STOCKS
Equities have recovered. The crucial supports mentioned yesterday are holding well. However, it will have to be seen if the indices can see a strong follow-through rise from here to negate the danger of breaking below their supports and see a deeper fall. Dow has to rise past 34000 and then 34700 subsequently to avoid a fall back. DAX is holding above 15400 and can remain ranged between 15400 and 15800 for some time. Nikkei has risen above 28500 again and has to see a strong rise above 29500 from here to bring back the bullish momentum. Shanghai can consolidate between 3500 and 3600 for some time. Sensex and Nifty are getting fresh buying below 52000 and 15600 and are continuing to remain relatively stronger among the lot.
Dow (33876.97, +586.89, +1.76%) has recovered sharply and needs to see if it can rise past 34000 from here. 34700-35000 will be a crucial resistance zone which will have to be broken in order to bring back the bullishness into the picture. We will have to wait and watch for a few sessions to get a clear picture.
The support at 15400 has held well and DAX (15603.24, +155.20, +1%) risen back sharply from the low of 15309.44 yesterday. While above 15400, a sideways consolidation between 15400 and 15800 is possible for some time and will keep the broader bullish view intact of seeing 16000-16100 on the upside. As mentioned yesterday, a strong break below 15400 is needed to drag DAX lower to 15200-15000.
Nikkei (28801.67, +790.74, +2.82%) has risen back sharply above 28500. The support at 28000 has held very well. The danger of seeing a deeper fall to 27000-26000 has reduced. A rise past 29500 will completely negate it and bring back the broader bullish view of seeing 32000 on the upside into the picture.
Shanghai (3556.01, +26.83, +0.76%) has risen back towards 3560 as expected. The support at 3500 is holding well. 3500-3600 can be a range for the near-term and Shanghai can move up towards the upper end of this range now. A strong rise past 3600 will be needed to completely negate the danger of seeing a deeper fall to 3450-3425 and resume the uptrend from here itself.
Sensex (52574.46, +230.01, 0.44%) and Nifty (15746.50, +63.15, +0.4%) are continuing to get good buying below 52000 and 15600 respectively. This keeps the broader bullish view intact. A break above 53000 on Sensex and 15900 on Nifty will pave way for a fresh rise to 54000 and 16100 respectively going forward. 51000 and 15400-15300 are the next important supports below 52000 and 15600 on Sensex and Nifty respectively.
COMMODITIES
Precious metals and Copper are stable and may look for a short corrective bounce but we may not say that the fall is over as there could be another phase of decline after the current pause. Crude prices have moved up well and may continue to rise in the near term. Brent and WTI is headed towards $77 and $75 while Gold, Silver and Copper may rise towards 1800-1820, 26.50 and 4.40 while above 1760/50, 25 and 4.40-4.10 respectively.
Brent (75.01) and WTI (73.16) have both risen above the initial level of the respective $75-77 and $73-75 ranges mentioned over the past few days. The upmove is likely to continue and take Brent and WTI higher towards $77 and $75 respectively. $75 is an important resistance on the WTI which if holds could pull down the prices a bit else Brent could target $80 on the upside, pulling up WTI above $75 eventually. Watch price action near $75 on WTI in the coming sessions.
Gold (1786.40) has risen from levels seen yesterday and needs to continue to move up to test 1800-1820 again. But thereafter, a dip back to 1780/60 cannot be completely ruled out. The current bounce can be considered as a shirt corrective bounce for now. Unless a sustained rise above 1860 is seen bearish view cannot be negated.
Silver (25.96) continues to trade below 26. A further fall below 26 can accelerate the decline towards lower support at 25. But the price is expected to remain stable near current levels and eventually move up towards 26.50 in the near term. Broad range of 25-27 may hold for now with immediate view of a possible rise to 26.50.
Copper (4.1770) ha risen slightly. Copper has crucial support at 4.0-4.10 which needs to hold to keep up the long term uptrend intact. Failure to bounce from 4 can make the price vulnerable to sharp decline in the longer run. For now, we expect a bounce from 4.0-4.10 towards 4.40/60 in the next 1-2 weeks.
