STOCKS
Dow and Shanghai remain sideways with a bullish bias to break the consolidation on the upside eventually. 33500-35000 (Dow) and 3550-3625/3650 (Shanghai) is the range in place now. Nikkei and DAX can move up towards 29500-30000 and 15800-16000 respectively in the near-term. Sensex and Nifty look relatively much stronger in the lot. The outlook is bullish and the indices can rise in the coming weeks.
Dow (34756.39, +179.35, +0.52%) has moved up further on Friday and could head up towards 35000 in the coming days. We expect the Dow to break 35000 and move up to 36000 in the coming weeks. Inability to breach 35000 can keep it in the 33500-35000 range for some more time. 34000 and 33500 are strong supports that can limit the downside.
DAX (15692.90, +60.23, +0.39%) seems to be gaining momentum. Our view of seeing a rise to 15800 and 16000-16100 remains intact. Immediate support is at 15600 and then next important one is at 15400. As mentioned on Friday, DAX has to fall below 15400 to come under pressure and reduce the chances of the above mentioned rise.
Nikkei (28988.93, +47.41, +0.16%) has come-off from the high of 29214 on early trades today. Our view remains the same. While above 28500, a near-term rise to 29500-30000 is possible. It will also reduce the danger of seeing the fall to 27000-26000 that we were mentioning earlier.
Shanghai (3593.94, +2.10, +0.06%) is holding above 3550 and can consolidate between 3550 and 3625 for some time. The overall outlook is bullish. 3625-3650 is an important resistance ahead. An eventual break above 3650 can take the index up to 3800 over the long-term.
Nifty (15670.25, −20.10, -0.13%) and Sensex (52100.05, −132.38, -0.25%) though had come-off from their day’s high are holding above their immediate support levels of 15600 and 52000 respectively. The broader view remains bullish to see 16200-16500 (Nifty) and 53000-54000 (Sensex) in the coming weeks. Deeper supports are at 15450-15400 (Nifty) and 51500-51150 (Sensex).
COMMODITIES
Most commodities have moved up. Crude prices may rise further but we would look at resistance at $70 on WTI, which if holds could drag down both Brent and WTI down in the medium term. Gold, Silver and Copper have risen slightly and may slowly inch higher in the near term, Gold could be ranged within 1860-1900 for now while Silver can be stuck within 27-28. Copper can test 4.65/68 while above support at 4.40.
Brent (71.66) and WTI (69.44) have risen well and continue to look bullish in the near term. Note that WTI has immediate resistance at $70 which if holds could produce a fall towards $68-65 which in turn could pull down Brent too for a short time. Watch price action on WTI near $70.
Gold (1889.30) could be ranged within 1860-1900 for now before again rising back to 1900+ levels in the longer run.
Silver (27.77) may trade within 27.00-28.50 for the near to medium term before attempting a rise above $28.50 in the longer run.
Copper (4.5180) has risen well and while above 4.40, Copper looks bullish towards 4.65/68.
FOREX
Dollar Index has dipped lower and could test 89.50/30 again. We need to watch price action near 89.50/30 to see if it manages to bounce back or fall from there. Aussie and Pound looks stable just now while Euro has risen well from 1.21 and could be headed to 1.22 soon. USDCNY needs to remain able 640 to rise higher slowly. USDINR can remain within 72.80-73.20 for now.
Dollar Index (89.98) can fall lower towards 89.50/30 again in the near term while below 90.60/50.
Euro (1.2166) has bounced well from 1.21 and while that holds, we may expect a rise towards 1.22.
EURJPY (133.29) has dipped but can rise back from 133 in the near term. View is bullish while above 133.
Dollar-Yen (109.56) has fallen sharply and needs to break below 109.30 to move down towards 109.0-108.80 in the near term.
Pound (1.4144) looks stable and can be ranged for now 1.4085-1.42.
USDCNY (6.4008) has managed to test 6.40 and a slow and steady rise above 6.40 is likely for a possible rise to 6.4125. Overall view is bullish while above 6.40.
USDINR (73) can rise higher to test 73.20/25 while downside is likely to be limited to 72.80
INTEREST RATES
The US Treasury yields have declined sharply after the US jobs data release on Friday. The yields may now move down towards the lower end of their broader range contrary to our expectation for a rise mentioned on Friday. The German yields have room to fall further within their current correction and then can resume their broader uptrend. The 10Yr GoI has risen back sharply above 6%. It can move up further in the near-term and then resume its broader downtrend.
The US 2Yr (0.15%), 5Yr (0.79%), 10Yr (1.57%) and 30Yr (2.24%) Treasury yields have come down sharply on Friday especially at the far end. The narrow range of 1.57%-1.7% (10Yr) and 2.25%-2.4% (30Yr) seems to be breaking on the downside. A sustained fall below 1.57% on the 10Yr and 2.25% on the 30Yr can drag the yields lower to 1.50%-1.45% (10Yr) and 2.15% (30Yr) in the coming day. That will bring the broad 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) range into the picture now
The German 2Yr (-0.68%), 5Yr (-0.60%), 10Yr (-0.21%) and the 30Yr (0.35%) yields continues to move down in line with our expectation. The corrective fall remains intact and the yields can test 0.30%-0.25 (30Yr) and -0.30% (10Yr) on the downside. Thereafter the broader uptrend can resume targeting 0% (10Yr) and 0.55% (30Yr) over the medium-term.
The 10Yr GoI (6.0272%) had risen sharply from the low of 5.9755% on Friday after the RBI’s policy meeting. This has brought back the chances of seeing 6.04%-6.06% on the upside first before resuming the downtrend towards 5.95% and 5.9%.
