STOCKS
Global equities in the grip of bears, with Dow and DAX more bearish than the Nikkei and Shanghai. India outperforms handsomely.
We were unable to work out a bearish target yesterday for the Dow (22859.60, -464.06, -1.99%), but now have something for you. Immediate Support seen between 22650-22500. Can produce a relief rally to 23500, to be followed by a fresh decline towards 21500-210000 in the longer term.
The DAX (10611.10, -155.11, -1.44%) saw a low of 10563.44 yesterday, coming close to our bear-target of 10500-400. A small relief rally towards 11000 might be possible over the Christmas and New Year weeks, but january is likely to see a fall 10000.
Good fall in the Nikkei (20068.23) over yesterday and today. A test of 19500 is quite likely in the near term, but that is a strong Support to be kept in mind.
The Shanghai (2511, -0.97%) trades below 2525 and could therefore test 2450, as mentioned yesterday. Note, however, that that would be a strong long-term Support.
The current bearishness in global equities might prevent the Nifty (10951.70, -15.60, -0.14%) from crossing past 11000 easily. But, the Nifty is likely to outperform its global counterparts easily.
COMMODITIES
Commodities are mixed. Brent looks bearish while there is medium term support on the WTI which if bounces could pull up Brent as well. Gold is trading near important resistance and could come off from there. Copper could remain stable before rising back to higher levels.
Sharp rise in Gold (1263.80) as Dollar Index moved lower. But while the immediate resistance near 1265 holds just now, we may see a dip in the Gold prices back towards 1240. Only a break above 1260, if seen could be bullish with a possibility of rising towards 1280. For now, we remain cautious of a fall from here towards 1240.
2.60-2.65 is an immediate support on the Copper (2.6920) and is likely to hold in the medium term, pushing the price back towards 2.70/75. A break below 2.60, if seen would force us to consider lower levels.
Brent (55.19) and Nymex WTI (46.61) have broken below immediate supports mentioned near 56 and 48 and now, the crude prices look bearish towards 54-52 and 44-42 respectively. Brent looks bearish for the coming weeks on the longer term charts with small interim corrective upmoves. WTI on the other hand has important support at 46 as seen on the weekly candles and may bounce back from there.
FOREX
Currencies are overall ranged and could possibly remain so next week before we see a fresh infusion of volatility in the medium term.
Euro (1.1452) has risen sharply but could face immediate resistance at 1.15. Dollar Index (96.39) on the other hand has broken below 96.50 levels but could possibly recover from here back towards 97-98 in the near term. Considering strong resistance on the Euro at 1.15 and support near 96 on the Dollar Index, we look for a possible rise in the Dollar Index and a fall towards 1.13 on the Euro in the near term. Some more range trade within 1.13-1.15 and 96-98 is possible on the Euro and Dollar Index respectively.
Dollar Yen (111.22) has fallen in line with our expectation and has enough room on the downside towards 111.5-111.0-110.5in the medium term. View is bearish while below 112.5.
Although Euro-Yen (127.35) has near term support above 127, it is looking bearish just now and could fall towards 126 before again bouncing back from there.
Pound (1.2659) is bearish contained well above 1.255 and could see some small sideways range trade within 1.255-1.275 region just now. However, while the medium term resistance at 1.28 holds, view for Pound is bearish in the longer run.
Aussie (0.7116) is likely to test 0.710-0.705 in the near term before bouncing back from there. Long term weekly trend line is visible and seems to be a strong support which could eventually take the currency back to higher levels in the longer run.
Dollar Rupee (69.71) is likely to rise from previous low near 69.56 back towards 70.00/20, today. However, we continue to keep a close watch on Brent crude because if the crude price weakens during the day, Dollar Rupee may not be able to break or sustain above 70.20 today.
INTEREST RATES
Bit of a bounce in US yields yesterday, with the 2, 5, 10, 30 Yr at 2.67%, 2.67%, 2.80% and 3.04% respectively. The 5-2 Spread has come up to 0% again from -2bp earlier. The 10-5 Spread (13bp) has been dipping for the past few days, but is now testing a medium term Support. So, maybe there is some scope for some Curve steepening.
The 12mth US Libor (3.0528%) has been coming down from 3.13% in the beginning of the month. The 6mth Libor (2.87%) has been flattening while the 3mth (2.79%) and 1mth (2.48%) have continued to rise. we need to see if the 1 and 3 months start tapering off.
The 10Yr GOI (7.2581%) has recovered a bit from the 7.22% low, and might move up some more, given that the Indo-US 10Yr Spread has come to a Support and can move up.
