STOCKS
Dow and DAX have dipped below their near-term supports and may fall further in the near-term. However, the broader view is still bullish with strong supports at 34000-33500 on the Down and 15400 and 15000 on the DAX. Nikkei is holding above 28500 and keeps alive the chances of seeing 29500-30000 on the upside. Shanghai has risen towards the upper end of its 3550-3625 range and it will have to be seen if it can break above the range now itself or not. Sensex and Nifty have to bounce-back today to avoid a further fall to test their deeper supports at 51000 (Sensex) and 15400 (Nifty) before resuming the uptrend.
Dow (34447.14, −152.68, -0.44%) has dipped below 34500 and can test 34000 while it remains below 34500. However, the broader trend will continue to remain up. 34000 and 33500 are important supports while above which the view of breaking above 35000 and testing 36000 on the upside remains intact.
DAX (15581.14, −59.46, -0.38%) can test 15400 if it sustains below 15600. A break below 15400 will a deeper fall to 15200-15000 which in turn will delay our expected rise to 15800 and 16000-16100 that we have been mentioning for some time.
Nikkei (28982.70, +121.90, +0.42%) is getting support near 28800 now. View remains the same. While above 28500, a rise to 29500-30000 is still possible. Nikkei will come under pressure only on a break below 28500. That will bring back the danger of seeing 27000-26000 on the downside.
Shanghai (3615.16, +23.77, +0.66%) has risen sharply and is coming closer to the upper end of its 3550-3625 range. A break above 3625 and a subsequent rise past 3650 will pave way for 3700-3750 and will keep the broader bullish view intact of seeing 3800 on the upside.
Nifty (15635.35, −104.75, -0.67%) fell sharply after testing 15800 yesterday. It will have to be seen if it can sustain above 15600 or not and move up to 15800 again. A break below 15600 can drag it to 15400. Thereafter a fresh rise is possible. While above 15400, the broader bullish view is intact.
Sensex (51941.64, −333.93, -0.64%) on the other had will have to bounce-back above 52000 today. Else a fall to 51500-51000 is possible in the near-term. While above 51000, the broader bullish view of seeing 53000-54000 remains intact.
COMMODITIES
Commodities have dipped today but look ranged for the near term. Crude prices have dipped slightly but may gear up for a rise to $72-75 on the upside soon. Gold, Silver and Copper are likely to remain ranged within 1860-1920, 27-28.50 and 4.40-4.65 respectively and unless a break on either side of the ranges are seen, it would be difficult to get clarity on further direction from here.
Brent (71.56) and WTI (69.35) had risen yesterday on reports of crude inventory draws reported by the API but has dipped again, trading lower just now. Brent could trade within 73-68 region for the near term before trying to rise sharply towards 75-77 in the medium term while WTI could be seen trading within 71-66 region for now. Overall, we may expect some sideways ranged trade for the near term before attempting to rise further rise.
Gold (1887.90) has dipped from levels seen yesterday and has immediate supports at 1880 and 1860 respectively. On the upside decent resistance id holding near 1920 indicating a possible ranged movement within 1860-11920 for some time. While we may expect an eventual break above 1920 in the longer run, any dip below 1860 could make Gold vulnerable to a sharp fall.
Silver (27.82) is almost stable and could be seen trading within the broad 27-28.50 region in the near to medium term.
Copper (4.5180) has dipped a bit but could remain stuck within 4.40-4.65 for the near term. A break on either side of the range is needed to give clarity on further direction from here. We would wait to get some indication on a break on either side.
FOREX
Currencies are mostly mixed. Dollar Index can attempt a test of 90.30/40 n a break above 90.20 while Euro can be ranged within 1.21-1.2225. Aussie and Pound also look broadly ranged while USDJPY may rise towards 110 eventually. Watch price action near 6.38 on USDCNY closely as a break on the downside could make it vulnerable to a sharp fall. USDINR may continue within 72.70-73.00 with possible extension towards 73.20/30.
Dollar Index (90.18) has been stable above 89.55/65 for the last 3-weeks with upside capped at 90.60. Movement over the last 2-sessions has been quiet. A break above 90.20, if seen today could take the index higher towards 90.30/40 before a dip from there is visible. Very near term view is slightly bullish.
Euro (1.2167) has dipped a bit after testing 1.2218, the upside level of our mentioned range of 1.2100-1.2225 yesterday. We may expect the range to hold for a few more sessions.
EURJPY (133.30) is stable within 133-134 and is likely to continue so for a few more sessions. Maximum downside within the current movement can be limited to 132.50.
Dollar-Yen (109.55) has risen slightly and could have scope for a rally towards 110.
Aussie (0.7728) is stuck within the broad range of 0.7650-0.78 and is likely to continue trading within this region for some more time before a sharp breakout on either side is seen to give some clarity on longer time direction.
Pound (1.4113) has fallen within the range and could soon bounce from 1.4085. Overall range of 1.4085-1.42 is likely to hold for now.
USDCNY (6.3845) has turned to the downside and may test the lower end of the 6.38-6.41 range mentioned yesterday. Note that a fall below 6.38, if seen would be strongly bearish for the medium term.
USDINR (72.98) continues to remain within the expected range of 72.70-73.00. A break on the upside could open up chances of a rise to 73.20/30. The NDF quotes at 72.9430 just now and the pair can possibly extend a rise above 73 in the next few sessions. Watch price action near 73.
INTEREST RATES
The US Treasury yields have declined further and have come closer to their crucial supports. A strong bounce is necessarily needed in order to negate a trend reversal. The US inflation data release today will need close watch to see if it can provide the trigger for the yields to bounce from here or not. The German yields are near the end of their corrections. Supports are coming up which can halt the current correction and a fresh rise can be seen from there to keep the broader uptrend intact. The 10Yr GoI can consolidate sideways for some time before resuming its overall downtrend.
The US 2Yr (0.15%), 5Yr (0.75%), 10Yr (1.48%) and 30Yr (2.16%) Treasury yields have declined further. The 10Yr and 30Yr are just above their crucial support levels of 1.45% and 2.15%. The yields have to move up from here in order to keep the overall uptrend intact and move up to 1.6%-1.7% (10Yr) and 2.3%-2.4% (30Yr) again. The price action in the coming days will need a close watch.
The German 2Yr (-0.69%), 5Yr (-0.62%), 10Yr (-0.25%) and the 30Yr (0.31%) yields have come closer to their key supports. We expect the 0.30%-0.25 (30Yr) and -0.30% (10Yr) supports to hold and produce a bounce in the coming days. The broader view is bullish to see 0% (10Yr) and 0.55% (30Yr) on the upside over the medium-term.
The 10Yr GoI (6.0163%) had come-off from 6.0318% yesterday. As mentioned in our Rupee Comments yesterday 6%-6.04% can be a possible near-term range. The bias is bearish to see a break below 6% eventually and a fall to 5.95% and 5.9% over the medium-term.
