STOCKS
Asians are trading in red following the sharp fall in the Dow on Friday. Dow will have to sustain above 34400 to see the rise to 36000 from here itself. Else a fall to 34000-33500 can be seen first before the expected rise happens. DAX has been coming down with its 15300-15800 range. Nikkei has room to test 27200-27000 from where it can bounce again. Shanghai looks vulnerable to break its 3500-3625 range on the downside and fall to 3450-3400 first before resuming its broader uptrend. Sensex and Nifty can fall back into their 52000-53000 and 15600-15900 range respectively again following the weakness in the other markets. This could delay the rally to 54000 (Sensex) and 16000-16200 (Nifty).
Dow (34687.85, −299.17, -0.86%) has come-off sharply on Friday. 34500-34400 will be a key support to watch which if broken can drag the Dow down to 34000-33500 in the coming weeks. Such a break will also delay the expected break above 35100 and the rise to 36000. From the big picture the broader trend is up while above 33500.
DAX (15540.31, −89.35, -0.57%) has declined further on Friday and can test the lower end of its 15300-15800 range. 15200 is an important support while above which the broader view remains bullish to see a break above 15800 and a rise to 16000-16200.
Nikkei (27584.99, −418.09, -1.49%) has tumbled towards 27500 as expected and can extend the fall to 27200-27000. As mentioned on Friday, 27000 is a crucial support while above which a consolidation between 27000 and 29500 is possible for some time within the overall uptrend. In case of a break below 27000, Nikkei can see a deeper fall to 26000 and then see a fresh rise.
Shanghai (3509.61, −29.69, -0.84%) is trading at the lower end of its 3500-3625 range. A break below 3500 can drag it to 3450-3400. Thereafter a fresh rally can be seen. While above 3400 the long-term trend is up to target 3700-3800 on the upside.
Sensex (53140.06, −18.79, -0.04%) can fall back into its 52000-53000 range again taking cues from the weakness in the other markets. This will delay our expected rise to 54000 and higher levels. 52000 and 51000 are strong supports while above which the broader outlook is bullish.
Similarly, Nifty (15923.40, −0.80, -0.005%) can fall back into the 15600-15900 range and will delay the expected rise to 16000-16200. The overall trend is up with strong support in the 15600-15500 region.
COMMODITIES
Commodities trade lower today. Crude prices have fallen as expected and could soon see a bounce from $70/68 levels, failure of which will indicate bearishness for the medium term. The fall has been triggered by the result of the OPEC+ meeting yesterday that decided to increase production by 400,000 barrels a day by Sep’22 as demand seems to be increasing. Coordinated increases in production will start in Aug’21. Watch price action over the next few sessions. Gold and Silver still have scope for a rise while above 1800 and 25 respectively. Copper may test 4.20 and rise from there, failure of which will make it vulnerable to a sharp fall in the medium term. Watch price action near 4.20 for now.
Brent (72.48) and WTI (70.48) have come down significantly in line with our expectations of seeing a fall towards $70 and $68 respectively, mentioned last week. A strong bounce from here, if seen, can take the prices higher towards $73/75 but overall near term view is bearish. A break below $70/68 would confirm that and indicate a trend reversal if any.
Gold (1812.40) has come down sharply today. While above 1800,the chances of Seeing a test of 1820 and eventually 1840/1860 is still possible.
Silver (25.53) has come down sharply too. The bias is bullish while above 25 for a scope to rise above 25.50-26.00 again.
Copper (4.2805) has come down but is still trading within the range of 4.40-4.20.A bounce from the levels of 4.20 towards 4.40 looks possible from here.
FOREX
Dollar Index has risen sharply and could be headed towards 92.80-93 while Euro can re-test 1.1780/70-1.1750 on the downside. Aussie and Pound looks bearish and have fallen well. EURJPY looks weak towards 129 while USDJPY can be ranged within 109.50-110.50/80. USDCNY can rise towards 6.48/50 while above 6.46. USDINR can rise to 74.70/80 but need to see if it declines from there.
Dollar Index (92.73) has risen well and a break above 92.80 can take it higher towards 93. A break above 93, if seen and sustained would be strongly bullish for the index in the medium term, opening up chances of a rise to 94.0-94.50 before declining from there. For now, watch price action at 93.
Euro (1.1802) has bounced and trades above 1.18 but unless a rise above 1.1835-1.1850 is seen over the next few sessions, it would be difficult to turn bullish on Euro as scope for a fall to 1.1780/70-1.1750 still remains intact. Watch price action within 1.1750/80-1.1835/50 for the near term.
EURJPY (129.73) has scope to fall to 129 in the near term. A range of 129-130.50 looks possible for the coming sessions.
Dollar-Yen (109.90) continues trade within 109.50-110.50/80 region and could remain so for a few more sessions before breaking on either side of the range. Immediate view is bearish.
Aussie (0.7376) has fallen, breaking below the support at 0.74. Near term view is bearish towards 0.73.
Pound (1.3750) has dropped lower and looks bearish for the near to medium term towards 1.3720-1.3700. If there will be some reversal from 1.37 is to be seen.
USDCNY (6.4785) has risen and could rise towards 6.48/50 in the near term. Thereafter, if it breaks above 6.50 or not is to be seen.
USDINR (74.5150) was mostly stable in the previous week but held well above support at 74.40. While Dollar Index trades strong and Chinese Yuan and Euro show weakness against the Dollar, we may expect USDINR also to move up towards 74.70/80 on the upside before a dip from there is seen. The broad range of 74.20/40-74.80 is holding. We need to see if the pair manages to break on the upside or continue within the mentioned range in the near term.
INTEREST RATES
Both the US Treasury and the German yields are coming closer to their crucial supports within their broad downtrend and have little room to test it. We expect these supports to hold and trigger corrective bounce in the coming weeks before a fresh fall is seen. The 10Yr GoI is holding well above 6.18% and can see a rise to 6.3%-6.32% before resuming the broader downtrend. The 5Yr GoI can trade in the range of 5.64%-5.7% in the near-term with a bearish bias to break the range on the downside eventually.
The US 2Yr (0.23%), 5Yr (0.76%), 10Yr (1.28%) and 30Yr (1.90%) have come down towards their key supports. The 30Yr is at a crucial support level of 1.9% and the 10Yr has it at 1.25%-1.2%. We expect these supports to hold and see a corrective bounce towards 2.1%-2.2% (30Yr) and 1.45%-1.5% (10Yr) in the coming weeks. Thereafter a fresh fall is possible thereby keeping the long-term downtrend intact.
The German 2Yr (-0.69%) and 5Yr (-0.64%) yields remain stable while the 10Yr (-0.36%) and 30Yr (0.12%) have dipped further. The 30Yr has come closer to the key support zone of 0.10%-0.08% while the 10Yr has slightly more room to test -0.45%/-0.50% on the downside. We expect the yields to bounce from these supports to test 0.25% (30Yr) and -0.25% (10Yr) going forward. The broader trend is down which is likely to resume after the above mentioned corrective bounce.
The 10Yr GoI (6.2119%) is holding well above the support at 6.18%. As mentioned last week, while above 6.18%, the 10Yr can rise to 6.3%-6.32% first and then resume the broader downtrend. Similarly, the 5Yr is holding above 5.64% and can trade in the range of 5.64%-5.7% for some time before moving down to 5.6%.
