STOCKS
Dow has broken above 35100 and will be bullish to test 36000 while this break sustains. DAX and Nikkei have room to move up within their 15300-15800 and 27000-29500 range respectively. Shanghai has tumbled below 3500 but has strong support at 3400 which can hold and keep the broader uptrend intact. Sensex and Nifty hovers at the upper end of their 52000-53200 and 15600-15900 range respectively. We expect them to break their ranges on the upside and see a fresh rally. The outcome of the US Federal Reserve meeting tomorrow will be crucial to watch. Any hint on stimulus tapering could trigger sell-off/corrective fall in equities. We will have to wait and watch.
Dow (35144.31, +82.76, +0.24%) has broken above 35100 as expected. While this break sustains, our bullish view is intact of seeing a rise to 36000 and higher levels in the coming days. 34000 can itself be a good support now and then the deeper one is at 33000.
DAX (15618.98, −50.31, -0.32%) oscillates around 15600 and has room to move up towards 15800 in the near-term. The 15300-15800 range remains intact. We expect DAX to break this range on the upside and rise to 16000-16200 eventually going forward.
Nikkei (27977.07, +143.78, +0.52%) is moving up within the 27000-29500 range. A strong rise past 28000 can take it to the upper end of its range. The bias is bullish to see an upside break above 29500 and see a rise to 31000 and higher levels over the medium-term. As mentioned yesterday, only a break below 27000 will turn the outlook bearish to see 26000 on the downside.
Shanghai (3463.76, −3.69, -0.11%) tumbled to a low of 3424.74 yesterday and has bounced from there. It can consolidate in a range of 3400-3500 for some time. 3400 is a strong support while above which the long-term view is bullish to see a break above 3625 and a rise to 3700-3800. Only a break below 3400 will negate the bullish view.
Sensex (52852.27, -123.53, -0.23%) has come-off from the high of 53103.42 yesterday. The 52000-53200 range remains intact for now. We expect Sensex to break 53200 and rise to 54000 and higher levels going forward. In case if 53200 continues to hold, the sideways range can continue for some more time and the expected rise to 54000 will get delayed.
Nifty (15824.45, −31.60, -0.20%) is retaining its 15600-15900 range for now and is stuck in a narrow range of 15800-15900 within it. We retain our bullish view of seeing an upside breakout of this range above 15900 and see a fresh rise to 16000-16200 in the coming weeks.
COMMODITIES
Crude prices trade higher today with Brent having scope to test 75-76 while WTI has resistance at 74 from where rejection is expected in the near to medium term. Gold and Silver have dipped today and could fall to supports of 1780 and 25 but it would be important to see if the respective supports hold and produce a bounce back to higher levels or pave way for a break on the downside. Copper has surged well and if the rise continues, we may expect the rise to extend towards 4.80.
Brent (74.82) and WTI (72.11) both have risen well today. Brent can rise towards 75-76 while WTI can rise towards 74 before again coming off from there in the near term. Failure to fall from expected levels would be strongly bullish for a possible extension towards $78-80 in the longer run. For now watch price action near mentioned resistances.
Gold (1796) has fallen sharply within 1820-1780 range that we have been mentioning over the last few days. A test of 1780 looks possible over the next few sessions but we need to watch price action closely to see if it manages to bounce from 1780 or decides to break on the downside which would be indicative of a strong bearishness for the longer run. For now, 1780 is an important support.
Silver (25.18) has dipped today but we look for a range of 25-26 to hold in the near term. Any break below 25 would take it sharply lower towards 24-23 in the longer run. Watch price action near 25 closely.
Copper (4.6070) has surged to 4.60 in line with our expectations. If copper continues to rise, breaking above 4.60, then near term view is bullish to see a test of 4.80 levels.
