STOCKS
Dow is moving up towards the upper end of its 33500-35000 range in line with our expectation. DAX has just broken above its 14800-15500 range on the upside as expected and can rise to 15800-16000 while this break sustains. Nikkei is holding above 28500 and can rise to 29500-30000. Shanghai is facing resistance at 3625 and can see a corrective dip to 3550 before resuming its uptrend. Sensex and Nifty remain higher and are keeping the bullish view intact. The indices can rise further from current levels.
Dow (34529.45) rose to a high of 34849.32 and has come-off from there yesterday. While above 34500 a test of 35000 – the upper end of the 33500-35000 range is possible in the near-term. Our broader view remains bullish to see an upside breakout above 35000 and a rise to 36000 eventually.
DAX (15567.36, +146.23, +0.95%) has come-off sharply from the high of 15685.4 yesterday. The view of seeing 15800 on the upside remains intact. Indeed a sustained rise above 15600 can take the index even upto 16000-16100 on the upside. The index has to fall below 15400 to delay this rise.
Nikkei (28946.84, +132.50, +0.46%) tested 28500 and has risen back. This keeps alive the chances of seeing a rise to 29500-30000. A strong rise past 30000 is needed to become bullish for a surge to 32000 and also to completely negate the danger of seeing 27000-26000 on the downside.
Shanghai (3593.46, −31.25, -0.86%) is continuing to face resistance at 3625 itself. The 3625-3650 resistance zone is holding well and keeps alive the chances of seeing a corrective fall to 3550. Thereafter a fresh rise can be seen. As we have been mentioning for some time, the long-term view remains bullish to see 3800 on the upside in the coming months.
Nifty (15574.85, −7.95, -0.05%) has come-off from the high of 15660.75 yesterday. However, the broader view remains bullish to see a rise to 16200-16500 in the coming weeks while the index remains above the 15450-15400 support zone.
Sensex (51934.88, −2.56, -0.005%) oscillated around 52000 yesterday. We expect it to break above 52000 decisively and rise to 53000-54000 in the coming weeks. 51500 and 51150 are good near-term supports.
COMMODITIES
Crude prices look potentially bullish towards $70-75 on WTI and $75-77-80 on Brent for the coming weeks. Gold and Silver have dipped from levels seen yesterday and could soon rise back to re-test levels of $1920-1940/50 and $28.50-29.00 respectively. Copper trades below crucial levels of 4.70 which if breaks could pave way for a rise to 4.80/90 else a fall back to 4.60/55 cannot be negated in the medium term.
Brent (70.62) and WTI (68.07) continue to trade higher and look bullish for the near term. WTI has broken above $68 and has scope for a n initial test of $70 which if breaks on the upside could take it higher towards $75 in the longer run. Similarly Brent is headed towards $72 which if breaks on the upside could pave way for a rise to $75-77 or even $80 on the upside before a sharp fall is seen in the longer run. Immediate view is bullish.
Gold (1901.30) has dipped from higher levels seen yesterday. 1920 seems to be holding as a decent resistance just now which needs to break in order to move up further towards 1940/50. Watch price action for the near term. Immediate downside could be limited to 1880.
Silver (27.93) has dipped too but could soon rise back towards 29. While above 27, view is bullish for the longer term.
Copper (4.6630) trades below 4.70. We reiterate that 4.70 is an important level a break above which could take the price higher towards 4.80/90 else a fall back to 4.60/55 cannot be negated in the medium term.
FOREX
Dollar Index looks stable while Euro has bounced well and could be headed towards 1.2260. EURJPY looks bullish towards 135/136 while Aussie and Pound could rise a bit from current levels. Dollar-Yen may rise to 109.80 before again dipping back while USDCNY has started to rise towards 6.40. We expect downside to be limited to 6.36/35. USDINR has scope to rise towards 73.00/25 initially while above 72.80. Maximum downside for the day can be seen at 72.60.
Dollar Index (89.8730) has interim resistance at 89.90/95 which needs to hold and push the index back towards 89.30-89.00 on the downside. Else we may have to allow for a rise to 90.20 on the upside before seeing the expected fall from there. Watch price action near current levels, just now.
Euro (1.2223) has bounced well from support at 1.2210 and while that holds, there is scope for a rise to 1.2240-1.2260 in the near term. Immediate view is bullish on Euro.
EURJPY (133.99) could test 134.12 but a break above that is needed for the cross to continue moving up towards 135/136 in the medium term. View is bullish on EURJPY.
Dollar-Yen (109.60) is moving higher and could test 109.70/80 before again dipping from there. Narrow range of 109.20-109.80 could be seen for the day.
Aussie (0.7762) needs to break above 0.7780 just now in order to move up further. Any rejection from 0.7780 would take the currency back towards 0.7740/30.
Pound (1.4160) has bounced from 1.4143 and could rise to 1.4180-1.42 again in the near term. A break below 1.4143 will be bearish for Pound, indicating a fresh fall towards 1.41.
USDCNY (6.3823) has bounced well and could slowly head back towards 6.40. Immediate downside is likely to be limited to 6.36/35.
USDINR (72.90) broke above 72.80 to close higher. A rise to 73.00/25 initially cannot be negated while immediate downside could be limited to 72.65/60 for the day. Watch price action to see if the pair manages to break above 73 today or dips back from there towards 72.60.
INTEREST RATES
The US Treasury yields remain stable and may move up within their narrow 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) range in the near-term. The German yields have room to dip within their corrective fall before resuming their uptrend. The 10Yr GoI can move up from current levels and then reverse lower to keep the overall downtrend intact.
The US 2Yr (0.15%), 5Yr (0.81%), 10Yr (1.61%) and 30Yr (2.29%) Treasury yields remain stable. The narrow range of 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) remains intact for now and the yields are attempting to move up within it. Broadly, 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) are the wider range within which the Treasury yields can trade over the next couple of months.
The German 2Yr (-0.67%) and 5Yr (-0.57%) yields remain stable while the 10Yr (-0.18%) and the 30Yr (0.38%) have inched slightly higher. The yields are on a corrective fall and there is room to test 0.30%-0.25 (30Yr) and -0.30% (10Yr) on the downside in the near-term. Thereafter the uptrend is likely to resume and target 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.
The 10Yr GoI (6.0244%) remains higher and keeps intact our view of seeing 6.04%-6.06% on the upside in the near-term. Thereafter a dip to 6% can be seen again. The broader view remains bearish to see 5.9% on the downside over the medium-term.
