STOCKS
Mixed signals are coming out from the equity segment. Dow, DAX and Nikkei continue to consolidate at higher levels. They remain mixed on whether one more rise can be seen after this consolidation or they will see the much expected corrective fall from here itself. Shanghai is struggling to see a sustained break above 3600 and look vulnerable to fall from here. Sensex and Nifty are under pressure and are giving early signs that the corrective fall could have begun. A further fall from here breaking below their immediate supports will confirm the same. Overall our cautious stance on the equities continues to remain intact and we would be approaching this segment from the sell side.
Dow (30937.04, −22.96, -0.07%) continues to oscillate around 31000 and remains mixed. Our view remains the same. The chances of seeing 31500-32000 on the upside is still alive. But a rise beyond 32000 now could be less likely. 30300-30000 will be a crucial support to watch on the downside. A break below 30000 is necessarily needed to confirm that the top is in place and trigger a deeper correction.
DAX (13870.99, +227.04, +1.66%) has risen-back sharply after making a low of 13599.78 on Monday. This keeps the 13600-14000/14100 range intact in line with our expectation. Our view remains the same. The index can consolidate in this range for some more time with a bearish bias to break below 13600 and fall to 13200 or lower eventually. In case of a break above 14100 a rise to 14500 can happen first before the above mentioned fall is seen.
Nikkei (28572.89, +26.71, +0.09%) continues to trade stable between 28500 and 28850. Our view remains the same. A strong break below 28000 will be bearish and trigger a fall to 27000-26500 thereby confirming that a top is in place. While above 28000, the chances of seeing 29600 on the upside is still alive before the expected correction comes into play.
Shanghai (3625.49, +18.74, +0.52%) has failed again to see a sustained break above 3600. This keeps alive the chances of seeing a fall to 3475-3450 in the near-term. As mentioned earlier, a strong break above 3625 is needed to boost the bullish momentum and move higher to 3700. We will have to wait and watch.
Sensex (48347.59, −530.95, -1.09%) and Nifty (14238.90, −133, -0.93%) are under pressure as they have extended their fall for the third consecutive day on Monday. We reiterate that 14200 (Nifty) and 48500-48000 (Sensex) are crucial levels to watch now. A decisive break below these levels will confirm a reversal and will be bearish to see 13800-13600 (Nifty) and 46000 (Sensex). It will also negate the chances of seeing 14600-14800 (Nifty) and 50000-50300 (Sensex).
COMMODITIES
Overall commodities trade lower except rude prices which have risen compared to prices seen yesterday as support holds well on both Brent and WTI near term charts. While Gold and Silver have some scope for a bounce from current levels, Copper could likely be vulnerable to a fall if support at 3.55 does not hold strong just now.
Brent (56.01) and Nymex WTI (52.71) have risen from immediate trend supports on the daily charts and while they hold, we may expect a test of immediate resistance levels of $58-60 on Brent and $55 on WTI. Immediate view for the coming sessions is bullish.
Gold (1843.40) has dipped from 1880 seen in the last week but we may expect 1840-1820 to hold just now and produce a bounce back towards 1900 or even higher in the medium term. Only if a break below 1820 if seen would make the metal vulnerable for a sharper fall. For now watch price action near 1840 and 1820.
Silver (25.33) is again rising from 25 after facing rejection from 26 earlier. Overall 24 continues to remain an important support above which, a rise to 26-27 looks more likely in the near term.
Copper (3.6090) seems to be stuck in the 3.55-3.65 region for no. Failure to sustain and hold above 3.55 would make it vulnerable to see a gradual fall towards 3.45/40 in the medium term. Only a rise again from 3.55 if seen could have some hope of a further rise beyond 3.65 in the medium term again to target higher levels. For now a test of 3.75/80 may be delayed while below 3.65.
FOREX
Dollar Index, USDCNY, EURJPY and Aussie seem to be stuck within a sideways range and need to break on either side to indicate any sharp movement in the medium term. Immediate view is ranged for now. USDINR is likely to fall towards 72.75 while Pound may head towards 1.39 while above support at 1.36. Euro has immediate support at 1.21 which if holds could gradually take it higher towards 1.23.
Dollar Index (90.234) seems to be stuck within 90-91 and while below 91, there is scope for some sideways movement before any break is seen on either side of the range. Immediate resistance is seen at 90.60 which if holds could drag Dollar Index down towards levels below 90.
Euro (1.2158) also has immediate trend support at 1.21 on the daily charts and while that holds, a rise towards 1.23 and higher looks possible in the near term. Watch price action for a bounce from current levels.
EURJPY (126.10) is likely to remain stuck in the 125.75-126.50 region for the very near term. A break above 126.50 is necessary to lead to an eventual break on the upside to target 127.50 again in the medium term.
Dollar-Yen (103.70) looks stable but has not been able to fall below 103.30 over the last week. While below 104.05-102.15, we continue to look for a gradual fall in the pair towards 103-102.50 in the medium term.
Aussie (0.7733) is stable and could remain sideways within 0.78-0.7660 just now before indicating on further movement from there. Immediate view is to see a ranged movement.
Pound (1.3735) has trend support at 1.36 and while that holds there is scope for a rise to 1.39 on the upside. View is bullish for the near term.
USDCNY (6.46) has dipped sharply from 6.48 seen yesterday and a break below 6.45/44 would strengthen the fall towards lower levels of 6.42/40 in the medium term. Overall immediate range of 6.48-6.44 may hold in the very near term.
USDINR (72.94) closed below 73 on Monday and may trade lower today as strength in Euro and Chinese Yuan may support a stronger Rupee allowing for a fall in the USDINR pair towards 72.75 soon and 72.50 eventually.
INTEREST RATES
The US Treasury yields have declined across tenors thereby reducing the chances of retesting the resistance on the upside. A further fall from here will indicate the resumption of the broader downtrend that we had been indicating for some time. The outcome of the US Federal Reserve meeting tonight will need a close watch to see how the yields are getting impacted. The German yields have failed to break above their intermediate resistances and have turned-down. This keeps our bearish view intact of seeing a fall going forward. The 10Yr GoI continues to look mixed in the near-term. It can consolidate sideways for some time before seeing a fresh fall.
The US 2Yr (0.12%) Treasury yield remains stable while the 5Yr (0.41%), 10Yr (1.04%) and the 30Yr (1.80%) have declined further sharply. Our bearish view of seeing a fall to 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) and even lower levels remain intact. The chance of testing 1.20%-1.25% (10Yr) and 1.95%-2% (30Yr) on the upside stands reduced now.
The resistances at -0.50% and -0.10% on the German 10Yr (-0.54%) and 30Yr (-0.12%) yields respectively are holding well as expected. The yields have reversed lower. This keeps our bearish view alive of seeing -0.60% (10Yr) and -0.20% (30Yr) on the downside intact. As mentioned on Monday, a strong break above -0.50% (10Yr) and -0.10% (30Yr) is needed to negate the above mentioned bearish view and take the yields higher towards -0.40% and 0%-0.05%.
The 10Yr GoI (5.9553%)has bounced-back sharply from the low of 5.9328% on Monday. 5.93%-5.98% seems to be a range for now. From a medium-term perspective, we retain our view of the upside being capped at 6% even if a break above 5.98% is seen. While the yield can oscillate in the 5.93%-5.98% range, the bias will bearish to see a break below 5.93% and fall to 5.90% and 5.88%-5.86% eventually.
