STOCKS
The resistance at 26250 on the Dow (26179.13, -79.29, -0.30%) seems to be holding as of now. The outlook remains positive. However, a dip to 26000 cannot be ruled out before the DOW breaches 26250 and gears-up for a rally to 27000 and 27250
DAX (11754.79, +72.80, +0.62%) keeps the bullish view intact. With an immediate support at 11710 (200-day moving average), DAX can surge to 11900 and 12000 in the coming days.
Nikkei (21674.13, +168.82, +0.79%) is volatile. But with support at 21415 (21-day moving average) the near-term view is positive for it to test 21930 and 21960.
Shanghai (3180.30, +3.47, +0.11%) continues to move higher, but at a slower pace. A test of 3200 is likely in the coming sessions. A pull-back from 3200 can trigger a corrective fall to 3120. But a decisive break above 3200 will see the upmove extending towards 3250 and 3280
Sensex (39056.65, +184.78, +0.48%) and Nifty 50 (11713.20, +44.05, +0.38%) continue to trade strong and keep the bullish view intact. Sensex can test 39500 in the near term. Indeed the weekly charts are much stronger for it to test 40000 and even higher levels in the coming weeks. Nifty can test 11780-11800 in the near term.
COMMODITIES
Among commodities, oil looks stronger and can move further higher. Gold and Silver sustains above their support and may see some upticks in the coming sessions. Copper looks slightly weak in the near term.
Gold (1292) sustains above 1280. As mentioned yesterday, while above 1280, the possibility of an upmove to test 1300-1305 cannot be ruled out in the near term.
Silver (15.15) has bounced after a brief dip below 15 yesterday. Immediate resistance is at 15.2. A break above it can take silver higher to 15.35.
Copper (2.91) extended its fall yesterday and seems to be under pressure. A key support is in between 2.90 and 2.89. A bounce from there can take it back to 2.95 levels. But a break below 2.89 can drag it to 2.85.
WTI (62.75) has risen above 62 decisively. Supports are at 62.3 and 61.5. WTI can move further higher to 63.7 in the coming sessions.
Brent (69.72) has risen further as expected and is trading in the key 69.7-70 resistance region. The outlook is bullish. A strong break above 70 will pave way for a further rally to 72 in the coming days. Immediate support is at 69.2
FOREX
Currencies are all mixed. Euro is weak while Euro-Yen, Dollar-Yen and Pound have scope to rise just now. Aussie is stuck in a sideways range while Yuan may weaken to test 6.73/74. Dollar-Rupee could start moving up from 68.50/60 levels back to 69+.
Dollar-Index (97.20) has dipped after testing 97.50 on the upside yesterday. We could possibly see some sideways trade above 97 in the near term with the upside limited to 97.75.
Euro (1.1222) tested 1.1187 yesterday, falling below the 1.12 support. Although Euro is trading slightly higher today, there is scope for falling towards 1.11 in the near term. View is bearish for the coming sessions.
Euro-Yen (125.14) has risen well. Only if it manages to break above the 21-MA near 125.40, we would turn bullish towards 126.0-126.8 else a fall back towards 125-124 could be on the cards.
Dollar Yen (111.50) has resistance near 111.50-112.0 from where a rejection is expected, pushing the pair back towards 111-110 in the near term.
Aussie (0.7099) has risen contrary to our expectation of a further fall below 0.705. Although the immediate resistance levels of 0.7150 and 0.72 are holding just now, Aussie is finding difficult to break below 0.7050 and move down towards 0.70.
Pound (1.3141) has been clearly rising from trend support near 1.30. While the rise holds, a test of 1.32 could be seen.
USDCNY (6.7130) has scope of rising towards 6.73/74 while the pair trades above 6.70. In the medium term 6.74/75 is likely to hold and could push the pair back towards 6.70.
Dollar-Rupee (68.7550) declined sharply yesterday in the last 1-hr of the trading session to fall sharply below 68.90/80. Downside could be limited to 68.50 just now while the pair could move back to 69+ levels in the near term.
INTEREST RATES
The US Yields have all risen. The 2YR (2.32%), 5YR (2.31%), 10YR (2.50%) and the 30Yr (2.90%) have all risen sharply and look bullish for the near term. The 30Yr (2.90%) could rise towards immediate resistance at 3% while the 10Yr (2.50%) could rise towards 2.55/58%.
The German-JGB 10YR (0%) has fallen instead of bouncing from immediate support levels. A further fall from current levels could turn the spread negative towards -0.05%.
Contrary to our expectation of decline, USDINR Forward Premia actually went up substantially yesterday, with the 1-mth going up to 8.22% , as compared to 4.63% last Thursday. The 2-mth was 6.22%, as compared to 4.31% last Thursday. Cash-Spot too was very high yesterday. All this is because of an excess supply of Dollar balances and shortage of Rupee balances in the Indian money-market linked to the outsize USDINR buy/sell swaps announced by the RBI. It may take another couple of days for the situation to normalise.
The 10Yr GOI (7.4190%) saw a sharp dip below 7.45% yesterday and may try to push further down towards 7.35% or even lower. Confirmation would come on a break below 7.40%.
Tomorrow’s MPC will be keenly awaited. For one, the market is likely pricing in a rate cut. Secondly, the market will also want to know if the RBI aims to do anything about the anomalies currently being seen in the Dollar-Rupee Cash-Spot and Forward Premia markets.
