STOCKS
Strong recovery in equities over the last couple of days after having fallen sharply on Tuesday. This keeps our broader bullish view on equities intact. The indices can oscillate in a broad range and we expect the sideways range to be broken on the upside. The Dow is back above 34500 and can revisit the 35000-35100 resistance which has to be broken to see a fresh rise. DAX has bounced from its key support and can gain momentum on a break above 15600. Nikkei is closed today and tomorrow. Shanghai retains its 3500-3625 range and is moving up within it. Sensex and Nifty can bounce-back within their 52000-53000 and 15600-15900 range and are likely to break them on the upside eventually.
Dow (34798, +286.01, +0.83%) has risen-back sharply after Tuesday’s fall, recovering all the loss. A test of 35000-35100 looks likely again while the momentum sustains. A strong rise past 35100 is needed to see a fresh rise to 36000. Broadly, 33000-35100 is the trading range for now. The bias is bullish to see an upside breakout of this range eventually.
The support at 15000 has held very well and DAX (15422.50, +206.23, +1.36%) has bounced from the low of 15048.56. A strong rise past 15600 from here can see a revisit of 15800. That will also keep alive the chances of seeing 16000-16200 from here itself. While below 15600, the danger of seeing 14800 on the downside first will still be there before seeing 16000-16200 on the upside.
Nikkei (27548) is closed today and tomorrow. Broadly we expect it to sustain above 27000 and retain the 27000-29500 range with a bullish bias.
Shanghai (3569.70, +7.04, +0.20%) is retaining its 3500-3625 range and is moving within its. The bias is bullish to see an upside break above 3625 and a rise to 3700-3800 over the medium-term. 3450 and 3400 are deeper supports seen below 3500. Only a break below 3400 will turn the broader view bearish.
Sensex (52198.51, −354.89, -0.68%) can rise back within the 52000-53000 range taking cues from the recovery in the global equities. Our broader view remains bullish while above the strong supports at 52000 and 51000. As such Sensex is likely to break above 53000 and see a rise to 54000 and higher levels over the medium-term.
Similarly, Nifty (15632.10, −120.30, -0.76%) can rise within its 15600-15900 range. The broader view is bullish to see an upside break above 15900 and a rise to 16000-16200 going forwards. Supports are at 15600 and 15500. The bullish view will get negated only on a break below 15500.
COMMODITIES
Commodities have recovered a bit on weak Dollar over the last 2-days and if the weakness sustains, we may expect commodities to rise back in the near term. Crude prices can rise towards immediate resistance near 72 from where another dip looks possible while Gold and Silver needs to remain above 1800 and 25 to rise towards 1820/40 and 26 respectively. Failure to hold above 1800 and 25 can drag them down towards 1780 and 24 which are crucial supports on the downside. Copper can be ranged within 4.30-4.15 and a break on either side would give more clarity on further direction.
Brent (71.94) is holding above 68 just now and the corrective upmove can take the price higher towards 72-72.50 from where another fall towards 68-65 can be expected. Only a break above 72, if seen will indicate a possible rise back towards 75-77 in the medium term. Watch price action after a rise to 72. WTI (70.08) on the other hand is holding above 64 and can rise to 71-72 in the next couple of sessions from where a dip looks likely.
Gold (1801.80) rose to 1814 yesterday but could not sustain the rise beyond that. While below initial resistance at 1820, we may see a delay in a rise towards our expected 1840/60 levels. While 1800 holds, a ranged move between 1800 and 1820 looks possible but a break below 18000 if seen can drag it down to crucial support at 1780 again. Watch price action near current levels.
Silver (25.35) tested 24.79 yesterday before bouncing back to levels above 25. Another fall below 25, if seen in the near term can be bearish for Silver towards 24-23 in the medium term. On the upside the maximum upmove could be limited to 26 over the next 1week.
Copper (4.2770) is holding well above the support near 4.20/15 and while that holds, we may continue to see ranged movement between 4.15 and 4.30. A break on either side will give clarity on further direction.
