STOCKS
Dow and DAX have moved up. As mentioned yesterday the indices can remain sideways for some time before a fresh leg of rally begins. Within this sideways consolidation the indices can move up in the near-term towards the upper end of their respective range. Dow can move up to 26000-26500. DAX can test 12500. In Asia, Nikkei looks mixed within the preferred range. Sensex and Nifty are stuck in a narrow range and remain mixed with equal chances of moving on either side from current levels. Shanghai has risen sharply and looks strong and more bullish among the lot.
Dow (25812.88, +217.08, +0.85%) has moved up further and is likely to head towards 26500 in the coming days as mentioned yesterday. The support at 25000 is holding well and we can see some sideways consolidation between 25000 and 26500 for some time. Thereafter a break above 26500 and a fresh rise to 27000-28000 can be seen eventually.
DAX (12310.93, +78.81, +0.64%) has risen above 12200. However, as mentioned yesterday a strong rise past 12500 is needed to gain momentum and move up to 12800 and 13000-13200 from here itself. Else the index can oscillate in a sideways range of 11900/12000-12500 for some time before the preferred rise happens.
Nikkei (22253.21, −34.93, -0.16%) continues its struggle of gaining strength. Our view of seeing a sideways consolidation between 22000 and 22600 for some time remains intact. Eventually we expect the Nikkei to break above 22600 and rise to 23000-23200 and 23800-24000 over the medium-term. 22000 and 21500 are important supports.
Shanghai (3002.71, +18.04, +0.60%) has risen sharply breaking above 2985 much faster than we had expected. The outlook is bullish and a rise to 3025-3050 that we have been mentioning can be seen in the coming days.
As mentioned yesterday, Nifty (10302.10, -10.30, -0.10%) remains in the 10200-10400 range. 10200-10600 can be a slightly wider range that is possible on a break above 10600. A strong rise past 10600 is needed to negate the chances of seeing a fall below 10000 and resume the uptrend from here itself.
Sensex (34915.80, −45.72, -0.13%) hovers around 35000 and looks mixed. As mentioned yesterday, a strong rise past 36000 is needed to boost the momentum to move up further and also to avoid a fall to 34000-33000.
COMMODITIES
Crude prices are stable just now and could continue to see some more sideways trade for the near term. Gold has risen sharply as US Dollar declined yet again failing to see a sharp rise above 97.80.Silver and Copper look bullish too for the near term.
Brent (41.75) and Nymex WTI (39.80) are almost stable near levels seen yesterday. We continue to look for some sideways consolidation while below $45.27 and $41 respectively. Repeating from yesterday’s comments, we expect downside to be limited at $37.50 and $35 in the near term.
Gold (1799) has finally moved up rising past 1780/90 mentioned yesterday to now test 1800. A break on the upside could be bullish for 1820-1850 in the near term before a rejection is seen in the medium term. 1800-1820-1850 are crucial levels just now from where rejection could be expected. Overall Gold looks bullish for the very near term.
Silver (18.61) is headed towards 19 in the near term. Support near 18 (revised from earlier 17.5) is holding well for now. Only a break above 19 in the next few sessions would trigger further upside in the medium term; else we may expect a pullback from 19 in the near term.
Copper (2.7485) is rising well as expected. Price may target our mentioned 2.80/85 in the near term before seeing a pullback from there. Near term view is bullish.
FOREX
Dollar index, Euro and EURJPY all look stable and could be seen in a sideways consolidation in the next few sessions. Dollar Yen is holding below 108.20 but is likely to see a short term dip before again rising back to higher levels. Watch price action near 1.24 on Pound. USDCNY is trading lower contrary to our expectation and needs to remain above 7.05 to keep sideways trade of 7.0819-7.0510 intact. Rupee is stuck in a range too but looks strong for the coming sessions.
Dollar Index (97.33) declined after testing an intra-day high of 97.80 yesterday. The index lacks strength just now and could see some sideways trade within 97.80-96.80 in the near term. Thereafter, a break on either side would decide on further direction.
Euro (1.1238) could have some scope for a rise from current levels to 1.13 in the near term. Overall some sideways consolidation is possible within 1.1300-1.1240 region in the near term. A break below 1.1240 could take it down further towards 1.12-1.1150 in the longer term. For now watch price action near 1.13 and 1.1240 respectively.
EURJPY (121.02) continues to trade above 121 although it dipped from 121.48. We may expect some ranged movement within 121.70-120.50 for the next few sessions before a break on either side is seen.
Dollar-Yen (107.69) started falling after testing 108.16 yesterday. The fall is expected to be limited and short lived just now and we may soon expect continuation of upward rally in the near to medium term.
Aussie (0.6908) has moved up as expected and could be headed higher towards 0.70/71. Copper continues to trade higher and could influence the Aussie positively. View is bullish for the near term.
Pound (1.2386) has moved up slightly. While above support near 1.23, Pound may attempt a test of 1.24 again but if it fails to rise past 1.24 within the current upmove, we may have to consider another dip back towards 1.23 or even lower.
USDCNY (7.0627) is stuck in a sideways range within 7.0510-7.0819 but is unclear on further direction from here. Till then we do not negate a possible rise towards 7.10. Only a break below 7.05, if seen and sustains could trigger further fall for the medium term.
USDINR (75.5050) closed lower yesterday but traded above 75.40 keeping the possibilities of consolidation within 75.40-75.60/65 intact for few more sessions before we see a break below 75.40 for a dip towards 75.25/20 in the medium term. Overall view is bearish for Dollar Rupee.
INTEREST RATES
The US Treasury yields have bounced well especially at the far end. It will have to be seen if they can sustain this bounce and move up from here itself instead of seeing further dip to test their supports and then reverse higher. The German yields have inched higher but have key resistances ahead which can cap the upside and drag it lower again. The 10Yr GoI looks mixed in the near-term and can oscillate sideways for some time.
The US 2Yr (0.15%), 5Yr (0.30%), 10Yr (0.68%) and the 30Yr (1.44%) have risen back well especially at the far end. It will have to be seen if this bounce sustains and a reversal happens from here itself or not instead of seeing a further dip to test the supports that we have been mentioning over the last few days. Broadly we retain our view that 1.30%-1.25% (30Yr) and 0.60%-0.58% (10Yr) are important supports that can limit the downside and trigger a fresh leg of upmove going forward.
The German 2Yr (-0.70%), 5Yr (-0.70%), 10Yr (-0.46%) and the 30Yr (0%) yields have inched slightly higher Key resistances are at -0.40% on the 10Yr and 0.05% on the 30Yr which can cap the upside. We expect the yields to reverse lower again and keep our broader bearish view intact of seeing -0.50%/-0.60% (10Yr) and -0.10%/-0.20% (30Yr) on the downside eventually. Only a strong rise past -0.40% (10Yr) and 0.05% (30Yr) will negate our bearish view.
The 10Yr GOI (05.79 GS 2030, 5.8885%) has bounced-back well from the low of 5.8631% yesterday. The near-term outlook is mixed. We expect the yield to remain in the range of 5.85%-5.92%. The bias is bearish to see a downside breakout of this range eventually.
