STOCKS
The increasing tensions between the US and Iran after the US drone was shot down by Iran yesterday seems to have not impacted the equities much as of now. But the developments on the US-Iran conflict will need a close watch which might disrupt the ongoing rally in the equity segment. The US equities have surged overnight and continue to remain bullish for further rise. Asians, though trading mixed remains positive from a broader picture. Shanghai has broken its sideways range on the upside as expected and is bullish for further rise. Sensex and Nifty can consolidate sideways for some time.
Dow (26753.17, +249.17, +0.94%) has surged breaking above 26600. The bullish outlook is intact and the index can extend its upmove to our preferred targets of 27200 and 27500.
DAX (12355.39, +46.86, +0.38%) tested 12430 as expected yesterday and has come-off from there. Immediate support is in the 12300-12285 region which can limit the downside in the near term. While above this support zone, the bullish outlook will remain intact to test 12600 and 12800 in the coming weeks.
Nikkei (21429.06, -33.8, -0.16%) has dipped slightly. But the broader bullish view remains intact to test 21750 on the upside. The support at 21250 can limit the downside in case of any intermediate dips.
As expected, Shanghai (3002.48, +15.36, +0.51%) has broken the sideways range above 2950 and has risen to 3000. Immediate resistance is at 3020 which can hold and trigger a corrective fall. But the resistance-turned-support level of 2950 will limit the downside and keep the outlook bullish to target 3050 and 3100 over the medium term.
Sensex (39601.63, +488.89, +1.25%) and Nifty (11831.75, +140.30, +1.20%) have surged yesterday breaking above 39500 and 11800 respectively. Sensex can test 39750 and Nifty can test 11900 which may cap their upside in the near term. The indices can remain range-bound between 38500-39750 (Sensex), 11600-11900 (Nifty) for some time.
COMMODITIES
Commodities are trading strong and have gained momentum. Gold and Silver have risen sharply and are closer to a key resistance. A corrective is possible in the near term. Copper has turned bullish and can rise further. Oil has risen breaking above their key near-term resistance which we had expected to hold. The escalating tensions between the US and Iran has triggered this price rise. A double-bottom in the oil charts indicate further upside is possible in the coming days.
Gold (1397) has surged towards 1400 as expected. A key resistance is near 1405 which may halt the current rally and a corrective fall to 1375 is possible in the coming days.
Silver (15.49) has room to test 15.65-15.70 on the upside. A corrective fall to 15.5-15.4 is possible from there before the upmove resumes targeting 16.0-16.10 on the upside.
Copper (2.72) has bounced again as expected. The outlook is now bullish for a test of 2.75 and 2.77. Our earlier bearish view for a fall below 2.60 to 2.58-2.55 has got negated.
Contrary to our expectation for a fall, Brent (64.74) and has risen breaking above 64. A corrective rally is in place now as against our expectation for a sideways consolidation. While above 64, Brent can now test 66 in the near term and even 67-68 thereafter.
Similarly, WTI (57.38) has surged breaking above 55, which we had expected to hold. While above 55, the current corrective rally can extend up to 58.5-59 in the coming days.
FOREX
Almost all currency pairs are testing important resistance and support levels that would be crucial to set further direction for the medium term.
Dollar Index (96.52) is at crucial and important support just now and unless it sees an immediate bounce from current levels, it could be vulnerable to fall towards 95-94 in the near term. A break below 96.50 would break the uptrend from Sep’18.
Euro (1.1304) also has important resistance near 1.1325/50 which should hold to prevent further rise. A sharp break above 1.1325/50 would lead to an eventual rally towards 1.14 and higher in the medium term reversing the longer term outlook to bullish. We would watch price action near 1.1325/50 for confirmation.
Dollar-Yen (107.08) is down to test support at 107. While we may expect the pair to bounce back, there is room for a fall towards 106 in the near term. We would remain cautious and watch price action near immediate support at 107.
Euro-Yen (121.01) is trading above supports at 120 and 121. While these hold, trade within 120-123 looks possible. While above 120, Euro-Yen is bullish for the medium term.
Aussie (0.6930) is rising towards immediate resistance near 0.6950. A corrective dip from either 0.6950 or higher from 0.70 looks possible in the near term.
Pound (1.2715) has very near term resistance at 1.2750 which if breaks could turn bullish towards 1.28 or higher in the longer run. We may prefer a short dip from 1.2750 before Pound resumes its rally towards 1.28-1.29 in the longer run.
USDINR (69.45) closed below 69.50 contrary to our expectation of trading in the 69.50-69.90 region yesterday. This fall is crucial and if sustains, could lead to a test of 69.25 today from where a bounce back towards 69.50 is possible.
INTEREST RATES
The US near term yields have risen after an initial sharp fall seen as reaction to the FED statement while the yields at the farther end remain stable. The 2YR (1.76%) and 5Yr (1.77%) are sharply up from 1.72% and 1.75% while the 10Yr (2.01%) and the 30Yr (2.52%) are stable just now. The 30Yr has room for a fall towards 2.45% which could be tested next week after an initial bounce for 1-2 sessions. But the fall in the near term could be limited and we could hope for some corrective upmoves in the next 1-2 weeks.
The US-Japan 10Yr (2.19%) has risen from 2.13%. If the rise sustains, it could indicate a rise in Dollar-Yen from 107. But note that the yield spread has room towards 2.10% on the downside and if the spread resumes to fall, Dollar Yen could be pushed down towards 106.
The 10Yr GOI (6.9336%) remains bearish to test 6.80/75% on the downside. This could aid Rupee strength in the coming sessions. Resistances are seen near 6.95% and higher at 7%.
