STOCKS
Equities look mixed within their broad sideways range. As mentioned yesterday, a fresh trigger looks likely to be needed to see an upside breakout of the range that we have been expecting. Else a fall within the range is possible in the coming days. Dow is struggling to breach 35000 decisively and can fall to 34250-34000 within its 33000-35250 range. DAX looks mixed and has equal chances of moving either side within the 15200-15800 range. Nikkei has to break above 28000 to move up towards the upper end of its 27000-29500 range. Else there is a danger of breaking below 27000. Shanghai has room to move up towards 3500 on a break above 3460. Sensex and Nifty are moving up within their 52000-53200 and 15600-15900/16000 range and need to see if they can break the range on the upside from here itself.
Dow (34838.16, −97.31, -0.28%) seems to be struggling to rise past 35000 decisively. This increases the chances of seeing a fall to 34250-34000 in the near-term within the broad 33000-35250 range. A strong rise past 35250 is needed to become bullish to see 36000 on the upside.
DAX (15568.73, +24.34, +0.16%) continues to oscillate in the middle of its 15200-15800 range. The near-term outlook is mixed with equal chances of seeing either a rise to 15800 or a fall to 15200 with the range from here. While above 15200, the broader view is bullish to see a break above 15800 and a rise to 16000-16200 eventually.
Nikkei (27546.45, −234.57, -0.84%) has come-off again today. The 27000-29500 range remains intact for now. But Nikkei has to rise past 28000 to move up towards 29500 and also to negate the danger of breaking below 27000 and seeing a fall to 26000.
Shanghai (3452.73, −11.55, -0.33%) has risen back sharply and is testing the 3450-3460 resistance zone. A break above 3460 and a subsequent rise past 3500 will only negate the bearish view of seeing 3200 on the downside and in turn will bring back the earlier bullish view of seeing 3700-3800 on the upside. The price action in the coming days will need a close watch.
Sensex (52950.63, +363.79, +0.69%) is moving up within its 52000-53200 range. It will have to be seen if it can rise past 53200 which is needed to move further up to 54000 and higher levels. Else the sideways range can continue for some more time. From a bigger picture, the broader outlook is bullish with strong supports at 52000 and 51000.
Nifty (15885.15, +122.10, +0.77%) has come up to the upper end of its 15600-15900 range. A strong break above 15900 and a subsequent rise past 16000 will be needed to become bullish for a test of 16200 from here itself. While below 16000, the sideways consolidation can continue for some more time. The broader bias remains bullish while the Nifty remains above its key supports at 15600 and 15500.
COMMODITIES
Crude prices have fallen slightly but may remain in a broad range for the near term. Gold is likely to trade below 1840/20 and could test 1800-1780 before moving up again. Silver and Copper too are stuck within 24.50-26 and 4.40-4.60 region. Overall we may expect near term to be stable for the commodities as a whole before any clear direction is seen for the longer run. Respective supports and resistances seem to be holding well for now.
Brent (73.02) and WTI (71.44) have bounced from 72.86 and 71.22 respectively. Brent tested 72.31 yesterday and has bounced from there and we re-iterate that while Brent sustains below 74, it can head towards 70 slowly. WTI on the other hand can fall towards70 while below 75.
Gold (1814.80) looks stable just now and could trade above 1800 for the near term, trying to re-attempt a rise towards 1840. Support region of 1800-1780 is very crucial and would decide the longer term direction for Gold. Unless a sustained break above 1840/60 is seen, we may continue to see movement in the broad 1780-1840 region for the next 1-2 weeks.
Silver (25.39) can test 25.0-24.50 before bouncing back from there. A broad range of 26-24.50 can hold for now.
Copper (4.4265) continues to trade in a narrow sideways range. A break on either side of 4.60-4.40 range is needed to get clarity on medium term direction. Looking at the longer term charts, a fall looks more likely while resistance at 4.60 holds.
