STOCKS
Dow and DAX have bounced yesterday but seem to lack strength. The US-China trade talk set to begin today will weigh on the equities. Broadly the indices like the Dow, DAX and Nikkei has to surpass their key resistances to bring back the bullishness. The bias in Shanghai is relatively more positive than others. Sensex and Nifty have risen sharply from their crucial supports and need to see if they can sustain higher.
The Dow (26346.01, +181.97, +0.70%) has moved up but seems to lack strength. As mentioned yesterday, a strong rise past 26500 is needed to bring back the bullishness. While below 26500 a fall to 26000 and 25800 cannot be ruled out.
The bounce-back move above 12000 in the DAX (12094.26, +124.06, +1.04%) can face resistance around 12200. We expect this resistance at 12200 to hold and keep the bearish view intact to test 11800-11600 on the downside in the coming days.
Nikkei (21538.40, +82.02, +0.38%) continues to oscillate around the key level of 21500 and remains mixed in the near term. As mentioned yesterday, a strong rise past 21750 is needed to bring back the bullishness. A break below 21250 on the other hand will be bearish to see 21000 and even 20750 on the downside.
The support in the 2900-2885 region on the Shanghai (2933.93, +9.07, +0.31%) seems to hold well. The bias is turning bullish. A test of 2950 is likely in the near term. A break above 2950 will pave way for a fresh rally to 3000 and 3050 in the short term.
The support at 37500 on the Sensex (38177.95, +645.97, +1.72%) mentioned yesterday has held very well and the index has surged. Support is now at 37790 and while above it a further rise to 38400-38500 is possible in the coming sessions.
Nifty (11313.30, +186.90, +1.68%) can test 11400 while it sustains above the support level of 11213.
COMMODITIES
Gold (1513.70) and Silver (17.89) are almost stable. Silver has moved up slightly in line with our expectation and could test 18 before falling back towards 17.50-17.00. Gold has come off after testing 1522.30 yesterday. While resistance near 1520/25 holds, a fall towards 1480 could be seen. Only a sharp break above current levels could turn bullish for the metal. Preference is for a fall in Gold towards 1480.
Copper (2.5785) is trading well above immediate support near 2.5250 and could rise towards 2.6250-2.650 in the near term.
Brent (58.18) and WTI (52.43) are stable. There is scope for both Brent and WTI to trade sideways in the 56-60 and 54-51 region for a few sessions before attempting to break on either side.
FOREX
Dollar Index (98.99) could have immediate resistance near 99.25 but is likely to hold above support at 98.75 eventually extending the rise towards 99.75. View is bullish while above 98.75s holding above 98.50 and has seen a decent bounce. It would be important to see if it sustains above 99 and rises towards resistance near 99.60-99.75 again in the medium term. View is bullish above 98.50
Euro (1.0989) could face rejection from resistance near 1.10 falling towards 1.09 in the near term. A break above 1.10 is needed to see sharp upmove in the medium term. 3-day candles suggest short term trade between 1.10-1.09 with possibility of breaking on either side soon.
faces selling near 1.10 and is finding difficulty to break above 1.10 just now. Further rise in Dollar Index could make 1.10 stronger for Euro and drag the currency towards 1.09 in the near term.
Dollar-Yen (107.46) has risen to test immediate resistance near 107.50 and above that we have daily trend resistance at 108. Both are important levels an could drag Dollar-Yen down in the near term towards 106.50-108.00.
EUR-JPY (118.11) has bounced well from support near 117.072 as expected. A rise towards 118.56 is possible from where a short corrective fall looks likely.
Aussie (0.6744) is likely to trade in the 0.67-0.68 region for a few sessions. Immediate view is stable.
Pound (1.2225) has risen slightly but overall trades stable. While support near 1.22 holds, Pound looks bullish towards 1.24.
The USDCNY (7.1123) has come down a bit before the expected US-China talks. A fall below 7.10 is needed to being in possibility of a fall in USDCNY towards 7.06-7.05 levels negating a test of 7.17/18.
Dollar-Rupee (71.07) closed above 71 yesterday. While we look for a fall towards 70.75 on resistance holding at 71.25, interim support at 70.95 seems to be holding well for now. So we may consider a possible sideways range of 71.25-70.95 for a few sessions. The bounce in Indian stock index, if sustains could be positive for the Rupee.
INTEREST RATES
The US Fed minutes of the meeting released yesterday though has acknowledged the fear of a slow-down on the back of the trade war has also raised concerns that the market is over expecting on the future rate cut path. With this background the upcoming Fed meet on October 30 will be interesting to watch. Both the US and German yields have inched higher yesterday. They have to see some more uptick before resuming their overall downtrend. The Indian (7.26% GS 2029) 10Yr GoI remained stable yesterday and is vulnerable to fall while it remains below 6.70%.
The US 2Yr (1.45%), 5Yr (1.39%), 10Yr (1.57%) and 30Yr (2.08%) inched higher across tenors. . As mentioned yesterday, the 10Yr has room to test 1.60% and 1.63% on the upside in the near term before reversing lower again. The 30Yr has resistance near current levels at 2.10% and can reverse lower in the coming days.
The German 2Yr (-0.77%), 5Yr (-0.77%), 10Yr (-0.55%) and 30Yr (-0.03%) have moved slightly higher. The yields can move further up in the near term and then can resume the downtrend. The 30Yr has room to test 0% while the 10Yr can move up to -0.50% and then can reverse lower.
The Indian (7.26% GS 2029) 10Yr GoI (6.6622%) dipped slightly but remained broadly stable above 6.65% all through the day. Though the near-term view is mixed the broader view remains bearish. While below 6.70%, a fall to 6.55%-653% and 6.50% is possible. A strong rise past 6.70% is needed to negate the bearish view and take the yield higher to 6.80%.
The Indian (6.45% GS 2029) has closed at 6.4526% yesterday.
