STOCKS
Equities are mixed today. While Dow Jones has risen well and looks strongly bullish, Dax has fallen slightly over the last 2-sessions but could test support at 15800 before bouncing back from there. We are cautious on Nikkei while below 28000 and shanghai on a break below 3500. Nifty and Sensex trade higher and look bullish for a further rise this week.
Dow (35625.40, +110.02, +0.31%) has risen well, breaking above our expected 35600. The view continues to remain bullish for this week. A further rise to 37000-38000 could be on the cards soon.
DAX (15925.73, -51.71, -0.32%) has dipped slightly and has support near 15800 which if holds can produce a bounce back towards 16000-16200 in the medium term.
Nikkei (27569.84, +46.65, 0.17%) has risen slightly today but continues to trade below 28000.The support at 27250 seems to be holding well. A strong break above 28000 will negate the view of seeing a dip towards 27000-26500 on the downside mentioned yesterday. Watch price action near 28000.
Shanghai (3501.96, 15.39, -0.44%) has fallen to test 3500 and unless a bounce is seen immediately, there could be scope for a fall to 3400 before a bounce is seen. An immediate bounce, if seen could take it higher to 3600.
Nifty (16563.05, +33.95, +0.21%) rose yesterday and is heading towards 16600 in line with our expectations. The view is bullish to see a break above 16600 soon. Any immediate corrective dip if seen could be short lived and limited to 16400/350.
Sensex (55582.58, +145.29, +0.26%) has also risen and us heading towards 56000 in the coming sessions. Any corrective dip, if seen could be limited to 54500.
COMMODITIES
Brent and WTI trade lower and could move towards $65 while Gold and Silver have risen today and may move up further to test 1800-1810 and 24.0-24.50 respectively. Copper holds below crucial near term resistance at 4.40 and could fall to 4.30/20 before bouncing back again in the medium term.
Brent (69.62) and WTI (67.43) have both come off slightly from levels seen yesterday and could be headed towards $65 soon. View is bearish while below $72-70 on both.
Gold (1788.30) has slightly risen and could head towards 1800-1810 soon while it trades above 1750. On the flip side, a break below 1750, if seen can drag it lower towards 1700. Watch price action near current levels.
Silver (23.84) has risen today and could head towards 24-24.50 soon. Immediate view is bullish.
Copper (4.3245) has fallen. While below resistance at 4.40, there is scope for a fall towards 4.20 before a bounce is seen.
FOREX
Dollar Index has bounced well dragging Euro down from 1.18 as expected. Euro could extend fall to 1.1750 from where a bounce can take place else we cannot negate a possible fall to 1.17. Aussie, Pound, EURJPY are all trading strongly bearish and could continue for a few more sessions. USDCNY can head towards 6.49/50 while USDINR may hold above support at 74.20 and rise higher.
Dollar Index (92.68) has risen today extending the bounce seen from 92.47. But unless the bounce leads to a sharp and sustained rise above 93.20/30, view is still bearish to see an eventual fall back to 92.0-91.75 or even lower in the coming sessions.
Euro (1.1770) tested 1.18 yesterday but has come off from there. The fall may extend to 1.1750 before another reversal is seen. Watch immediate support at 1.1750.
EURJPY (128.62) has fallen as expected but could face support at 128.50-128 which could hold and produce a bounce back towards 130-130.50 soon.
Dollar-Yen (109.28) has is headed towards 109 which if breaks can drag the pair towards 108.30-108.00 before another bounce from there is seen. Overall a broad range of 110.50/80-108.30/00 can hold for the next 1-2 weeks. Immediate view is bearish towards 109 and lower.
Aussie (0.7312) has broken below the mentioned support at 0.7325. While the fall sustains, Aussie can extend towards 0.7290-0.7250 soon before bouncing back.
Pound (1.3822) fell as immediate resistance near 1.39 held. If Pound falls below 1.39, we may expect a further fall towards 1.37-1.36 soon. View is bearish for the near term.
USDCNY (6.4790) has bounced well and if the rise holds, it can move up to test 6.49/50 again.
USDINR (74.25) has held above 74.20 last week but we need to see if it manages to hold above 74.20 this week too and rise back to 74.40/50 or breaks lower to test 74.00-73.80 eventually. Watch price action near 74.20 this week.
INTEREST RATES
The US Treasury yields remain lower. Inability to rise back from here can drag the yields further lower in the coming days and will reduce the chances of seeing an extended corrective rally that we had been expecting. The German yields sustain above their support and are likely to see a corrective rally in the coming weeks before the broader downtrend resumes again. The 5Yr GoI looks mixed and can trade in a sideways range for some time.
The US 2Yr (0.21%), 5Yr (0.75%), 10Yr (1.25%) and the 30Yr (1.91%) Treasury yields continue to trade lower and stable. As mentioned yesterday, the 10Yr can fall to 1.18% while below 1.3%. Similarly, the 30Yr can test 1.85%-1.8% on a fall below 1.9%. The 30Yr has to rise sharply from here and breach 2% and the 10Yr will have to rise past 1.3% to bring back the chances of seeing 1.4%-1.45% (10Yr) and 2.1%-2.2% (30Yr) on the upside into the picture.
The German 2Yr (-0.75%), 5Yr (-0.73%), 10Yr (-0.47%) and 30Yr (-0.03%) yields continue to hover near their supports. Our view remains the same. We expect the -0.45%/-0.50% support zone on the 10Yr and -0.05% on the 30Yr to hold for now and trigger a corrective rally to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks. Thereafter a fresh fall can happen indicating the resumption of the broader downtrend.
The 5Yr GOI (5.7326%) is likely to oscillate in a broad range of 5.7%-5.78%/5.8% in the coming days.