FOREX
Dollar Index trades near immediate support at 92.60/50 which needs to break for the index to head lower, else a bounce back to 93-93.30 looks possible while the support holds. Euro has risen above 1.18 and could be headed towards 1.1850 if the Dollar Index falls from current levels. Aussie and Pound look bullish for the very near term but has their respective resistances which could soon produce rejection. EURJPY can face rejection at 130.5 and head towards 129. USDCNY has fallen from 6.4872 and can hold within 6.49/50-6.46/45 in the near term. USDINR can break below 74.40 to head towards 74.20 or lower.
Dollar Index (92.60) trades just above immediate support at 92.50 and needs to bounce back from here to keep the 92.50-93.30 rage intact for now. Failure to bounce from 92.50 can take it down to 92 slowly in the near term. We need a break on either side of the 92.50-93.30 region to decide on further direction.
Euro (1.1802) has moved above 1.18 instead of breaking below 1.1770 to test 1.1750 mentioned yesterday. This is positive for the Euro and could take it up towards 1.1850. Thereafter, a break above 1.1850 will be needed to indicate further bullishness for the medium term. Watch for a possible rise in Euro in the near term.
EURJPY (130.09) is likely to face rejection from 130.50 and fall back towards 129.50 in the near term. Broader range of 130.50-128.50 is likely to hold for some more time.
Dollar-Yen (110.32) may hold within 110.80-110.00 for the very near term while downside support is seen near 109.50-109.00.
Aussie (0.7378) has immediate resistance at 0.74 and while that holds, Aussie can again head lower towards 0.73 in the near term. A narrow range of 0.74-0.73 holds for now.
Pound (1.3821) has bounced well breaking above 1.38. It can rise further to test 1.3850-1.39 in the near term; 1.39 being a crucial resistance that could produce a fall back towards 1.38. Immediate view is bullish towards 1.39.
USDCNY (6.4751) has dipped from 6.4872, unable to break above 6.49. This could keep the broad range of 6.49/50-6.46/45 active for some more time until we see a sharp break on either side to give clarity on further direction. Immediate view is to see a sideways range.
USDINR (74.4225) held above 74.40 yesterday but could not sustain to see a sharp bounce on the upside. Today as Euro and Chinese Yuan trade strong against the US Dollar, it is positive for Rupee. USDINR may break below 74.40 today and head towards 74.30/20 on the downside. Immediate view is bearish for USDINR on a break below 74.40. NDF currently quotes at 74.32.
INTEREST RATES
The US Treasury yields are inching up ahead of the US Federal Reserve meeting outcome tomorrow. Any hint of stimulus tapering could trigger a sharp rise in the yields. The outcome of the Fed meeting tomorrow could be a key trigger in setting the direction of the move going forward. The German yields remain lower and have room to dip further within their current downtrend. The 10Yr GOI sustains above 6.2% with muted trading and the 5Yr GOI looks mixed and can oscillate in a broad range.
The US 2Yr (0.19%), 5Yr (0.72%), 10Yr (1.28%) and 30Yr (1.94%) Treasury yields have moved up slightly. Our view of seeing a corrective bounce to 2.1%-2.2% (30Yr) and 1.45%-1.5% (10Yr) remains intact. Supports are at 1.9% (30Yr) and 1.2% and 1.1% (10Yr).
The German 2Yr (-0.74%), 5Yr (-0.71%), 10Yr (-0.42%) and 30Yr (0.06%) continues to trade stable and lower and keeps the bearish view intact. There is room within the current fall to test -0.45%/-0.50% (10Yr) and 0%/-0.05% (30Yr) on the downside. Thereafter a corrective bounce to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) is possible before the broader downtrend resumes again.
The 10Yr GoI (6.2255%) sustains above 6.2% amid muted trading and keeps the chances alive of seeing 6.3%-6.32% on the upside. The 5Yr GOI (5.6809%) is stuck in a narrow range of 5.66%-5.7% over the last few days. We expect it to oscillate in a broad range of 5.64%-5.72% for some time.
