STOCKS
The outcome of the US Federal Reserve meeting yesterday has failed to provide any trigger for a strong rise/breakout in equities. The Fed left both the interest rates and the asset purchases unchanged and gave no hint on tapering the stimulus. As such the sideways consolidation in equities can continue for some more time. Our bias continues to remain bullish to see an upside breakout of this consolidation eventually going forward. Dow has dipped below 35000 and can move down within its 33000-35100 range. DAX remains mixed within its 15200-15800 range. Nikkei is likely to retain its 27000-29500 range and move up within it in the coming days. Shanghai continues to remain under pressure and can consolidate between 3300-3450 for some time. Sensex and Nifty have risen back well after a sharp intraday fall yesterday. They are likely to retain their 51000/52000-53000 and 15500/600-15900 range for some more time.
Dow (34930.93, −127.59, -0.36%) has dipped below 35000 and may come down to 34500-34000 again while it remains below 35000. The rise to 36000 breaking above 35100 is getting delayed further. For now the broader 33000-35100 range is still intact. Our bias however continues to remain bullish to see an upside break of this range eventually.
DAX (15570.36, +51.23, +0.33%) looks mixed within the 15200-15800 range. We expect DAX to move up towards the upper end of its range in the near-term. The bias is bullish to see an upside break above this range and a rise to 16000-16200 going forward.
Nikkei (27677.43, +95.77, +0.35%) is getting intermediate support at 27500. We expect it to retain the 27000-29500 range for some more time and move up within this range now. Bias is bullish to see a break above 29500 and a rise to 31000 and higher levels. The view will turn bearish only on a break below 27000 to test 26000 on the downside.
Shanghai (3391.51, +29.93, +0.89%) has opened with a wide gap-up today after tumbling to a low of 3312.72 yesterday. We expect it to consolidate between 3300 and 3450 for some time. A strong rise past 3450 is needed to turn the sentiment positive. While below 3450, the chances of seeing 3200 on the downside cannot be ruled out.
Sensex (52443.71, −135.05, -0.26%) had recovered sharply from the low of 51802.73. Inability to sustain the break below 52000 strengthens our bullish view of seeing a break above 53200 and a rise to 54000 and higher levels going forward. 52000 and 51000 are strong supports while above which the outlook is bullish.
Nifty (15709.40, −37.05, -0.24%) has risen back sharply from the low of 15513.45. The support at 15500 is holding well as expected. While above 15500, the outlook I bullish to see 16000-16200 on the upside. A break above 15900 can trigger this rally.
COMMODITIES
US Dollar weakened after the FOMC meeting pulling up Gold and Silver sharply. While the rise sustains, Gold can head towards 1840/60 while Silver can rise to 25.80-26. Crude prices have risen too and we may expect Brent to test $77-78 while WTI can rise to $75 before any reversal is seen. On Brent we look at a maximum rise to $80. Copper has fallen and could test 4.40 before bouncing back. A range of 4.40-4.60 may hold for the near term.
Brent (75.07) and WTI (72.69) have risen sharply. Brent can re-test $77-78 levels or even $80 on a break above $75/76 before facing rejection from there. A maximum upside of $80 looks possible on the upside before a sharp fall sets in, WTI on the other hand has crucial resistance at $75 which is likely to hold in the near term.
Gold (1819.90) has risen well on Dollar weakness after the FOMC meeting. A break above 1820 will take it higher towards 1840/60 in the medium term. Watch if it sustains above 1820 in the near term.
Silver (25.27) has risen contrary to our expectation of a fall towards 24-23. The rise if sustains can take it back towards 25.80-26.0 on the upside. Watch price action while above 25.
Copper (4.4905) has dipped today. While below 4.60, we may expect a fall towards 4.40 before again rising back to higher levels. A range of 4.40-4.60 may hold for now.
