STOCKS
Dow and DAX are close to their crucial resistances. Dow will have to breach 35100 to become bullish for a rise to 36000. DAX has to break 15800 to see 16000-16200. The price action on these two indices in the coming days will need a close watch. Nikkei has room to move up towards 29000-29500. Shanghai can rise within its 3500-3625 range. Sensex and Nifty can also retain their 52000-53000 and 15600-15900 range respectively and can move up within this range in the coming days. Eventually we expect these ranges to be broken on the upside and see a fresh rise going forward.
Dow (34996.18, +126.02, +0.36%) has risen and come close to the crucial 35000-35100 resistance zone. As we have been mentioning for some time, a strong rise past 35100 is needed to boost the bullish momentum and rise further to 36000. Else a fall back to 34500 and even lower levels is possible again. The price action in the next few days will be crucial and needs a close watch.
DAX (15790.51, +102.58, +0.65%) has come up towards the upper end of its 15300-15800 range. The chances are looking high for it to break 15800 and rise to 16000 and 16200 – the next important resistances in the coming days. From a long-term picture, DAX will need to rise past 16200 to become extremely bullish.
Nikkei (28794.73, +225.71, +0.79%) sustains well above 28000 and is heading up towards 29000-29500 in line with our expectation. Nikkei will have to break 29500 decisively and then a subsequent rise past 30000 in order to become strongly bullish again.
Shanghai (3562.26, +14.42, +0.41%) is moving up within its 3500-3625 range in line with our expectation. We expect this range to remain intact. A bullish breakout above 3625 and a rise to 3700-3800 is likely to be seen eventually over the medium-term.
Sensex (52372.69, −13.50, -0.03%) and Nifty (15692.60, +2.80, +0.02%) had come-off from their day highs to close flat for the day. We expect the 52000-53000 (Sensex) and 15600-15900 (Nifty) range to remain intact. Within this range, the indices can move up on the back of the rise in the global indices. The broader bias is bullish to see an upside breakout of these ranges eventually and see a rise to 54000 (Sensex) and 1600-16200 (Nifty) going forward.
COMMODITIES
Commodities continue to trade higher today. Crude prices rally towards resistance near $77/78 with Brent having scope to test $80 before a sharp decline is seen. Gold and Silver are bullish towards 1820/40 and 26.50/27.0 respectively while Copper has risen within the range of 4.15-4.40 and could hold within this range for the near term.
Brent (75.30) and WTI (74.24) have risen well and may continue to rise towards $77/78 before declining from there. On Brent there is scope for a test of $80 on the upside which is a crucial resistance and can hold for the medium term. Immediate view is bullish towards respective resistances from where a sharp decline looks likely.
Gold (1810.70) is rising towards 1820 and while the upward momentum is intact a break above 1820 is possible taking the price towards 1840 in the near term. Immediate view is bullish.
Silver (26.39) has risen as expected and could test 26.50 soon. A break above 26.50, if seen would take the price higher towards 27. Immediate view is bullish on Silver too.
Copper (4.3375) has risen a bit instead of coming off sharply. The range of 4.15-4.40 (revised from 4.10-4.40) may hold for some more time.
FOREX
Dollar Index is heading towards support a 92 and need to see if it sustains or paves way for a fall to 91.80/60. Euro, EURJPY, Aussie and Pound look bullish for the near term. USDCNY has come down and a break below 6.46 can take it lower towards 6.44. USDINR can break below 74.40 to head towards 74.20-74.00 soon while immediate upside is likely to be limited at 74.60. Dollar-Yen needs to fall from current levels else a rise to 110.60/80 is likely in the very near term.
Dollar Index (92.15) is stable and has dipped from 92.40. It is important to see if the index manages to bounce back from 92 or head lower towards 91.80-91.60 to indicate strength in most other currencies. Watch price action closely near 92.
Euro (1.1872) trades higher and can test crucial level of 1.19 in the near term. We need to wait and watch to see if 1.19 holds or produces a decline back towards 1.1850/1.180. Watch price action near 1.19.
EURJPY (131.03) has risen above 131 and can rise to 131.50 or higher in the near term while it sustains above 131. Immediate view is bullish.
Dollar-Yen (110.35) is trading higher. It can test 110.60/80 in the near term before seeing a dip. Failure to decline from 110.60/80 can take the pair higher towards 111 or higher again in the longer run.
Aussie (0.7495) has risen and could test 0.75. We need to wait and watch of 0.75 holds and produces a decline or paves way for further rise towards 0.7520/40.
Pound (1.39) is holding its upward momentum strong and can rise towards 1.3950-1.40 if it manages to break above 1.39 and sustain the rise. Immediate view is bullish above 1.39.
USDCNY (6.4663) has dipped as expected and could test immediate near term support near 6.46 which if breaks can take the pair down towards 6.45/44 in the next few sessions before a bounce is seen in the medium term. Immediate view can be bearish if it does not sustain above 6.46.
USDINR (74.5750) tested 7440 as expected and bounced to close higher but the pair cannot sustain the bounce for long as the upside is likely to be limited to 74.60. An eventual fall back towards 74.40/20 is possible in the near term. Very near term view would be to see a ranged trade between 74.60-74.40 before falling towards 74.20-74.00 in the medium term. View is bearish for USDINR in the medium term.
INTEREST RATES
The US Treasury yields remain stable. A corrective rise is possible in the coming day while they sustain above their crucial supports that had held very well last week. The German yields remain bearish and have room to fall further from current levels. The 10Yr GoI has risen above 6.2% and is bullish to test 6.3% from where it can reverse lower again.
The US 2Yr (0.23%), 5Yr (0.80%), 10Yr (1.37%) and 30Yr (2%) Treasury yields have inched 1 bps each across tenors. Our view remains the same. 1.25%-1.2% (10Yr) and 1.9% (30Yr) are important support that has held very well for now. A corrective bounce to 1.45%-1.5% (10Yr) and 2.1%-2.2% (30Yr) is possible in the coming days while above these supports.
The German 2Yr (-0.68%), 5Yr (-0.60%), 10Yr (-0.30%), 30Yr (0.20%) remains stable. The outlook is bearish to see a fall to 0.10%-0.8% on the 30Yr and -0.45% / -0.50% on the 10Yr in the coming weeks.
The 10Yr GoI (6.22%)has broken the 6.1%-6.2% range on the upside. While this break sustains the outlook is bullish to see a further rise to 6.3%-6.32% in the coming days. The 6.3%-6.32% is a strong resistance zone from where we can expect the 10Yr GoI to reverse lower again.
