STOCKS
Indian equities continue to outperform the others and while above immediate supports at 17800 (Nifty) and 60000 (Sensex), the rally is likely to continue. Dow and Dax have fallen overnight and have scope for a fall to 34000-33750 and 15000-14800 before a bounce back is seen from there. Nikkei is likely to dip back towards 28000-27500 before bouncing back towards 28750. Immediate range of 28750-27500 looks likely. Shanghai needs to hold above 3500 to keep bullish view intact.
Dow (34378.34, -117.72, -0.34%) has strong resistance near 35000-35200 and while that holds, the index could fall towards 34000-33750 again in the near term before attempting to rise again. Immediate view is bearish while below the mentioned resistance.
DAX (15146.87, -52.27, -0.34%) has dipped slightly and is likely to remain within the broad range of 14800-15400/500. Trading in the middle of the mentioned range, there is scope for movement on either side to test 14800 or 15400/500. Only a sustained break on either side of the range will bring in further course of movement.
Nikkei (28184.51, -46.43, -0.14%) has important support at 27500 and while that holds a narrow range trade within 28750-27500 is possible. But note that there is enough room on the upside for a possible rise to 29250/500 which can come into the picture on a rise above 28750.
Shanghai (3527.07, -19.86, -0.55%) has declined below 3550. A bounce from 3500 is necessary to take the index again towards 3600 or higher else a further decline to 3450/25 cannot be negated in the medium term.
Nifty (17991.95, +46 +0.26%) is holding above the support at 17800 and a test of 18250 can be seen in the next few sessions. There is no impact of rising Nifty on Rupee as the latter is more highly correlated with Crude just now.
Sensex (60284.31, +148.53, +0.25%) is sustaining above 60000 which indicates a rise towards 61000 or even higher towards 62000 in the medium term.
COMMODITIES
Crude prices are stable below respective resistances of 84-85 (Brent) and 81-82 (WTI) and while they hold, there could be a short decline to 81-80 and 78-77 respectively. Gold and Silver are stable within the 1740-1780 and 22-23 range. Copper trades below crucial resistance at 4.35/40and while that holds, a decline to 4.20/00 is possible in the near term.
Brent (83.25) trades below immediate trend resistance near 84. While below the 84-85 resistance zone, we may expect a dip towards 81-80 in the near term. WTI (80.50) on the other hand can dip towards 78-77 while below 81. We reiterate that we would be cautious at current levels to go long as upside is likely to be limited.
Gold (1762.40) has risen slightly and has scope to head towards the upper end of the 1740-1780 range. A break on either side is needed to have more clarity on further direction.
Silver (22.59) also continues to remain ranged within 22-23.
Copper (4.3125) is stable just now. Immediate resistance at 4.35 and higher at 4.40 may hold for now and produce a decline towards 4.20/4.00 on the downside. Any break above 4.40 would be crucial and would indicate strong rally ahead. Such a rally looks less likely for now.
FOREX
Dollar Index continues to trade higher while there is scope for Euro to test 1.1525/00-1.1493. EURJPY could test immediate resistance near 131.50 and fall from there along with the fall in USDJPY from resistance at 114. Aussie and Pound are ranged just now but could be gearing up for a sharp move soon. USDCNY may fall to 6.44/42 while below 6.4650. USDINR can be bullish while above 75.30/3250. Note immediate resistance near 75.75.
Dollar Index (94.35) has dipped from 94.56 and could fall towards 94 in the near term. A break above 94.50, if seen and sustained can take the index higher eventually.
Euro (1.1552) has risen after a dip to 1.1524 yesterday. We may continue to see a decline towards 1.1525/00-1.1493 soon.
EURJPY (131.07) has managed to finally rise above 131, pulled up by a weaker Yen. Immediate resistance is seen near 131.50 which can be tested before a corrective dip is seen towards 130.50 or lower.
Dollar-Yen (113.44) has dipped a bit from yesterday’s high of 113.79. while below immediate resistance at 114, a short corrective dip towards 113.40-113 can be possible.
Aussie (0.7342) finds difficulty to rise above 0.74 just now and could trade within 0.74-0.7250 for the near term.
Pound (1.3613) is unable to rise above 1.37 and could trade within 1.37-1.3550/35 in the near term. The sideways consolidation could be building up momentum for a sharp rise soon on the upside.
USDCNY (6.4455) looks stable just now and while resistance near 6.4650 holds, the pair can decline towards 6.44/42 on the downside.
USDINR (75.51/52) closed higher yesterday and while above 75.3250, there is scope for a rise to 75.75 on the upside which can hold for the very near term. Note that there is high correlation with Brent crude just now and a fall in Brent could be in favor of Rupee strength. For today while above 75.30/3250, view is bullish on USDINR.
INTEREST RATES
The US Treasury Yields have come-off well especially at the far-end. The key resistances are holding well for now in line with our expectation, but the yield will have to fall below their near-term supports to confirm a reversal and fall further. The CPI inflation data will need a close watch to see if it pulls down the yields further or takes it up again. The German yields are coming up towards their key resistances from where we expect a fresh fall. The 10Yr GoI remains higher but stable below its important resistance. We expect a pull-back in the coming days. The 5Yr GoI is moving down within the expected sideways range.
The US 2Yr (0.34%), 5Yr (1.07%), 10Yr (1.58%) and the 30Yr (2.09%) %) have dipped well especially at the far-end. 1.65% on the 10Yr and 2.2% on the 30Yr seems to be holding for now. A fall below 1.5% (10Yr) and 2% (30Yr) will be needed to negate the chances of breaking above 1.6% (10Yr) and 2.2% (30Yr). Such a fall will then pave way for a revisit of 1.4%-1.3% (10Yr) and 1.85%-1.8% (30Yr) that we have been expecting.
The German 2Yr (-0.67), 5Yr (-0.47%), 10Yr (-0.09%) and 30Yr (0.37%) yields have inched up further. The 10Yr and 30Yr have entered their -0.1%/-0.05% and 0.35%/0.45% resistance zones respectively. We expect these resistances to hold and the yields to reverse lower in the coming days. The price action in the coming days will need a close watch.
The Indian 10Yr GoI (6.3363%) has dipped slightly. We reiterate that 6.35%-6.36% is a crucial resistance which is likely to cap the upside and trigger a pull-back to 6.25%-6.2% and even lower. In case of a break above 6.36%, an extended rise to 6.4% is possible.
The 5Yr GoI (5.7008%) is falling within our expected 5.66%-5.76% range. We will have to wait for a breakout on either side of the 5.66%-5.76% range to get clarity on whether the yield can move up to 5.8%-5.85% or fall to 5.62%-5.6% going forward.
