STOCKS
Equities seem to lack momentum to break their immediate resistances and see a fresh rally. Dow has come-off failing to sustain above 34700 and can fall to 34000-33000 on a break below 34500. DAX continues to remain mixed within its 15400-15800 range. Nikkei is coming down towards its crucial long-term support level of 28000 and needs a closed watch. Shanghai is holding above 3500 and is retaining its 3500-3625 range. Sensex and Nifty have come-off from their resistances at 53000 and 15900 respectively. This could keep the 52000-53000 (Sensex) and 15600-15900 (Nifty) range intact for some more time before an upside breakout of this range happens.
Dow (34577.37, −208.98, -0.60%) has failed to sustain above 34700 and has declined sharply. A further fall/close below 34500 can drag it down to 34000-33500 again. It will then negate the chances of seeing a break above 35100 immediately and could delay the same.
DAX (15511.38, −150.59, -0.96%) has dipped below 15600 and continues to look mixed within its 15400-15800. As mentioned yesterday we will have to wait for a breakout of this range to get a clear cue on whether the DAX can move up to 16000-16200 or fall to 15200-15000 going forward.
Nikkei (28341.56, −301.65, -1.05%) has declined sharply and is coming closer to the crucial support level of 28000. As we have been mentioning for some time, 28000 is a strong long-term support which is expected to hold and produce a bounce to keep the broader uptrend intact. In case if Nikkei breaks below 28000, a deeper fall to 27000-26000 is possible. The price action at 28000 will need a close watch.
Shanghai (3531.75, +1.49, +0.04%) has bounced after testing 3500. This keeps the 3500-3625 range intact and a rise to 3550-3600 can be seen while above 3500. As mentioned yesterday, a break below 3500, if seen, can trigger a deeper fall to 3450-3400 which in turn will delay our preferred medium term rise to 3700-3800. While above 3400, the long-term trend is up.
Sensex (52861.18, −18.82, -0.04%) broke above 53000 but failed to sustain. While below 53000, a fall back to 52000 and the range of 52000-53000 can remain intact for some more time. In case if Sensex breaks below 52000, the downside can extend up to 51000. Overall 52000-53000 (narrow) or 51000-53000 (broad) are the possible range that could be seen for sometime before we see a break above 53000 and a rise to 54000 and higher eventually.
Nifty (15818.25, −16.10, -0.10%) had come-off after testing 15900 yesterday. This could keep the 15600-15900 range intact for some more time. As such the expected break above 15900 and the rise to 16000-16200 could get delayed further.
COMMODITIES
Commodities have come down after rising sharply yesterday. Brent and WTI have come down significantly but we need to see if they rise back to test $80 (Brent) and $78/79 (WTI) on the upside before we see a medium term reversal. Gold and silver have also come down after rising yesterday. Copper went up to test the upper side of the range of 4.10-4.40/50 and has come down today. Copper can consolidate between 4.1-4.5 for some more time before we see a decisive break on either side.
Brent (74.47) and WTI (73.42) have dipped today after a sharp rise seen yesterday. $78 on Brent and $77 on WTI has held well for now and while the resistances hold, a short dip towards $72-71 looks likely on both. Watch price action in the near term to see if the prices reverse higher again for Brent to test $80 and WTI to test $78/79 levels before a sharper decline is seen.
Gold (1800.60) made an intra-day high of 1809 yesterday but has dipped slightly from there. Immediate rise to 1820 is on the cards followed by a further rise towards 1840/60 in the longer run. View is bullish while above 1800.
Silver (26.25) too tested 26.84 yesterday before coming off from there. But overall view is bullish for a slow and steady rise towards 27-28 in the medium term.
Copper (4.2755) tested 4.4025 yesterday before falling from there. The movement has been in line with pur expectation and a range of 4.40/45-4.10 can hold for a few more sessions before a break on either side is seen.
FOREX
Currencies look mixed. Dollar Index has risen a bit and could be ranged within 92-93 for the near term. Euro has scope to test 1.18 before rising from there. Aussie looks bearish for the near term while Pound can rise from current levels. EURJPY has fallen sharply and need to see if it can hold above 130 to rise back else could be vulnerable to a sharp fall going ahead. USDCNY look stable while USDINR can rise towards 74.80-75 before falling from there.
Dollar Index (92.55) has risen from levels seen yesterday and while above 92, we may expect trade within 92-93 for some more time.
Euro (1.1818) has dipped further and could test 1.18 before rising higher towards 1.19 in the medium term. While Dollar Index heads higher within the 92-93 range, Euro may attempt to test 1.18 before rising.
EURJPY (130.64) has fallen below 131 and could test immediate support near 130 before bouncing back. Any break below 130 would negate out bullish view and open up chances of a fall towards 129-128 in the longer run. Watch price action near 130 for a bounce back.
Dollar-Yen (110.52) continues to dip and could head to test 110-109.50 on the downside before bouncing back from there.
Aussie (0.7486) continues to fall and has broken below 0.75. View is bearish to test 0.74 before a rise is expected towards 0.75 or higher. Immediate view looks bearish.
Pound (1.3792) can rise towards 1.39-1.3950 n the near term while above 1.3730. View is bullish for the near term.
USDCNY (6.4734) looks stable between 6.45/44-6.48 for the near term.
USDINR (74.5475) bounced back from 74.24 yesterday negating a fall to 74 mentioned yesterday and if the rise continues, we may have to allow for a re-test of 74.80 or even 75 before a sharper decline is seen. On the downside, immediate support is seen at 74.20.
INTEREST RATES
The US Treasury yields have declined sharply across tenors. The 30Yr has room to test 1.9% which in turn can drag the 10Yr also more lower breaking below its immediate support at 1.35%. The German yields have also declined sharply and are turning bearish. A further fall is likely in the coming days and the earlier bullish view is getting negated now. The 10Yr GoI has surged above 6.1% and now has high chances of seeing 6.2% and even 6.3% in the coming days before reversing lower again.
The US 2Yr (0.22%) Treasury yield has dipped slightly while the 5Yr (0.80%), 10Yr (1.35%) and 30Yr (1.98%) have declined sharply. As mentioned earlier, the 30Yr has room to test 1.9% from where we can expect a reversal. This leaves the chances high of the 10Yr breaking below its immediate support level of 1.35% and extend the fall to 1.25%-1.2% in the coming days and then reverse higher.
The German 2Yr (-0.69%), 5Yr (-0.62%), 10Yr (-0.27%), 30Yr (0.22%) yields have declined sharply especially at the far-end. The 30Yr has broken below the key support level of 0.25% and can now fall to 0.10% while it sustains lower. The 10Yr on the other hand looks vulnerable to break -0.30% and fall to -0.45% in the coming days. Our earlier bullish view of seeing a rise to 0% (10Yr) and 0.55% (30Yr) is getting negated now.
The 10Yr GoI (6.1752%)has surged breaking above the key level of 6.10% and has closed on a strong note. While this break sustains, the chances are high for the 10Yr GoI to break 6.2% from here and extend the rise to 6.3%-6.32% in the coming days. Thereafter a turn-around can happen.
