STOCKS
The first level of support on the major indices is holding very well. Broadly it looks like the equity segment can run into a sideways consolidation for some time within their broader uptrend. Thereafter we expect the indices to break the consolidation on the upside and begin a fresh leg of rally. The Dow can remain in the range of 25000-26500 and DAX in the 12000-12500 range. Nikkei can trade between 22000-22600 while the Shanghai can be in the range of 2940-2985. Sensex and Nifty looks mixed and will need a close watch for some time to get a clear idea on whether they can move up from here itself or will see a dip before a rally.
The support at 25000 on the Dow (25595.80, +580.25, +2.32%) is holding well for now as expected. A follow-through rise in the coming days can take the Dow higher to 26500 in the next few days. A range of 25000-26500 looks like a possibility in the near-term. Our broader bias continues to remain bullish and we will be looking for an eventual break above 26500. Such a break will pave way for our preferred targets of 27000 and 28000 in the coming weeks.
DAX (12232.12, +142.73, +1.18%) has bounced and oscillates around 12200. The broader bullish view remains intact to see 12800 and 13000-13200 in the coming weeks. However, the near-term outlook is unclear. A dip to 11900 or even lower is still a possibility before the above mentioned rise happens. A strong close above 12500 is needed to avoid a fall and move up straight away from here itself.
The immediate support at 22000 on the Nikkei (22379.48, +384.44, +1.75%) is holding well in line with our expectation. Nikkei can consolidate between 22000 and 22600 before our preferred rise to 23000-23200 happens. We reiterate that the bigger picture is bullish with strong supports at 22000 and 21500 and the index can target 23800-24000 over the medium-term.
As expected Shanghai (2971.74, +10.22, +0.35%) dipped to test 2950 yesterday and has bounced from there. We retain our view of seeing a consolidation between 2950 and 2975 (narrow) or 2940 and 2985 (wider) in the near-term before a fresh rally to 3025-3050 happens.
Nifty (10312.40, -70.60, -0.68%) continues to lack momentum although it sustains above 10200. A consolidation in the range of 10200-10400 (narrow) or 10200-10600 (wider) is a possibility in the near-term. While the broader view remains bullish, we will have to wait and watch whether the Nifty sustains above 10200 and moves up after this consolidation or dips below 10200 to test 10000 and lower levels before beginning a fresh leg of rally.
Sensex (34961.52, −209.75, -0.60%) is struggling to get strong follow-through rise above 35000. The index will have to rise past 36000 decisively in order to avoid the fall to 34000-33000 and move up from here itself.
COMMODITIES
Crude prices are in a sideways range and are likely to remain so for some more time. Gold is also likely to remain stable while above support at 1760. Silver on the other hand has crucial resistance at 18.5 and while that holds, we may expect some pull back in silver which could eventually drag down Gold also in the near term. Copper is looking the most bullish amongst other commodities mentioned below. Breaking above 2.70, it is now headed for a near term rally. The rise in Copper came in as demand in China rebounded to stronger than expectations this quarter.
Brent (41.66) and Nymex WTI (39.44) are stable and likely to see some sideways consolidation while below $45.27 and $41 respectively. Downside could be limited at $37.50 and $35 just now.
Gold (1783) is holding well above 1760 but has not been able to see a clear bounce to 1800 as it struggles to rise past 1780/1790 just now. Broad 1760-1800/20 could be the trade zone for the near term.
Silver (18.09) is trading higher just now but has crucial resistance at 18.5 which if holds could push down prices towards 17 again in the near term. Only a break above 18.50, if seen and sustained would bring in bullish possibilities for the longer term. We would be cautious to see a rejection from 18.5. View is bearish while below 18.5.
Copper (2.7120) has risen in line with our expectation, breaking above 2.70 and is bullish for the near to medium term targeting 2.80 or even higher.
FOREX
Dollar Index and Euro look stable for the near term while Dollar Yen has moved up and looks bullish towards 108+. Pound has dipped and look bearish while Aussie could be supported by stronger Copper prices and could move up in the near term. EURJPY and Yuan looks strong just now. But we will keep a close watch on Yuan to see if it strengthens past 7.06. USDINR could be ranged in the 75.50-75.75 region for now with medium term possibility of breaking below 75.50 towards 75.40 and 75.25/20 eventually.
Dollar Index (97.50) needs to break above 97.74 as mentioned yesterday and move higher to turn bullish for the near term. Else stable ranged movement could be expected below 97.75 for the near term.
Euro (1.1241) is also looking stable and could be ranged in the 1.1210-1.1300 region for the coming sessions. A break on either side would be needed to give more clarity on further direction.
EURJPY (121.13) has risen well breaking above 121 that was mentioned yesterday. Now while above 121, EURJPY could be bullish towards 121.70-122.00 in the near term.
Dollar-Yen (107.72) has risen well despite sideways trade seen in the Dollar Index. We may expect a test of 108 or even higher in the near term. View is bullish for Dollar-Yen.
Aussie (0.6876) has dipped slightly despite supporting rise seen in Copper. While Copper looks bullish for the near term (refer commodities section above), Aussie could also continue its upmove in the near term targeting 0.70/0.71. View is bullish while above support near 0.68 and taking bullish cues from Copper.
Pound (1.2302) has dipped from 1.24 and while that holds as a decent resistance just now, we may expect a fall towards 1.2205 in the near term.
USDCNY (7.066) has fallen breaking below immediate trend support near 7.07 mentioned yesterday. The pair will have to sustain a break below 70.07 in order to turn further bearish for the coming sessions.
USDINR (75.5875) remained stable above 75.50 yesterday and is likely to remain stuck in the 75.50-75.75 region for the near term. Looking at the charts, bias is tilted to the downside for an initial test of 75.40 and a sustained break below that could take the pair towards 75.25/20.
INTEREST RATES
The US Tresaury yields remain lower and stable. The yields have room to dip in the near-term to test their supports from where we expect them to begin a fresh leg of upmove going forward. The German yields continue to trade lower and keep our bearish view intact. The 10Yr GoI can consolidate sideways with a bearish bias.
The US 2Yr (0.15%), 5Yr (0.28%) and the 10Yr (0.63%) Treasury yields have dipped while the 30Yr (1.39%) has inched slightly higher from levels seen in early Asian trades yesterday. Our view remains the same. A near-term dip to test the important supports at 1.30%-1.25% on the 30Yr and 0.60%-0.58% on the 10Yr is possible. Thereafter we expect the yields to reverse higher and begin a fresh leg of upmove. As mentioned yesterday our view will go wrong if the yields decline below 1.25% (30Yr) and 0.58% (10Yr).
The German 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.47%) and the 30Yr (-0.03%) yields remain lower and stable. The near-term negative view remains intact. The 10Yr can test -0.50% now and then -0.60% eventually on the downside. The 30Yr on the other hand can fall to -0.10% in the near-term and then -0.20% going forward. Resistances are at -0.40% (10Yr) and 0.05% (30Yr).
The 10Yr (5.79 GS 2030, 5.9041%) GoI is stuck around 5.90%. It can trade sideways between its support at 5.87% and resistance is at 5.92%. A breakout of this range will determined the next move. While below 5.92%, the bias is bearish.
