STOCKS
Equities are trading higher with crucial resistances coming up. Dow looks strong to rise towards 35250 while Dax may face resistance near 15700/800 in the coming sessions. Nikkei and shanghai may rise too towards 30500/700 and 3600/3700 respectively. Nifty and Sensex may see a pause or corrective dip followed by resumption of uptrend.
Dow (34869.37, +71.37, +0.21%) has risen well. A break above 35000-35250, if seen can take the index towards 35631 eventually. Watch price action as Dow is expected to rise further from current levels in the near term.
DAX (15573.88, +42.13, +0.27%) has risen and can test resistance near 15700/800 in the near term. Thereafter a fall from there or break on the upside would indicate further direction.
Nikkei (30139.65, -100.41, -0.33%) has dipped from 30171 today. While above 30000 we do not negate a test of 30500-30700 before we see a corrective fall from there.
Shanghai (3597.10. +14.27, +0.40%) is trading higher today and while above important supports near 3550-3575, a rise back towards 3650-3700 can be expected soon.
Nifty (17855.10, +1.90, +0.011%) rose to test 17943.50 and has come down from there. A corrective fall towards 17700-17600 is possible in the coming sessions while below 18000.
Sensex (60077.88, +29.41, +0.049%) has managed to sustain above 60000 but we may expect a pause or corrective decline from here towards 59500-58500 before resuming the upmove again in the medium term. Watch price action near current levels.
COMMODITIES
Crude prices trade higher and can target 85 (Brent) if it fails to decline from current levels. WTI too can move up to 78 if it does not decline from 76/77 itself. Gold and Silver are stuck near levels seen over the last couple of days and need to show some bigger movement to indicate further direction. Till then we may expect precious metals to remain ranged. An expected rise in Dollar Index (refer Forex section below) can lead to a fall in precious metals over the next few sessions. Copper is bullish towards 4.30/40 while above 4.00/10
Brent (79.98) tested 80.19 and has come off a bit from there. It would be crucial to see if Brent comes off from here or manages to break above 80 and sustain higher as that would be surprising and contrary to expectation. We would wait and watch for a couple of sessions to see how the price moves. Any sustained break above 80 would trigger a rise towards 85 in the near term.
WTI (75.99) is also near resistance at 76/77 mentioned yesterday and failure to decline from here could take WTI eventually towards 78. But we would wait and watch to see if the price comes down from current levels.
Gold (1753) is stuck and needs to break on either side of 1800-1740 region to give more clarity.
Silver (22.67) is stuck too and can rise towards 23-23.50 on the upside. Immediate view is bullish while above 22.00-22.50.
Copper (4.2885) has dipped a bit but is bullish towards 4.30/40 while above crucial support at 4.0.
FOREX
Volatility seems to be picking up in currencies. Dollar Index might head towards resistance at 94 while Euro may fall towards 1.1625-1.16 on a break below 1.1665. EURJPY and USDJPY rise sharply and could be headed towards 130.50 and 112 respectively. Aussie and Pound may rise too but could face resistance above current levels. USDCNY has resistance near 6.47/48 and support at 6.44 hence could be ranged within these levels. USDINR can rise towards 74.
Dollar Index (93.46) can rise towards crucial resistance at 94 which could be in line with a fall in Euro towards 1.1625-1.1600. We may expect a corrective dip from 94 on the Dollar Index.
Euro (1.1689) fell below 1.17 as German election results pave way for coalition talks and might lead to some volatility in the near term. While below 1.17, it may test 1.1665 which if fails to hold can drag the exchange rate towards 1.1625-1.1600. Watch price action near 1.1665.
EURJPY (129.85) continues to rise and can rise towards 130-130.50 in the near term. A further break above 130.50 is needed for the cross to turn bullish.
Dollar-Yen (111.12) has finally risen above the 109-110.80 range breaking sharply on the upside. While above 111, a rise towards 112 cannot be negated. Immediate view is strongly bullish.
Aussie (0.7283) has scope to rise towards resistance near 0.7377 which can be tested and face a decline from there back towards 0.7250-0.72 on the downside.
Pound (1.3696) seems to be in a range of 1.3750-1.36 and unless a break on either side is seen, it is difficult to predict further movement from here. We wait for a break on either side of the range.
USDCNY (6.4554) trades below immediate resistance near 6.47/48 but also has support near 6.44 which is likely to keep the pair ranged within 6.47/48-6.44 in the near term.
USDINR (73.8450) broke above 73.80 by the end of the session yesterday as earned in yesterday’s morning edition. The pair is likely to sustain above 73.80 to rise towards 73.90-74.00 in the near term.
INTEREST RATES
The US Treasury yields have risen further and are poised at crucial level. There is limited room left on the upside as strong resistance is coming up. While we expect the resistances to hold and produce a reversal, we remain cautious as well at the moment to see a breakout of these resistances and a further rally from here. The German yields remain stable and higher. They have room to move up further from here. The 5Yr and 10Yr GOI continue to rise and have room to move up further from here before the expected reversal happens.
The US 2Yr (0.28%), 5Yr (0.98%), 10Yr (1.48%) and the 30Yr (1.99%) Treasury yields have moved up further and are poised at crucial levels. 1.5% (10Yr) and 2% (30Yr) are key immediate resistances which we expect to hold and produce a reversal. In case of a break above these resistances an extended rise to 1.6% (10Yr) and 2.1% (30Yr) is possible and the expected reversal can happen thereafter. The price action in the coming days will need a close watch.
The German 2Yr (-0.70), 5Yr (-0.56%), 10Yr (-0.22%) and 30Yr (0.25%) yields remain higher and stable. Our view remains the same. The 30Yr can rise further to 0.3%-0.35% while it sustains above 0.2%. The 10Yr has an immediate resistance at -0.2% which if broken can pave way for a test of -0.1% on the upside. Our earlier view of seeing a reversal stands negated for now.
The Indian 10Yr GoI (6.2087%)and the 5Yr GoI (5.6869%) have risen further. The 10Yr has tested 6.2% as expected and can rise to 6.25%-6.26% while it sustains above 6.2%. The 5Yr on the other hand has an immediate resistance at 5.7%. A break above it can take the 5Yr up to 5.76% and higher thereby negating our earlier view of seeing a reversal to 5.64% and lower.
