STOCKS
Equities manage to hold higher. While the pressure after last week’s sharp fall has eased, a further rise breaking above the upcoming resistances is needed to bring back the bullishness completely. Dow has to break above 34000 first and then 34700-35000 to see a fresh rise. DAX is moving up within the 15400-15800 range and has to break this range on the upside to gain momentum. Nikkei has to rise past 29500 and Shanghai has to breach its 3600-3625 resistance zone. Sensex and Nifty have come-off after testing 53000 and 15900 respectively. They can remain in the range of 51000-53000 (Sensex) and 15400-15900 (Nifty) for some time before witnessing an upside breakout of their range and resume the overall uptrend.
Dow (33945.58, +68.61, +0.20%) remained stable around 34000 yesterday. View remains the same. Firstly, the Dow has to rise above 34000 to ease the downside pressure. Thereafter it has to breach the 34700-35000 resistance zone in order to bring back the bullishness to see 36000 levels on the upside.
DAX (15636.33, +33.09, +0.21%) has risen back above 15600 and can head higher towards 15800. As mentioned yesterday, 15400-15800 can be the near-term range. The bias is bullish to see an upside breakout of this range and a rise to 16000-16100 eventually in the coming weeks. A strong break below 15400 is needed to bring DAX under pressure for a fall to 15200-15000.
Nikkei (28910.99, +26.86, +0.09%) sustains higher. As mentioned yesterday, a strong rise past 29500 will pave way for 30000 initially and then to 32000 eventually over the medium-term. It will also negate the danger of seeing a deeper fall breaking below 28000.
Shanghai (3569.66, +12.25, +0.34%) is moving up towards 3600 in line with our expectation. We can expect a consolidation between 3500 and 3600 for some time. 3600-3625 is an important resistance zone which will have to be broken to pave way for a further rise to 3700-3800 and negate the chances of seeing 3450-3425 on the downside.
Sensex (52588.71, +14.25, +0.027%) and Nifty (15772.75, +26.25, +0.17%) had come-off after testing 53000 and 15900 respectively. As mentioned yesterday a strong break above these levels is needed to pave way for a further rise to 54000 (Sensex) and 16000-16200 (Nifty). While below 53000 (Sensex) and 15900 (Nifty) a consolidation in the range of 51000-53000 (Sensex) and 15400-15900 (Nifty) is possible for some time before a fresh rally is seen.
COMMODITIES
Crude prices have moved up. Brent has moved up higher than WTI but we would lok at $75 on WTI which if holds and produces a rejection could drag down Brent too from $75-77. Gold and Silver have risen. As Silver has risen above 26, it can test 26.50 before falling from there while there is scope for a rise to 1800-1820 on Gold. Copper has bounced well and while above 4.0-4.10, a bounce to 4.40/60 can be possible.
Brent (75.23) has moved up slightly from levels seen yesterday while WTI (73.17) remains stable. However, both look bullish in the near to medium term. Watch immediate resistance near $75 on WTI which if holds and produces a rejection could bring down Brent as well from the $75-77 zone. The maximum upside for Brent would be $80 within the current upmove where we expect Brent to peak out for the medium term.
Gold (1781.20) has risen slightly but needs to rise further towards 1800-1820 and eventually break above 1820 to get back the bullish momentum. Till then we may expect broad range of 1740/60-1820 region to hold.
Silver (26.02) has managed to break above 26 and could test 26.50 on the upside before facing another rejection from there. Overall within the broad 25-27 zone, we may expect a rise to 26.50 followed by a dip from there to 25.80/90.
Copper (4.2505) has bounced well from 4.08 exactly as expected. While support near 4.10-4.00 holds, we may expect a rise to 4.40/60 in the medium term before another fall is seen from there. Immediate view is bullish.
FOREX
Dollar Index has fallen a bit taking up Euro to levels above 1.19. If the fall in index continues towards 91.50 or even 91, Euro may head towards 1.20 soon before again declining from there. Aussie, Pound and EURJPY have risen but may face a short corrective dip soon before again rising further. Dollar-Yen can test 110 from where if it fails to decline, we may see a rise to 112-112.50 in the longer run. USDCNY may rise to 6.50 while USDINR is open to test 74.50/75 while above 74.30.
Dollar Index (91.829) has dipped a bit but overall trades in a stable fashion. While below 92, we may expect a dip to 91.50 or even 91 soon.
Euro (1.1926) has risen back to levels above 1.19 breaking just above 1.1925 mentioned yesterday. While the rise sustains, a rally to 1.20 could be possible within the mentioned range of 1.18-1.20. Watch price action near 1.20, if a rally is seen today.
EURJPY (132.06) can test 132.50 on the upside before dipping back towards 131.50-131 in the near term. Only a break above 132.50, if seen in the near term, can the cross head higher towards 134. Narrow range of 132.50-131 can hold within the broader range of 130-134.
Dollar-Yen (110.75) has risen well and could be headed towards 111 in the near term. Any sustained rise above 111, if seen in the medium term can take the pair higher towards 112-112.50.
Aussie (0.7546) has bounced well from 0.7478 and while that holds, a rise to 0.76 looks possible.
Pound (1.3931) has risen to test decent resistance near 1.3925/3930 mentioned yesterday. If current levels hold, we may expect a rejection from here back towards 1.39 or lower. Else a break above current level would be needed for Pound to rise further towards 1.40-1.41 eventually.
USDCNY (6.4804) has risen well yesterday and could continue to rise to test 6.50 before a corrective fall is seen from there.
USDINR (74.37) broke above 74.30 to close higher and while above 74.30, we may allow for a rise to 74.50/75 in the near term. Failure to hold below 74.75 could take it higher to crucial resistance at 75 before a sharp fall is seen. Watch price action near 74.75-74.75 in the near term.
INTEREST RATES
The US Treasury yields have dipped slightly across tenors. Powell’s testimony yesterday did not have any fresh triggers for the market. We expect the yields at the far-end (10Yr and 30Yr) to remain in a sideways range for a few weeks while those at the near-end (2Yr and 5Yr) have room to rise in the near-term. The German yields sustain the bounce seen from its crucial support. The broader bullish view remains intact. A further rise from here will confirm the resumption of the overall uptrend. The 10Yr GoI can consolidate above 6% in the coming days before resuming its downtrend breaking below 6% eventually.
The US 2Yr (0.24%), 5Yr (0.86%), 10Yr (1.46%) and 30Yr (2.09%) have dipped slightly. Our view remains the same. 1.6%-1.7% (10Yr) and 2.2%-2.25% (30Yr) are important resistances that can cap the upside from here. Supports are at 1.3% (10Yr) and 1.9% (30Yr). We expect a range of 1.3%-1.6/1.7% (10Yr) and 1.9%-2.2/2.25% (30Yr) for a few weeks going forward.
The German 2Yr (-0.66%), 5Yr (-0.56%) and 10Yr (-0.17%), 30Yr (0.31%) yields remain stable and keep our broader bullish view intact. We expect the yields to rise towards 0% (10Yr) and 0.55% (30Yr) in the coming weeks. -0.30% (10Yr) and 0.25% (30Yr) are important supports that have held well and kept the broader uptrend intact.
The 10Yr GoI (6.0249%) oscillated around the intermediate resistance level of 6.03% yesterday. Our view remains the same. 6%-6.06% will be the broader range that can be seen in the near-term if the yield manages to breach 6.03% decisively. The 10Yr GoI will have to break below 6% to indicate the resumption of the overall downtrend and move down to 5.95% and 5.9% eventually.
