STOCKS
Equities continue to trade stable and are consolidating within their overall uptrend. They seem to be in need of some fresh trigger to accelerate the upmove from here. Dow remains stable above 34500 and needs to break above 35000 to move up further. DAX sustains above15600 and can test 15800-16000. Nikkei will need a close watch to see if it is holding above 28500 or not. A break below it will trigger a fresh fall and negate the chances of a rise. Shanghai can consolidate between 3550 and 3625/3650 within its overall uptrend. Sensex and Nifty are stuck in a narrow range above 52000 and 15600 respectively. The outlook is bullish and we expect Sensex and Nifty to outperform others.
Dow (34599.82, −30.42, -0.09%) has dipped slightly but is still holding above 34500.Our view remains the same. 34000 and 33500 are important supports while above which the outlook is bullish to break 35000 and rise to 36000 in the coming weeks. 34000-35000 (narrow) and 33500-35000 (broad) are the possible range while the Dow remains below 35000.
DAX (15640.60, −36.55, -0.23%) remains stable above 15600. While above 15600 the bullish outlook is intact to see 15800 and 16000-16100 in the coming days. As mentioned yesterday, only a break below 15400 will bring DAX under pressure and turn the view bearish.
Nikkei (28868.05, −95.51, -0.33%) has dipped below but has support at 28500. This support has to hold in order to keep alive the chances of seeing 29500-30000 on the upside. A break below 28500 will bring back the danger of seeing 27000-26000 on the downside into the picture.
Shanghai (3588.24, +8.13, +0.23%) remains stable near the lower end of its 3550-3625/3650 range. We expect Shanghai to retain this range for some time before breaking above 3650 and rising to 3800 eventually over the long-term.
Nifty (15740.10, −11.55, -0.07%) and Sensex (52275.57, −52.94, -0.10%) are stuck between 15600-15800 and 52000-52500 respectively within their overall uptrend. The bullish view remains intact to see 16200-16500 (Nifty) and 53000-54000 (Sensex) in the coming weeks. Support below 15600 on Nifty is at 15450-15400. 51500-51150 is a deeper support on Sensex.
COMMODITIES
The American Petroleum Institute (API) reported a draw in crude inventories of 2.08mln barrels for week ended 4th June against analyst prediction of 2.036mln barrels. This has taken crude prices higher today and could keep the upward momentum strong for now. Gold and silver look stable just now while they can attempt to move up in the longer run. Copper may trade within 4.40-4.65 in the near term.
Brent (72.63) and WTI (70.46) have risen sharply after seeing a brief decline yesterday. As the WTI has managed to break above $70, both WTI and Brent trade higher. Brent has scope for a rise to $75-77 on the upside while WTI can test $75soon. Both prices look bullish while above $70.
Gold (1896.0) and Silver (27.74) have dipped. While there is scope for a rise towards 1920 and 28.50 respectively in the longer run, immediate trade can be seen within 1860-1900 in Gold and above 27 on Silver.
Copper (4.5305) is rising well towards our expected 4.65 while support at 4.40 holds well. Immediate range of 4.65-4.40 is likely to hold in the near term.
FOREX
Currencies are mostly quiet today especially the Euro and Dollar Index ahead of the ECB policy meeting due tomorrow. EURJPY, Pound and Aussie also could remain ranged within 134-133, 1.4085-1.42 and 0.78-0.7675 respectively. USDCNY and USDINR are also likely to trade in the 6.38-6.41 and 72.70-73.00 region today. No major movement is expected today.
Dollar Index (90.068) has hardly moved since yesterday and seems quiet. While above immediate support at 89.65, there is scope for a rise to 90.20/55 on the upside. Watch price action as some volatility can be seen after the ECB meeting tomorrow.
Euro (1.2182) looks stable and could be ranged within 1.2100-1.2225 ahead of the ECB meeting tomorrow. While the currency may remain quiet today, some volatility can seep in tomorrow.
EURJPY (133.33) is stable and as mentioned yesterday, we may expect 133-134 to be the trade range for the very near term.
Dollar-Yen (109.43) is stable near current levels and while above 109, we may expect a rally towards 110 on the upside. A break below 109 is needed for the pair to fall towards 108.75/50 in the near term.
Aussie (0.7738) holds above 0.7650 and a further to 0.78 looks possible before a dip from there.
Pound (1.4163) looks stable and can continue to range within 1.4085-1.42.
USDCNY (6.3939) has dipped yet again and looks likely to fall towards 6.3874 in the near term. Overall broad range of 6.38-6.41 may hold for now.
USDINR (72.8950) traded within 72.70-73.00 region yesterday and may continue so for today also. A break below 72.70, if seen can take the pair down to 72.50 else while immediate support at 72.70 holds, we may expect a bounce to 73 or higher in the near to medium term.
INTEREST RATES
The US Treasury yields are coming down in line with our expectation. Crucial supports are coming up which will have to be watched closely to see if they can hold and produce a bounce to keep the overall uptrend intact or not. The German Yields continue to move down within their current correction. A further fall is possible before the overall uptrend resumes. The 10Yr GoI seems to lack strength to see a corrective rise and can fall from here itself if it breaks below 6% today.
The US 2Yr (0.15%), 5Yr (0.77%), 10Yr (1.53%) and 30Yr (2.21%) Treasury yields have dipped as expected. The 10Yr and 30Yr are moving down towards 1.50%-1.45% and 2.15% in line with our expectation. The price action at these levels will need a close watch to see if the yields can bounce-back and keep the 1.45%-1.8% (10Yr) and 2.15%-2.5% (30Yr) range and the overall uptrend intact or not.
The German 2Yr (-0.68%), 5Yr (-0.60%), 10Yr (-0.23%) and the 30Yr (0.32%) yields have dipped further as expected within their current correction. 0.30%-0.25 (30Yr) and -0.30% (10Yr) is likely to be tested. Thereafter the overall uptrend can resume and target 0% (10Yr) and 0.55% (30Yr) over the medium-term.
The 10Yr GoI (6.0064%) has dipped yesterday and seems to have failed to get a strong follow-through rise above 6.02%. A break below 6% today will reduce the chances of seeing 6.04%-6.06% that we had been expecting. Such a break can drag the yield to 5.98% and 5.95% in the coming days.
