STOCKS
The much awaited break above 35250 has happened in Dow and the index can now rise to 36000 in line with our expectation. DAX has also broken its 15200-15800 range on the upside as expected and can rise to 16000-16200 while this break sustains. Nikkei can move up within its 27000-29500 range. Shanghai also has room to test 3560-3580 and 3600 on the upside in the near-term. Sensex and Nifty continue to consolidate at higher levels and can rise today on the back of the rally in the other markets. The view remains bullish for both Sensex and Nifty. Overall the equities look bullish.
Dow (35484.97, +220.30, +0.62%) has risen sharply above the key level of 35250 in line with our expectation. Dow can now head up to 36000 – the rise that we have been expecting for a long time. 35250-35000 will now act as a good support that can limit the downside now and keep the broader bullish view intact.
DAX (15826.09, +55.38, +0.35%) has broken the 15200-15800 range on the upside as expected and has closed just above 15800. While this break sustains the outlook is bullish to see a test of 16000-16200 on the upside. The price action in the next few sessions will need a close watch to see if DAX sustains above 15800 or not.
Nikkei (28,136.20, +65.69, +0.23%) has risen well above 28000 as expected. While above 28000, our bullish view of seeing a test of 29000-29500 remains intact. It will also reduce the danger of the fall to 26000 that we had cautioned earlier.
Shanghai (3527.48, −5.15, -0.15%) has dipped slightly today but can find support at 3520-3500. The near-term view is bullish to see 3560-3580 and 3600. A strong break above 3600 is needed to become more bullish for seeing 3800 on the upside and also to negate the danger of falling back to 3400-3300
Sensex (54525.93, −28.73, -0.053%) is still oscillating around 54500. We retain our bullish view of seeing a rise to 56000 as long as the index stays above the 53500-53000 support zone.
Nifty (16282.25, +2.15, +0.013%) tested its support at 16150 and has risen back sharply from there. Our bullish view remains intact for it to break 16350 and see a rise to 16500-16600 in the coming days. As mentioned yesterday, supports are at 16150-16000 and then at 15900-15800.
COMMODITIES
Commodities have risen slightly as Dollar Index has come off a bit but we continue to look for bearishness in Gold and Silver while below 1800 and 24.50 respectively in the medium term. Copper may test 4.40/60 before falling back from there. Support near 4.20 is likely to hold for now. Crude prices may rise for a couple of sessions before falling from there again. Immediate view is to see a sustained corrective upmove for the next few sessions.
Brent (71.58) and WTI (69.36) are both in a corrective upmove and could test 72.50-73 and 70/71 respectively before again falling off from there.
Gold (1751.20) has risen well and needs to sustain a rise above 1750 to be able to rise back to 1800 again. Watch price action near current levels to see if it bounces back to 1800 or falls from here again to test 1700.
Silver (23.41) may attempt to rise slowly over the next 1-2 sessions while Dollar Index dips and allows silver to test 23-23.15.
Copper (4.3885) has risen well and could head towards 4.40/60 if the rise sustains. On the downside 4.20 is likely to hold for the medium term
FOREX
Dollar Index has come off a bit from 93.20 while Euro has risen and could test 1.178-1.18 before falling from there. Aussie and Pound have dipped a bit but may soon bounce back from interim supports. EURJPY remains within 130.50-129/128. USDINR has risen back after trading lower in the NDF markets. While above 74.40, view is bullish else a dip to 74.20 is possible.
Dollar Index (93.18) has fallen from 93.20 and while that holds, a corrective dip to 92.80/70 is possible before again attempting to bounce back.
Euro (1.1741) has bounced back well and could be headed over to 1.1780/1.18. There we will have to keep a close watch to see if the pair manages to rise past 1.18 and moves up or falls lower again.
EURJPY (129.6950) is stable and we would look for a range of 130.50-129/128 to hold for now.
Dollar-Yen (110.36) exactly came off room our expected resistance at 110.80 and has fallen well from there. While 110.80 holds, view is to see a corrective dip that may extend to 110 on the downside.
Aussie (0.7327) has dipped a bit and can test 0.7355 before bouncing.
Pound (1.38044) has dipped a bit but could test 1.39 on the upside before it falls from there back towards 1.38.
USDCNY (6.4755) has fallen further and could test 4.70 before bouncing back towards 6.49/50 in the medium term.
USDINR (74.4375) came down to test 74.14 on the NDF markets overnight but has bounced back without sustaining the fall. While above 74.40, we continue to look for bullishness towards 74.50/60/70 before a decline sets in.
INTEREST RATES
The US Treasury yields have dipped slightly as the US inflation data release showed a slight slowdown in the pace of increase. The US Core CPI rose 4.23% (YoY) in July as against a 4.45% rise seen in June. It will have to be seen if the yields can fall further from here which would then negate the chances of seeing an extended corrective rally. The German Yields continue to hover above their supports which we expect to hold and produce a bounce in the coming weeks. The 5Yr GoI can consolidate in a sideways range before dipping further from here.
The US 2Yr (0.22%), 5Yr (0.80%), 10Yr (1.32%) and the 30Yr (1.99%) Treasury yields have dipped slightly. The intermediate resistances at 1.35% (10Yr) and 2% (30Yr) seems to be holding as of now. However, the 10Yr has to fall below 1.3% decisively to negate the chances of seeing the extended corrective rise to 1.4%-1.45%. Similarly, the 30Yr has to fall below 1.9% to negate the view of seeing 2.1%-2.2% on the upside and resume the broader downtrend from here itself.
The German 2Yr (-0.76%), 5Yr (-0.73%), 10Yr (-0.47%) and 30Yr (-0.01%) yields are still stable above their key supports. We retain our view of seeing a corrective rally from here to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks and then a fresh fall is possible. Supports at -0.45%/-0.50% (10Yr) and -0.05% (30Yr) are likely to hold for now.
The 5Yr GOI (5.7515%) is attempting to inch higher. A range of 5.73%-5.78% is possible in the near-term. Within this range, the bias is bearish to break below 5.73% and fall to 5.7%-5.69% and then reverse higher again.