FOREX
FED kept rates unchanged and continues to buy bonds. Dollar Index has come down but we would wait to see if it manages to test 92 and break lower or bounces back to re-rise again towards 93 in the medium term. Euro looks bullish for a rise to 1.19 as it trades above 1.1850, the first hurdle. Pound looks strongly bullish towards 1.40 while Aussie and Dollar Yen seems to be ranged within 0.73-0.74 and 109.00/50-110.80 respectively. USDCNY has come down sharply from 6.51 and could fall towards 6.45 before showing any bounce again. USDINR needs to break below 74.40/30 in order to head towards 74.20/00. Else a sharp rise above 74.50 will change the outlook for a possible test of 74.60/70 (looks less likely)
Dollar Index (92.214) trades lower and needs to see if it can test 92 and break lower or bounces back to re-test 93 on the upside. A break below 92, if seen and sustained would bring in bearishness for the medium term opening up chances of re-testing lower supports of 90-89. Watch price action near 92.
Euro (1.1857) looks bullish as it rises past 1.1850. It needs to sustain in order to move up to 1.19 and higher eventually. We wait to see if the rise sustains over today and tomorrow. On the weekly candles, it seems to have risen well from very near term trend support. Scope of rising towards 1.19 is high.
EURJPY (130.13) trades in the upper end of the 130.50-129 region and the cross needs to break above 130.50 in order to signal a fresh bullish move in the medium term. Till then we may continue to look at 130.50 as a decent resistance that may produce a rejection back towards 129.50-129.00.
Dollar-Yen (109.80) came off sharply from 110.28 and trades lower for now. We continue to look at a range of 110.80-109.50/00 to hold for now unless a break on either side is seen.
Aussie (0.7371) looks stable below 0.74, unable to move sharply either ways. On the downside the range has been limited to 0.73. Unless a break on either side of the 0.73-0.74 region is seen, we continue to look for ranged sideways movement in Aussie.
Pound (1.3925) continues to rise and looks strongly bullish towards 1.3950-1.40 in the coming sessions before facing rejection from 1.40 over this week or the next. For now, view is bullish.
USDCNY (6.4787) came off sharply , unable to sustain above 6.50. We may expect the fall to extend towards 6.46/45 before a reversal is seen.
USDINR (74.38) needs to break below 74.30 in order to move down further towards 74.20-4.00. A strong Euro and Chinese Yuan is in favor of Rupee strength but we need to see if the important support near 74.30/40 will break on the downside or not.
INTEREST RATES
The US Treasury yields have dipped and may have room to move down further before a bounce is seen. The US Federal Reserve left the rates and bond purchases unchanged yesterday. The central bank did not give any hint on tapering the stimulus. This could keep the yields lower for some time. As such, the expected corrective bounce in the US yields may now get delayed. The German yields have come up to their key supports within their broader downtrend and could see a corrective bounce in the coming weeks. The 5Yr GoI retains the narrow range of 5.66%-5.7% for now. The bias is bullish to see an upside break of this range.
The US 2Yr (0.20%) and 5Yr (0.71%) Treasury yields continue to trade stable while the 10Yr (1.23%) and 30Yr (1.88%) have dipped slightly. The 30Yr has declined below 1.9% and can move down to test 1.8% before reversing higher. The 10Yr on the other hand has room to test 1.2% and even 1.1% on the downside and then can reverse higher. For now the corrective bounce to 2.1%-2.2% (30Yr) and 1.45%-1.5% (10Yr) is getting delayed.
The German 2Yr (-0.76%), 5Yr (-0.74%), 10Yr (-0.45%) and 30Yr (0.03%) yields remain lower. The 10Yr is at the -0.45%/-0.5% support zone and the 30Yr is coming closer to its 0%/-0.05% support zone. We expect these supports to hold and to see a corrective bounce to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks. Thereafter the broader downtrend can resume again.
The 5Yr GOI (5.6878%) continues to remain stuck inside the narrow 5.66%-5.7% range. While above 5.66%, the bias is bullish to break this range on the upside and see a rise to 5.76%.