FOREX
Dollar Index looks bearish but will gain momentum on a break below 91.75. Euro may slowly rise towards 1.19-1.1950 in the medium term. EURJPY is stable within 130.50-129.50 while Aussie and Pound are ranged too. Pound is bearish while below 1.40. Dollar-Yen is heading towards 109. A break below that if seen will be further bearish towards 108.50-108. USDINR needs to break on either side of 74.20-74.60 to see a sharp movement soon preferably on the downside. USDCNY is ranged within 6.45-6.49.
Dollar Index (92.088) did rise above 92.17 within the 91.75-92.25 range mentioned yesterday. But the index seems to be coming down again today. View would turn bearish on a fall below 91.75.
Euro (1.1872) has bounced from 1.1859 yesterday and while Euro trades above 1.1850, view is bullish for a re-test of 1.19-1.1950 in the near term.
EURJPY (129.69) is highly fluctuation within 130.50-129.50 region and may continue so for some more time. Downside is likely to be extended to 129. Unless a break above 130.50 is seen and sustained, view is sideways to bearish for EURJPY.
Dollar-Yen (109.21) has come down to test 109 as expected and looks strongly bearish for now. A break below 109 would indicate a fall towards 108.50-108 soon. The fall could get some boost if Dollar Index too falls sharply back towards 91-90.
Aussie (0.7365) may continue to trade within a range of 0.74-0.73 for the near term.
Pound (1.3891) has bounced a bit from 1.3873 and if the bounce holds, it can continue its upmove towards 1.40 again. Else, if today’s rise is a corrective move then we may have to allow for a further fall to 1.38 before any reversal is seen. Watch price action near current levels.
USDCNY (6.4658) has bounced from 6.46 and while the rise continues, we may expect the pair to head towards 6.48/49. A range of 6.45-6.49 may hold for now.
USDINR (74.3450) is spending some time in a very narrow range and could be preparing for a sharp move soon. We continue to expect 74.20-74.60 region to hold for now but soon see a break below 74.20. We wait and watch for early signals of a break below 74.20 which could then be bearish towards 74-73.80 initially.
INTEREST RATES
The US Treasury yields have declined sharply especially at the far-end. There is room for further fall to test their key supports in the coming days. We expect the yields to see a corrective bounce from their supports and then see a fresh fall to resume their broader downtrend. The German yields are poised just above their key intermediate supports. A corrective rally is possible in the coming weeks and then the broader downtrend can resume. The 10Yr GoI has to sustain above 6.2% to move up amid muted trading while the 5Yr has resistance ahead which has to be broken in order to rise sharply from here.
The US 2Yr (0.18%) Treasury yield remains stable while the 5Yr (0.66%), 10Yr (1.19%) and the 30Yr (1.86%) have declined sharply. The 10Yr and 30Yr are likely to head down towards 1.1% and 1.8% respectively in the coming days within their broader downtrend. Thereafter we expect the yields to see a corrective bounce towards 1.45%-1.5% (10Yr) and 2.1%-2.2% (30Yr) before the overall downtrend resumes again.
The German 2Yr (-0.78%), 5Yr (-0.76%), 10Yr (-0.49%) and 30Yr (-0.02%) yields have dipped across tenors. The 10Yr and 30Yr are poised just above their respective key support levels of -0.5% and-0.05%. We expect these supports to hold on its first test and produce a corrective bounce to -0.30%/-0.25% (10Yr) and 0.10% (30Yr) in the coming weeks. Thereafter the broader downtrend can resume again.
The 10Yr GoI (6.2129%)has come down sharply and the trading remains muted. A fall below 6.2% will negate the chances of seeing 6.3%-6.32% on the upside that we have been mentioning for some time. Such a fall can drag the 10Yr down to 6.1% again. The 5Yr (5.7310%) has resistance at 5.76% which has to be broken in order to move up further. While below 5.76%, a fall-back to 5.68%-5.66% cannot be ruled out in the near-term.
