STOCKS
Equities seem to lack strength to get a strong follow through rise after the bounce-back from last week’s fall. The price action in the coming days will need a close watch to see if the indices can move up or fall-back from here. The Dow has to rise past 34000 to move up further. Also a break above 34700 is necessary to bring back the bullishness. DAX has come-off sharply and has to sustain above 15400 to avoid a much deeper fall from here. Nikkei and Shanghai keeps alive the chances of seeing a near-term rise to test their resistances. Sensex and Nifty are struggling to break above 53000 and 15900 respectively and can consolidate sideways for some time before rising above these levels.
Dow (33874.24, −71.34, -0.21%) seems to be struggling to break above 34000. The immediate outlook is mixed. There are equal chances of either rising up to 34500-34700 or falling back to 33000 from here. We will have to wait and see. As we have been mentioning over the last few days, Dow will have to breach the 34700-35000 resistance zone to bring back the bullishness of seeing 36000 on the upside.
DAX (15456.39, −179.94, -1.15%) has come-off sharply below 15600 and looks vulnerable to break below 15400. Such a break can drag the DAX to 15200-15000 and in turn will delay the rise to 16000-16100 that we have been expecting. We will have to wait and watch the price action today to see if the index can sustain above 15400 or not.
Nikkei (28920.12, +45.23, +0.16%) sustains higher and keeps alive the chances of moving up to 29500. A strong break above 29500 can take it up to 30000 initially and then to 32000 eventually over the medium-term. Such a rise will negate the danger of seeing a break below 28000.
Shanghai (3559.03, −7.19, -0.20%) can rise to 3600 while it sustains above 3550. As mentioned yesterday 3500-3600 can be a range in the near-term. A strong rise past 3625 is needed to resume the broader uptrend towards 3700-3800. While below 3600 the chances of seeing a fall to 3450-3425 cannot be completely ruled out.
Sensex (52306.08, −282.63, -0.54%) seems to lack momentum to rise past 53000 and had come-off after opening higher yesterday. A break below 52000 can drag it to 51000 and keep the index in the range of 51000-53000 for some time. A strong rise past 53000 is needed to gain strength and rise to 54000.
Nifty (15686.95, −85.80, -0.54%) can fall to 15400 if it breaks below 15600 and can remain in the range of 15400-15900. A strong break above 15900 is needed to see 16000-16200 levels on the upside.
COMMODITIES
Crude prices look stable while Gold and Silver trade lower. Copper has dipped too but could soon rise towards 4.40/50. Overall the view on most commodities remain sideways to bearish for now.
Brent (75.22) and WTI (73.11) look stable and quiet trading slightly lower today. We continue to remain bullish within $75-77 and $73-75 respectively and look for a decline as immediate resistances hold for the near term. A break above $75 on WTI and $77 on Brent would trigger more upside. However we do not look for a rise above $80 in Brent in the longer run.
Gold (1775.10) is unable to sustain above 1780 and has fallen a bit. Note that 1760/40-1800/20 could be the broad range for the near to medium term. While below 1820/00, view is sideways to bearish with a maximum downside of 1740.
Silver (25.95) has dipped back to levels below 26 and a break below 25.90/80 if seen could trigger a sharp fall to 25 before a bounce from there is seen in the medium term. View is bearish while below 26. On the upside immediate resistance is seen near 26.50. Broad range of 25-27 can hold for a couple of weeks.
Copper (4.2845) has been rising steadily but the price came off after testing 4.3255 on the upside. There could be some small corrective dips but there is scope for a rise to 4.40/50 in the near term before a sharper decline is seen.
FOREX
Dollar Index has risen a bit and may continue to move up towards 92 that could pull down Euro to 1.19 preventing an immediate rise to 1.20. Aussie and Pound may rise a bit in the near term but could be restricted by 0.76 and 1.40 on the upside respectively from where a dip is possible in the near term. USDCNY has fallen a bit and could test 6.46/45 before again bouncing back towards 6.49/50. USDINR can face a short pull back below 74.40/30 but we keep alive possible test of 74.50/60 on the upside soon. Support is seen near 74.0-73.90
Dollar Index (91.830) has risen a bit from 91.50 and could be headed towards 92. A broad range of 93-91 may hold for the coming week.
Euro (1.1924) has risen well and while above 1.1925, there is scope for a rise to 1.20. Failure to hold above current levels can take it down to 1.19-1.18 in the coming sessions. This could be boosted by the dollar Index rising to 92. Broad range of 1.20-1.18 holds for now.
EURJPY (132.39) has dipped a bit . But we continue to stick to a possible range of 132.50-131 for the near term within the broader range of 130-134.
Dollar-Yen (111.02) has risen, finally breaking above the initial hurdle of 111. We now look for a rise towards 112-112.50 while the pair sustains above 111.
Aussie (0.7575) is rising slowly and steadily. While above 0.7478 an eventual rise to 0.76 looks possible.
Pound (1.3962) has fallen from 1.40 and while 1.40 holds, a test of 1.39/38 can be possible again in the near term. The range of 1.38-1.40 could continue to hold for some more time.
USDCNY (6.4788) has dipped a bit and looks stable for now. A possible range of 6.45-6.49 could be possible for the near term before the pair attempts to rise further beyond 6.50. View is bullish for the next week.
USDINR (74.2850) continues to trade above 74.15 and has scope for a test of 74.50 in the near term. Support is seen at 74.0-73.90.
INTEREST RATES
The US Treasury yields have inched up slightly. The 10Yr and 30Yr can remain in broad range for some time before resuming their long-term downtrend. The German yields sustain higher and could be gearing up for a fresh rise. The overall trend is up. The 10Yr GoI can consolidate above 6% for some time before breaking below it and resuming its downtrend.
The US 2Yr (0.26%), 5Yr (0.88%), 10Yr (1.49%) and 30Yr (2.10%) have moved up slightly. We expect the 10Yr to remain in the range of 1.4%-1.6% (narrow) or 1.3%-1.7% (broad) in the coming weeks. The 30Yr can trade between 1.9% and 2.25%. The broader view is bearish to see a downside breakout of this range eventually over the medium-term.
The German 2Yr (-0.66%), 5Yr (-0.57%) and 10Yr (-0.18%), 30Yr (0.30%) yields continue to trade stable. View is bullish. A rise to 0% (10Yr) and 0.55% (30Yr) can be seen in the coming weeks. Supports are at -0.30% (10Yr) and 0.25% (30Yr).
The 10Yr GoI (6.0179%) is stuck between 6% and 6.03% within its broad 6%-6.06% range. The yield can continue to consolidate in the 6%-6.03% (narrow) or 6%-6.06% (broad) range for some more time. Eventually we expect the 10Yr GoI to break this range below 6% and fall to 5.95% and 5.9% over the medium-term.
