STOCKS
Equities remain positive. Dow sustains well above 35250 and is bullish to test 36000. DAX has broken its 15200-15800 range on the upside as expected and can now test 16000-16200 on the upside. Nikkei remains bullish to rise towards 29000-29500 while above 28000. Shanghai can move up to 3580-3600 while above 3500. Sensex and Nifty have broken their sideways consolidation and keep our bullish view intact. As mentioned earlier, Sensex and Nifty can outperform others.
Dow (35499.85, +14.88, +0.042%) sustained higher and remained stable yesterday. The view is bullish to see a rise to 36000. As mentioned yesterday, 35250-35000 will now act as a good support and limit the downside for now.
DAX (15937.51, +111.42, +0.70%) has surged yesterday, confirming the breakout of the 15200-15800 range. This keeps our bullish view intact of seeing 16000-16200 on the upside in the coming days. 15800 will now be a good resistance-turned-support and can limit the downside.
Nikkei (28057.13, +42.11, +0.15%) has come-off from yesterday’s high of 28278 but is still trading above 28000.While above 28000 the view remains bullish to see a test of 29000 and eventually 29500 in the coming weeks.
The support at 3520-3500 region on Shanghai (3524.63, −0.10, -0.003%) is holding well. The view of seeing a rise to 3560-3580 and 3600 remains intact.As mentioned yesterday, a strong rise past 3600 will be needed to become more bullish to see 3800 and also negate the danger of falling back to 3400-3300.
Sensex (54843.98, +318.05, +0.58%) has risen well above 54500 yesterday. The bullish view is intact to see 56000 on the upside in the coming days. The supports at 53500 and 53000 are likely to hold well in case of any strong pull-back.
Nifty (16364.40, +82.15, +0.50%) rose well to close above 16300 and has also broken the 16150-16350 range on the upside. This keeps our bullish view intact of seeing 16500-16600 on the upside.
COMMODITIES
Crude prices have dipped a bit and if sustains, could head towards $65. Gold needs to sustain above 1750 to head towards 1800 else a fall back to 1700 cannot be ruled out. Silver can test 23 before rising back towards 24.50. Copper needs to break above 4.40 to head higher. Watch price action in the next few sessions.
Brent (70.79) and WTI (68.57) have dipped back and trade lower. Upside is likely to be limited to 72.50-73 and 70/71 respectively as mentioned yesterday and while that holds, a fall looks more likely towards 65 on both. View is bearish while below $73.
Gold (1756.70) broke the resistance level of 1750.If gold sustains above 1750 then we expect a rise towards 1800 in the near term. However if it falls back from current levels, then we can see a fall towards 1700.The price action around 1750 needs a close watch.
Silver (23.25) has fallen in line with our expectations. It can fall to 23.15-23.00 before rising back towards 24.50.
Copper (4.3770) is almost stable. We need to see if Copper can manage to break above 4.40 to head higher towards 4.60/80 eventually. But if 4.40 holds as a resistance, it can produce rejection and push price back towards 4.20. Watch price action near 4.40 just now.
FOREX
Dollar Index continues to remain stable above 93 keeping Euro below 1.1750. We would wait and watch for further movement on both. Aussie, EURJPY and Pound look stable now. Dollar-Yen is below 110.80 and while that holds, it can trade within 110.0-110.80 before attempting to move up again. USDCNY can fall towards 6.46 while below 6.49. USDINR may hold support at 74.20 and bounce back to 74.40/50. Failure to bounce from support can take it down to 74.10/00.
Dollar Index (93.179) is almost stable and needs to see if it remains below 93.30/20 and comes off towards 93 and lower or remains stable above 93 to eventually move up. Any sharp movement on the dollar Index will decide further course of direction for other currency pairs.
Euro (1.1738) did bounce from levels just above 1.17 but has been ranged in the 1.17-.1750 region. We need to see which way the Euro moves once it breaks the mentioned range. Movement on either side cannot be rules out just now. We would wait and watch.
EURJPY (129.70) is trading within very narrow range and is likely to remain stable for some more time within 129-130.50. Unless a break on either side of the range s seen, it can continue to remain ranged.
Dollar-Yen (110.39) is trying to come off while below 110.80 but the fall does not seen to be strong. A small sideways correction looks more likely before the pair can rise again towards 111 and higher. Watch price action while below 110.80. Maximum downside can be seen near 110 within this corrective move.
Aussie (0.7345) tested 0.7329 yesterday before bouncing back from there. We may expect support near 0.7320 to hold and keep Aussie higher in the next few sessions taking it up towards 0.7350-0.74. View is bullish while above 0.73-07320.
Pound (1.3805) has fallen and failure to bounce from 1.38 can drag it lower towards 1.37 in the medium term.
USDCNY (6.4783) has fallen from 6.4890 and while that holds it can remain ranged within 6.49-4.46 in the near term. An eventual rise to 6.50 cannot be negated. Broad range of 6.50-6.45 is likely to hold for the next couple of weeks.
USDINR (74.2850) managed to close above support at 74.20 yesterday but we need to see if it sustains and rises higher towards 74.40/50 or falls below 74.20 to head towards 74.10/00. We would wait and watch as there is equal possibility to move either ways. While support at 74.20 holds, it could likely move up from there.
INTEREST RATES
The US Treasury yields have inched slightly higher. The chances of seeing an extended corrective rally remains alive before the broader downtrend resumes again. A break above the immediate resistances can trigger this rally. The German yields continue to trade stable above their key supports. We expect the yields to see a corrective bounce from here before the broader downtrend resumes. The 5Yr GoI can move up within the expected range in the neart-term and then come-off again to see a fresh fall.
The US 2Yr (0.22%) Treasury yield remains stable while the 5Yr (0.82%), 10Yr (1.35%) and the 30Yr (2%) have inched slightly higher. As mentioned yesterday the 10Yr and 30Yr has to fall below 1.3% and 1.9% respectively to see a fresh fall from here itself. Else, the yields can break 1.35% (10Yr) and 2% (30Yr) and see an extended corrective rally to 1.4%-1.45% (10Yr) and 2.1%-2.2% (30Yr) before a fresh fall is seen to resume the broader downtrend.
The German 2Yr (-0.76%), 5Yr (-0.73%), 10Yr (-0.46%) and 30Yr (-0.01%) yields continues to hover stable above their key supports. Our view remains the same. -0.45%/-0.50% (10Yr) and -0.05% (30Yr) are the key supports which we expect to hold. A corrective rally is likely to be seen in the coming weeks targeting -0.30%/-0.25% (10Yr) and 0.10% (30Yr) on the upside. Thereafter a fresh fall to resume the broader downtrend can be seen.
The 5Yr GOI (5.7435%) remains within the 5.73%-5.78% as mentioned yesterday. Within this range, a rise to 5.78% and even 5.80% looks possible to be seen first before the yield comes down again towards 5.7% eventually.