FOREX
Dollar Index has fallen a bit but may bounce back again towards 92.50 while the range of 91.50-92.50 holds for now. Euro also has scope to rise towards 1.20 on a sustained break above 1.1925; else we cannot negate a possible fall back to 1.18. Either way looks possible. EURJPY has risen well and could hold within 130-134 while Aussie and Pound look stable. USDCNY has risen well and could see a slight dip but can eventually rise to 6.50 and higher. USDINR can fall to 74-73.90 while 74.30 holds. A broad range of 73.80/75-74.30/50 can hold for the next 1-2 weeks.
Dollar Index (91.938) has dipped a bit giving a short breather to most currency pairs. A dip to 91.50 could be possible before a possible rise to 92.50 again. Any bounce from current levels could take it higher to 92.50 first.
Euro (1.1909) has bounced well as expected, entering into the 1.19-1.1925 region. Well we may not negate a fall back towards 1.18 in the near term but a rise above 1.1925, if seen can initially see a test of 1.20 before the expected fall can be seen. While below 1.1925, we keep a possible fall back to 1.18 intact. Overall movement on either side (1.18 or 1.20) looks possible now.
EURJPY (131.44) has risen well as expected while support at 130 holds well. We may expect a rise towards 132-132.50 soon on the upside. Overall broad range of 130-134 may remain intact for the next 2-3 weeks.
Dollar-Yen (110.43) has bounced back well after testing 109.71 yesterday. View is bullish towards 111 in the near term from where a deeper fall could be expected. Failure of 111 to hold could open up chances for a rise to 112 in the longer run.
Aussie (0.7515) could be ranged within 0.75-0.7550 for the near term before deciding which way to go. Immediate view is to see some sideways consolidation.
Pound (1.3916) has bounced well but has decent resistance near 1.3925/3930 which if holds can limit further upside and push the Pound back towards 1.38/37 in the medium term. Watch price action near current levels. Only a break above 1.3930 can we expect a rise towards 1.40.
USDCNY (6.4618) has risen well and trades above 6.45. The rise needs to sustain now to keep the upmove intact and eventually lead to a rise to 6.50 and higher. Any pause or decline from current levels can take the exchange back towards 6.45/44 in the near term. Watch price action near current levels.
USDINR (74.1050) rose well to retest 74.30 before falling from there. Note that 73.80/75 is the maximum downside within the current movement while 74.30 continues to remain and hold as decent resistance. On a break above 74.30 there is scope for a rise to 74.50. If 74.30 holds today we may expect a dip towards 74.00-73.90 but watch that while the Chinese Yuan trades weaker, Rupee strength could be limited.
INTEREST RATES
The US Treasury yields at the far-end (10Yr and 30Yr) have recovered sharply. But key resistances ahead can cap the upside and drag them lower again. The German yields have bounced across tenors and are giving early signs of a resumption of the overall uptrend. A further rise from here will confirm the same and increase the bullish momentum. The 10Yr GoI can remain sideways above 6% for some time before falling below it eventually to keep the overall downtrend intact.
The US 2Yr (0.25%), 5Yr (0.88%) Treasury yields remain higher and stable while the 10Yr (1.48%) and 30Yr (2.10%) have recovered sharply. However, we expect 1.6% (10Yr) and 2.2% (30Yr) to cap the upside for now and keep them pressured to test 1.35%-1.30% (10Yr) and 1.9% (30Yr) on the downside. 1.3%-1.6% (10Yr) and 1.9%-2.2% (30Yr) is the range that can be seen for the next few weeks.
The German 2Yr (-0.66%), 5Yr (-0.56%) and 10Yr (-0.17%), 30Yr (0.30%) yields have risen across tenors. The support at 0.25% on the 30Yr has held well as expected and keeps our bullish view intact of seeing 0.55% on the upside in the coming weeks. The 10Yr on the other hand can rise to 0%. Support for it is at -0.30%.
The 10Yr GoI (6.0263%) sustains above 6%. As mentioned in the Rupee Comments yesterday 6%-6.03% (narrow) and 6%-6.06% (Broad) could be the possible range in the near-term. The broader view is bearish to see 5.95%-5.9% on the downside eventually over the medium-term. A break below 6% is needed to trigger this fall.