FOREX
Dollar Index has dipped a bit taking Euro higher towards 1.18. But we will watch price action closely for a few more sessions to get clarity on medium term direction. Aussie and Pound have recovered and seem to be in a corrective upmove and we may expect another fall over the next 2-3 sessions. USDCNY may fall to 6.45/44 before rising sharply towards 6.50 and higher in the medium term. USDINR may fall today towards 74.40/20. EURJPY can trade within 130.20-128.80 while USDJPY may remain within 110.80-109 levels in the near term.
Dollar Index (92.776) fell sharply from 93.19 and could be headed towards 92.40/92.00 in the near term. Unless a break below 92 is seen, it would be difficult to say if a reversal is in place and scope for a rise back to 93.0-93.20 may still be a possibility in the medium term. Watch price action on a possible fall to 92.40 which is an interim support and can hold for this week.
Euro (1.1795) has risen on Dollar weakness. But the currency may range within 1.1750-1.1820 for the very near term and while the Dollar Index is not very confident of coming off sharply from current levels, our bearish hopes on Euro seems to be increasing and will get confirmation on a break below 1.1750 in the near term. Only a rise above 1.1820/50, if seen over the coming week will show some bullish signs and indicate a rise.
EURJPY (129.91) tested 130.18 before coming off from there. A range of 130.20-128.80 may hold for the near term unless a break on either side is seen.
Dollar-Yen (110.13) tested 110.38 before coming off from there. A trade region of 110.80-109.00 may hold for the near term.
Aussie (0.7353) has bounced well from 0.73 and while that holds, Aussie could be bullish for a rise towards 0.74. A range of 0.73-0.74 may hold for the near term.
Pound (1.3705) has risen well from 1.3570 and while that holds, a rise to 1.38 can be possible. Any sharp rejection from 1.38, if seen can again take Pound back towards 1.3570/1.3500 in the longer run.
USDCNY (6.4675) has fallen sharply from 6.49 and can extend towards 6.45 before bouncing back from there. The 6.44/45-6.49/50 range may hold for now which could be followed by a sharp upmove soon. The pair seems to be on the last leg of a possible triangle correction pattern on the near term charts and could be preparing for a sharp breakout in the coming 1-2 weeks.
USDINR (74.62) held below crucial resistance at 75 last week and while that holds, we may expect a dip in the pair towards 74.40/20 in the near term. Note that below 75, important supports are seen at 74.60, 74.40 and 74.20 respectively that holds decent possibilities of pushing the pair to higher levels in the medium term. A break below 74.60 looks likely today to pave way for 74.40/20 in the near term.
INTEREST RATES
The US Treasury yields have recovered sharply from Tuesday’s fall and are back above their crucial supports. While this bounce sustains above the supports, the corrective rise that we had mentioned earlier will still be a possibility in the coming days. The German Yields remain bearish and have more room to fall from current levels. The 5Yr GOI has broken its 5.64%-5.7% range on the downside and can fall further in the coming days while this break sustains.
The US 2Yr (0.21%), 5Yr (0.74%), 10Yr (1.29%) and 30Yr (1.94%) have risen back sharply after tumbling on Tuesday. The 30Yr is back above 1.9% and the danger of seeing 1.7% on the downside mentioned earlier has reduced. A rise past 2% from here can see a relief rally to 2.1%-2.2%. The 10Yr on the other hand can see a corrective rise to 1.45%-1.5% while it manages to sustain above 1.2%.
The German 2Yr (-0.72%) and 5Yr (-0.69%) yields have dipped further while the 10Yr (-0.40%) and 30Yr (0.08%) remain stable. Our bearish view remains intact. The 10Yr has room to test -0.45%/-0.50%. The 30Yr is at an intermediate support but looks vulnerable to break below it and fall to 0%/-0.05% in the coming days.
The 10Yr GoI (6.1904%) is stuck below 6.2% with muted trading. The 5Yr GOI (5.6350%) on the other hand has broken the 5.64%-5.7% range on the downside. While this break sustains a further fall to 5.6% and 5.56% is possible in the coming days.
