a fall to 27000-26000 that we have been mentioning for some time. We will have to wait and watch.
Shanghai (3600.70, +19.36, +0.54%) has risen further and can test 3625-3650 in line with our expectation. While an intermediate pull-back to 3550-3500 cannot be ruled out, the current rise if sustains may have the potential to test 3800 on the upside over the medium-term.
Nifty (15208.45, +10.75, +0.07%) and Sensex (50637.53, −14.37, -0.03%) had come-off sharply from their respective highs of 15293.85 and 50961.35. However, supports are at 15100 (Nifty) and 50500 (Sensex). While above these supports, the outlook remains bullish to test 15400-15450 (Nifty) and 51500-52000 (Sensex) on the upside.
COMMODITIES
Precious metals have surged today. Gold has rallied to break above 1900 and could soon test 1920-1950 on the upside while Silver has also risen above 28 and could target 29-30 soon. Crude prices are up too but need to see price action near immediate resistance of $70 and $67 on Brent and WTI respectively which if holds could produce a fall else we have to allow for a further upmove of $75-77 and $70-72 on the prices respectively. Copper is down today and may remain within a broad range of 4.70-4.30 for the next 1-2 weeks.
Brent (68.67) and WTI (66.07) continue to trade higher and may soon be headed to test immediate resistance of $70 and $67 respectively. It is important to see if the prices manage to break above the resistance levels or fall back from there. Preference is to see a fall back from resistance towards $65 and $62 respectively in the medium term. Any break above $70 on Brent and $67 on WTI will bring in a possible rise to $75-77 on Brent and $70-72 on the WTI. Watch price action near immediate resistance levels closely.
Gold (1907.70) has risen sharply breaking above 1900 on fresh Dollar weakness. While above 1900, a near term rise to 1920-1950 can be seen. View is bullish for the near term.
Silver (28.30) has risen well from 27 and broken above 28 today. As the rally continues, we may expect a rise to 29-30 in the near to medium term. View is bullish while above 27-28.
Copper (4.5340) has fallen a bit today. A test of 4.60/70 is possible on the upside while downside could be limited to 4.40/30. Broad range of 4.70-4.30 is possible for the next couple of weeks.
FOREX
Dollar Index has fallen and Euro could be headed towards 1.23-1.2320 before falling off from there. EURJPY has risen and could be headed towards 134. Aussie and Pound are stable just now but could rise in the near term. Dollar-Rupee is closed today for Buddha Purnima. USDCNY is looking strogly bearish and needs to sustain above 6.40; else a sharp fall towards 6.36 could be seen breaking the bullish possibilities and indicating further downside possibilities for the next few weeks. Watch price action closely near 6.40. Dollar-Yen is stable between 108.50-109 and could remain so for a few sessions.
Dollar Index (89.64) is trading slightly higher than yesterday’s low of 89.5350 but while below 90, view continues to be bearish for a fall to 89 which could then eventually break to head further down. Overall Dollar Index looks weak and could continue so for the coming week too.
Euro (1.2250) rose slightly yesterday after a better than expected German IFO data. We may expect for a rise to 1.23-1.2320 in the near term.
EURJPY (133.25) has risen and could soon be expected to test 133.50-134 on the upside.
Dollar-Yen (108.77) is almost stale and while above immediate support near 108.50, it could remain stable for now within 108.50-109 for a few sessions. Thereafter a further dip in Dollar Index could drag down Dollar Yen lower.
Aussie (0.7777) has bounced well from 0.7733 seen yesterday. It could rise to test 0.78 or even higher in the near term.
Pound (1.4159) looks stable in the 1.42-1.41 region, unable to move on either side of the range. A break is needed for the exchange to decide on further direction from here. A break above 1.42 looks more likely.
USDCNY (6.4011) trades lower, just above 6.40 and needs to hold above 6.40 to bounce back from here. Failure to remain above 6.40 could drag it lower towards 6.36 soon. This could be very crucial and indicate fresh bearishness negating any possible rise back towards 6.42 or higher. Immediate view looks strongly bearish but we keep a close eye on crucial support at 6.40
USDINR (72.77/78) is likely to test 72.60/50 while below 72.80.The currency market in India is closed today for Buddha Purnima hence the fall towards 72.60/50 could be seen tomorrow.
INTEREST RATES
The US Treasury yields have dipped across tenors and can come down towards the lower end of their broad range in the coming days. The German yields are coming down to test their supports as expected. We expect them to bounce from their supports and keep the broader uptrend intact. The 10Yr GoI remains stuck inside the narrow range within its overall uptrend.
The US 2Yr (0.15%) Treasury yield remains stable while the 5Yr (0.78%), 10Yr (1.57%) and 30Yr (2.26%) have come down sharply yesterday. The 10Yr and 30Yr have dipped below their intermediate support levels of 1.6% and 2.3%. While this break sustains a further fall to 1.5%-1.45% (10Yr) and 2.2%-2.15% (30Yr) can be seen in the coming days. The price action thereafter will need a close watch to see if the yield can bounce-back or not.
The German 2Yr (-0.67%), 5Yr (-0.56%), 10Yr (-0.17%) and the 30Yr (0.39%) yields are heading down to test the supports at -0.20% (10Yr) and 0.35% (30Yr) in line with our expectation. We expect these supports to hold and the yields can reverse higher to keep the broader uptrend intact and target 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.
The 10Yr GoI (5.9725%) remains stuck inside the 5.95%-5.99% range and keeps the near-term view mixed. The trend is down and a test of 5.9% is likely to be seen in the coming days. Can this fall happen from here itself or after a corrective bounce to 6.02%-6.04% is still unclear.
