STOCKS
Global indices sustain higher above their near-term supports but seem to lack momentum. A strong follow-through rise is needed from here in order to boost the momentum. Though the chances of seeing a near-term dip cannot be ruled out, the broader picture remains positive as long as the indices remain above their supports. Dow has supports at 26000 and 25000, DAX has at 12200. For Nikkie the supports are at 22000 and 21500 and Shanghai at 2900. Sensex and Nifty looks relatively weaker among the lot because of the on-going tensions at the India-China border. As such the Indian indices look more vulnerable to fall in the coming days before resuming their broader uptrend.
Dow (26119.61, −170.37, -0.65%) sustains above 26000 but is not getting a strong follow-through rally which is needed to take it further higher. The broader picture remains bullish to see 27000-28000 as long as the Dow trades above 25000. But whether the rise will happen from here itself (while it manages to sustain above 26000) or after a dip to 25000 (in case if a break below 26000 is seen) is not clear now.
DAX (12382.14, +66.48, +0.54%) sustains well above 12200 and keeps our bullish view of seeing a rise to 12800. A strong break above 12500 can accelerate the rally. The upside has the potential to extend upto 13000-13200 as well.
Nikkei (22229.45, −226.31, -1.01%) has come-off failing to see a strong rise past 22500 However, the index can get support at 22000 and bounce-back again to keep our bullish view intact of seeing 23200 on the upside. 21500 is slightly a deeper support which needs to be broken in order to negate the bullish view.
Shanghai (2923.73, −12.15, -0.41%) hovers around 2925 but is not gaining momentum to extend the rise strongly above 2925. The broader picture remains bullish to see 2975 and higher levels. But the price action indicates that there are chances to see a dip to 2900 again before the expected rise to 2975 happens.
As expected, Nifty (9881.15, -32.85, -0.33%) remains below 10000 and is likely to see a dip to 9700 and even lower in the coming days. However, as mentioned yesterday we continue to see 9600-9500 as strong support which can limit the downside. 9500-10000 is the range that we prefer to see before we see an eventual break above 10000.
Sensex (33507.92, −97.30, -0.29%) can remain stuck in the 33000-34000 range for a few sessions. The bias will remain negative to break 33000 and test 32000 on the downside first before we see a fresh rise and an eventual break above 34000.
COMMODITIES
Overall most commodities are stable and could spend some time in a ranged fashion. Brent and WTI could be ranged within the mentioned zone while Silver could attempt to move up a bit from here. Gold is stable and has some room on either side to test respective resistance and support levels. Copper may move up while above interim support.
Brent (40.16) and Nymex WTI (37.57) are stable just now but as mentioned in earlier editions, upside is likely to be capped at 42.50 and 41 respectively in the near term. Any dip from there could have scope for a fall to 38-37 and 35-34 respectively.
Gold (1733.80) is almost stable while Silver (17.67) has risen slightly. The expected ranged movement in Gold is intact within 1690-1760 while the price is unable to move on either side of the range and seems to be stuck around 1730. WE may wait to see some volatility in Gold while Silver is likely to rise to 18 in the near term. Any rise in Silver seen just now could be short lived.
Copper (2.5765) has moved up slightly. Both levels of 2.55/50 and 2.65 are important support and resistance levels and could hold in the near term while the price movement in copper could be sideways ranged for some more time. While above 2.55, we may expect a rise back towards 2.60 or higher towards 2.65.
FOREX
Dollar Index and Euro looks stable while EURJPY, Aussie and pound are bearish. Dollar Yen has fallen but could bounce back from near term support below current levels. We need to keep a watch to see if it manages to break above 107.70. USDCNY has fallen a bit but USDINR looks bullish for the near to medium term.
Dollar Index (97.12) has been broadly ranged since the last 2 sessions and could eventually move up in the medium term targeting 97.50+ levels. Before that we may expect some ranged movement below 97.50with downside limited to 96.50 in the near term. Longer term view is bullish.
Euro (1.1238) could be headed to 1.12 but if the dollar index comes off from 95.50, we may expect 1.12 to hold well on Euro and produce a bounce back towards 1.13-1.1350 in the near term. Ranged Dollar Index could indicate ranged Euro for the near term.
EURJPY (120.12) looks bearish for the near term towards 119.45 from where a bounce could be expected towards 120.5 or higher.
Dollar-Yen (106.90) has fallen contrary to our expectation of a break above 107.70 to test 108+ levels. But 106.70/60 is also an interim support which if holds could push the prices back to higher levels in the near term.
Aussie (0.6852) has immediate support at 0.68 and lower near 0.6732/10 which could be tested in the medium term. Overall view looks bearish for Aussie in the near term. A rise in Copper prices to 2.65, if seen could pull up Aussie in the near term.
Pound (1.2535) looks bearish too for the near term towards 1.2455-1.2400.
USDCNY (7.0850) is stable below 7.10 and could re-attempt a test of 7.07/06 in the next few sessions. Note that 7.0600/0650 is important support in the near term that could hold well and prevent any further fall below 7.06 in the near term.
USDINR (76.1550) closed above 76.10 yesterday and could be ready to see a further rise to 76.30/40 in the near term. Downside is likely to be limited to 75.85/90. Overall view is bullish for USDINR. A confirmed break above 76.25 could trigger further rise till then we may expect a range of 76.25-75.85/90 to hold for a while.
INTEREST RATES
The Treasury yields have dipped again and are keeping alive the chances of seeing a further dip before reversing higher again. We will have to wait and watch for a few sessions. The German yields remain stable above their crucial support and will need a strong bounce from here to keep the broader bullish view intact and also to avoid the danger of seeing a fresh fall. The 10Yr GoI could remain stuck in a narrow range before moving further higher.
The US 2Yr (0.19%), 5Yr (0.32%), 10Yr (0.70%) and the 30Yr (1.47%) Treasury yields have come down across tenors indeed a little sharper at the far-end. The reversal keeps alive the chances of seeing a fall to 0.58% on the 10Yr and 1.25% on the 30Yr in the coming days. As we have been mentioning over the last few days, the 10Yr has to sustain well above 0.70% and the 30Yr has to breach 1.50% decisively in order to negate the above mentioned fall completely.
The German 2Yr (-0.68%), 5Yr (-0.65%), 10Yr (-0.40%) and 30Yr (0.05%) yields remain stable above their crucial supports. As mentioned yesterday a further rise from here is needed to confirm that the support at 0% on the 30Yr and -0.45%/-0.50% region on the 10Yr has held well. Such a move will then pave way for a fresh rise to -0.25% (10Yr) and 0.25% (30Yr) going forward and will also negate the danger of seeing further fall.
The 10Yr GoI (6.0099%) is struggling to breach 6.05% and extend the rise to 6.10%. While above 6% the view remains bullish to see a rise to 6.10%. But incase of a break below 6% (less preferred), the chances of seeing a dip to 5.95% on the downside will come back into the picture.
