STOCKS
Right now it seems that India zigs while the world zags. Yesterday saw another strong rally in India while there was the expected consolidation/ profit-taking in most other global indices. It might be prudent to expect Indian indices to also pause for a couple of days now, or at least for the rise to slow down a bit.
The Nifty (11600.20, +326, +2.89%) has key near-term resistance at 11700 for today. We might well see a dip towards 11550-500 today. That said, the new bullishness will remain potent while we remain above 11470 and 11381. Similarly, the Sensex (39090.03) might be consolidative between 38650-39250 today.
The Nikkei (22131.77, +52.68, +0.24%) continues to hold onto its near-vertical climb and might even try to rally further towards 22500, while above 22000. If so, the dip towards 21750-500 we have been talking about for the last few days might not happen.
Watch crucial Support at 2974-60 on the Shanghai (2988.15, +11.08, +0.37%). A Close below 2960, if seen, could turn out to be bearish towards 2925, maybe lower. Two-way possibility on the Shanghai today. Wait and watch.
As expected, the Resistance at 12500 held very well on the DAX (12342.33, -125.68, -1.01%) yesterday. Look for a test of 12200 today. We will wait to see if there is deeper decline below that or not.
Lastly, the Dow (26949.99, +14.92, +0.06%) dipped a bit yesterday. While a test of 26700 might still be possible, there might be decent near-term Support there, which could yet trigger a rally towards 27500.
COMMODITIES
Gold and silver have risen and look bullish. Copper has key resistances which can cap the upside and keep it pressured for further fall. Oil continues to consolidate and remains mixed.
Gold (1520) is oscillating around 1520. Immediate supports are at 1516 and 1514. While they hold, gold can test 1532 and will negate our bearish view to see 1460-1440 on the downside. A further break above 1532 will pave way for 1555-1560.
Silver (18.56) has surged breaking above 18.25 and tested 18.75 as expected. A strong rise past 18.75 can take silver higher again to 19.5 levels. But while 18.75 holds, an intermediate dip to 18.30-18.25 is possible before we see a rise above 18.75.
Copper (2.61) has bounced from its low of 2.57. But key resistances in the 2.63-2.64 region and 2.65-2.66 region are likely to cap the upside and keep it pressured on the downside to test 2.53 on the downside.
Brent (64.47) remains volatile between 63.50 and 65.50 and continues to trade mixed. As mentioned yesterday, Brent can remain in a broad range of 62-68. Within this range, inability to breach 65.5 in the coming days can drag it to 63-62.50.
WTI (58.41) fell to 57.35 but then has come back into its 57.50 and 59.50 range. The near-term view is mixed. As mentioned yesterday, a breakout on either side of 57.50 or 59.50 will decide the next direction of move.
FOREX
Weak manufacturing data has dragged the Euro lower below 1.10 and in turn has taken the Dollar index higher. The Euro has room to dip further while it remains below 1.10 which in turn can take the Dollar index further higher. Dollar-Yen can test is key support before resuming its uptrend. Aussie can consolidate or see a corrective rally before seeing a fresh fall. The key support on Pound is holding well as expected and keeps the bullish view intact. The USDCNY remains higher and can move up further in line with our expectation. CNYINR needs a close watch as it is coming near a crucial support level of 9.91. Dollar-Rupee remains bearish.
Dollar Index (98.66) broke above 98.75 but has come-off again from the high of 98.83. Immediate support is at 98.55. While above this support, the outlook is bullish for the dollar index to test 99 and 99.25 on the upside.
Contrary to our expectation, the Euro (1.0988) has declined below 1.10 and has negated the chances of a rise to 1.1165-1.1180 that we had been expecting last week. While below 1.10, the outlook is bearish to test 1.0940-1.0925 in the near term.
As expected, Dollar-Yen (107.58) fell yesterday and bounced from the low of 107.30. Though another dip to 107.20-107.15 cannot be ruled out today, the pair is likely to sustain above 107 and move higher to 108-109 in the short term.
The EUR-JPY (118.24) cross can test its important support at 117.5 which needs to hold in order to avoid a revisit of 116 levels on the downside. While 117.5 holds, a bounce to 119 is possible again in the coming days.
Aussie (0.6772) remains stable above its support at 0.6760. The view remains bearish for the Aussie to test 0.6735-0.6720 on the downside. However, a corrective bounce to 0.6800 cannot be ruled out before we see the above mentioned fall.
As expected, Pound (1.2438) fell to test 1.24 and bounced from there. 1.24 and 1.2370 are key supports which can limit the downside and keep the bullish view intact for a rise to 1.2550-1.2600. The bullish view will get negated only on a strong break below 1.2370.
USDCNY (7.1144) remains higher above 7.10 and keeps the bullish view intact to test 7.14-7.15. A strong break below 7.08 is needed to turn the outlook negative.
CNYINR (9.9670) has declined sharply below 10 and has a very important support at 9.91 which needs a close watch.
Dollar-Rupee (71.9350) traded stable above 71.90 all through yesterday. The bearish view remains intact to test 70.74 and 70.60 in the near term. Strong resistance is in the 71.20-71.23 region which can cap the upside if the pair breaks above 71.
INTEREST RATES
The US Treasury yields remains stable and lower. The broader bearish view is intact. German yields have declined sharply across tenors following the weak manufacturing data release yesterday. Data from HIS Markit showed that Germany’s manufacturing sector is under trouble. The German yields have room to decline further. The 10Yr GoI can dip in the near term and can remain in a broad sideways range for some time.
{The US 2Yr (1.68%), 5Yr (1.59%), 10Yr (1.71%) and 30Yr (2.16%) remained lower but stable. The view remains bearish. As mentioned yesterday, the 30Yr can fall to 2.0% and the 10Yr can test 1.57% in the coming days.
The German yields 2Yr (-0.75%), 5Yr (-0.76%), 10Yr (-0.58%) and 30Yr (-0.09%) have moved further lower in line with our expectation. The 30Yr has come closer to our first target of -0.1% and is likely to extend the fall towards -0.2% going forward. Similarly, the 10Yr can test -0.60% and -0.68% in the coming days.
The 10Yr GoI (6.7454%) can test 6.70%-6.68% in the near term while it remains below 6.80%.
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