STOCKS
Equities remain mixed and look likely to dip within their expected range. A strong and fresh trigger seems to be needed for the equities to stage a fresh rally. Dow has bounced back but needs to see if it can sustain above 34500 to move up further. DAX has declined sharply within its 15400-15800 range. Nikkei is coming down towards 28500 and can extend the fall even up to 28000 – a crucial long-term support. Shanghai can come down towards the lower end of its 3500-3625 range in the coming days. Sensex and Nifty can also come down within their 52000-53000 and 15600-15900 range respectively.
Dow (34502.51, +210.22, +0.61%) has risen back sharply and needs to see if it can sustain above 34500 to reduce the chances of falling to 33500 mentioned yesterday. Also the Dow will have to see a strong break above the 34700-35000 resistance zone in order to become bullish to see a fresh rise to 36000.
DAX (15531.04, −159.55, -1.02%) has failed to sustain above 15600. The near-term outlook is mixed and DAX can oscillate in the 15400-15800 range. The expected break and rise above 15800 towards 16000-16100 could get delayed. In case if DAX breaks below 15400, a deeper fall to 15000 and lower levels is possible. We will have to wait and watch.
Nikkei (28675.14, −116.39, -0.40%) is coming down towards 28500 in line with our expectation and has chances of extending the fall to 28000 even. The rise to 29500-30000 is getting delayed. 28000 is a crucial support which will have to hold to keep the broader uptrend intact and also to avoid a deeper fall to 27000-26000.
Shanghai (3584.34, −6.86, -0.19%) remains below 3600 and can dip within the 3500-3625 range in the near-term. A strong rise past 3625 is needed to gain momentum and rise to 3700-3800. As mentioned yesterday, if Shanghai breaks below 3500, an extended fall to 3450-3400 is possible before the expected break above 3625 happens.
Sensex (52482.71, −66.95, -0.13%) and Nifty (15721.50, −26.95, -0.17%) have been coming down gradually over the last few days. While below 53000 (Sensex) and 15900 (Nifty) a test of 52000 and even 51000 on the Sensex and 15600 and even 15400 on Nifty is possible in the coming days. Broadly, we reiterate that 52000-53000 (narrow) or 51000-53000 (broad) on Sensex and 15600/700-15900 (narrow) or 15400-15900 (broad) on Nifty can be the possible range for some time before a fresh rise above 53000 (Sensex) and 15900 (Nifty) happens eventually.
COMMODITIES
Commodities trade higher today. Crude prices have risen on higher than expected Crude inventory draws as per the EIA weekly report released yesterday. Gold has bounced back from levels below 1760 and need to sustain higher to negate a fall towards 1740/20 or lower. Silver too has risen well and could head towards 26.50-27. Copper is slightly up and is stuck within 4.50/40-4.10 range.
Brent (74.89) and WTI (73.74) continue to trade higher. The rise was boosted by a higher than expected crude inventory draw for week ended 25th June according to the EIA weekly release yesterday. The inventory saw a decline of 6.7mln barrels as compared to analyst expectation of 4.686mln barrels. Both Brent and WTI are headed towards resistance levels of $75-77-80 and $75-78 respectively. We may soon expect the prices to make a high and decline from there in the longer run.
Gold (1773.90) dipped below 1760 yesterday but has bounced back well and while it continues to remain above 1760, we may negate downside of 1740/20-1700 and instead look for a rise to 1780-1800 on the upside. Watch price action to see if the price continues to move up from here.
Silver (26.35) has risen well to head towards 26.50, the upper end of our range of 25.80-26.50. A break above 26.50 could take it higher towards 27. Immediate view is bullish while above 25.80-26.00.
Copper (4.2930) is stuck within 4.50/40-4.10 and could continue to trade within the said range before breaking on either side to give more directional clarity.
FOREX
Dollar Index trades higher and could drag down Euro towards 1.18. Aussie, Pound and Chinese Yuan looks weak towards 0.7450, 1.38/37 and 4.48/50 respectively. EURJPY can test 131-130 in the medium term. USDINR can rise towards 74.60/75-75.00 in the coming 1-2 weeks. Overall while Dollar trades strong, most currencies may weaken in the near term.
Dollar Index (92.4180) is bullish and headed towards 93.We need to see if it break above 93 or faces rejection there.
Euro (1.1848) has dipped below 1.1860 mentioned yesterday as the US Dollar strengthened overnight. While below 1.19, a fall to next support near 1.1830-1.1800 looks likely. Immediate view is bearish.
EURJPY (131.61) is holding below 132 and may have scope to fall towards 131 or even 130 before a bounce back is seen in the longer run.
Dollar-Yen (111.06) has risen well and is heading towards crucial weekly resistance near 112-112.25 from where a decline can be seen in the medium term. Immediate view is bullish.
Aussie (0.7488) has dipped further and may test 0.7470-0.7450 before a possible rise towards 0.76 in the longer run. Immediate view is bearish.
Pound (1.3816) has fallen and if it manages to decline below 1.38, it could be vulnerable to a sharp fall towards 1.37/36 in the longer run. Watch if Poun bounces back from 1.38 in the next few sessions.
USDCNY (6.4661) is up and looks bullish for a slow rise towards 6.48/50 in the medium term. While the US Dollar trades higher, USDCNY may move up too.
USDINR (74.33) closed above 74.30 after testing 74.4425 on the upside. While the Dollar trades weak the pair can move up towards 74.50/60 in the near term. Thereafter a rise to 74.75-75.00 cannot be negated in the longer run.
INTEREST RATES
The US Treasury yields remain lower and stable. We retain our view of seeing a broad sideways range movement in the coming weeks. From a bigger picture, we expect the yields to break their ranges on the downside eventually. The German yields have declined sharply and can test their crucial supports. The expected rise seems to be not happening and so the price action near the supports will need a close watch. The 10Yr GoI rose back to test the upper end of its 6%-6.06% range yesterday. It will have to be seen if the yield can break the range above 6.06% today or not.
The US 2Yr (0.25%), 5Yr (0.89%), 10Yr (1.46%) and 30Yr (2.08%) Treasury yields remain lower and stable. The view of seeing a broad sideways range in the coming weeks remains intact. The 10Yr can trade in the range of 1.4%-1.6% (narrow) or 1.3%-1.7% (broad) and the 30Yr between 1.9% and 2.25%. The bias is bearish to see this range breaking on the downside eventually over the medium-term.
The German 2Yr (-0.67%) remains stable while the 5Yr (-0.59%), 10Yr (-0.21%), 30Yr (0.29%) yields have declined sharply. The expected rise seems not to be happening. The supports at -0.30% (10Yr) and 0.25% (30Yr) will need a close watch now. A break below it will negate our bullish view of seeing the rise to -0.10% and 0% (10Yr), 0.40% and 0.55% (30Yr) that we have been mentioning so far. We will have to wait and watch.
The 10Yr GoI (6.0506%) had risen back sharply to test 6.06% again. The 6%-6.06% range is holding well for now. In case if the 10Yr GoI manages to break above 6.06%, a fresh rise to 6.08%-6.10% can be seen. The price action at 6.06% will need a close watch today.
