STOCKS
The US considering to extend the tariff exclusion and the UK getting an extension on the Brexit are keeping the sentiments and hopes highly positive. Major indices like the Dow, DAX, Nikkei and Shanghai have risen on this backdrop. India’s Sensex and Nifty are likely to take cues from it today. Dow, Sensex and Nifty have immediate resistances coming up which have to be breached in order to retain the momentum. Nikkei and DAX look stronger to move further higher.
Dow (27090.72, +132.66, +0.49%) has risen above 27000 and can test 27250 now. A strong break above 27250 (most preferred) will then pave way for a further rise to 27600. Support is at 26750.
DAX (12941.71, +47.20, +0.37%) continues to move higher and keeps our bullish view intact. It can test 13000 and 13200 from where a corrective fall is possible. An eventual break above 13200 will pave way for a further rise to 13500.
Nikkei (22976.99, +109.72, +0.48%) sustains higher. is heading towards 23000-23100 in line with our expectation. Inability to breach 23100 can trigger a corrective fall to 22500 within the overall uptrend. The broader picture remains bullish to test 24000 while above 22000.
Shanghai (2970.57, -9.48, -0.32%) has bounced-back above 2950 and has to be seen if it can sustain above it. While above 2950, a revisit of 3050 on the upside looks likely in the coming days. A strong rise past 3000 can accelerate the rally.
Sensex (39250.20, +192.14, +0.49%) and Nifty (11627.15, +43.25, +0.37%) have moved up on the special Diwali trading on Sunday. They have key resistances at 39430 (Sensex) and 11720 (Nifty) which has to be broken to gain momentum and surge further. A strong break above these resistances will pave way for a fresh rise to 40000 on the Sensex and 12000 on the Nifty. We will have to wait and watch these levels today.
COMMODITIES
Crude has fallen after testing immediate resistances; there is scope of some more rise on the upside followed by a fall in the near term. Gold and Silver may rise if supports hold. Volatility in gold may continue for some more sessions above 1480. Copper looks bullish.
Brent (61.57) and WTI (55.73) are trading slightly lower after US President Trump said that he is expected to sign a significant part of the trade deal with china ahead of schedule. However, no timing was mentioned. Brent could test 63 within the current upmove followed by a dip back towards 60-58 while WTI could be limited to 57 on the upside and could dip towards 54.
Gold (1494.50) and Silver (17.81) tested levels above 1520 and 18 respectively but could not sustain higher. Silver looks bullish towards 18.50-19 while above immediate support at 17.50. Similarly, Gold has decent support near 1490 which if holds could push prices higher. On the daily candles there is still some scope of testing 1480 on the downside. We do not look for a rise above 1520 in Gold.
Copper (2.6810) has been moving higher and could test 2.7250 before coming off from there. Immediate view is bullish.
FOREX
Dollar Index (97.77) tested 98 on the upside before seeing a dip from there. Immediate resistance on the daily candles is seen near 98 which is likely to hold in the very near term. Overall while support at 97 holds (see weekly chart), Dollar Index looks bullish in the medium term towards 99 or even higher.
Euro (1.1097) has been coming off from 1.1180 seen last week. Could find some support near 1.1050/60 just now which could keep the trade higher for the near term. Medium term could be bearish towards 1.10 or lower, while below 1.1180.
Immediate resistance seen near 109.15 on Dollar-Yen (108.98) which if holds could drag prices lower towards 107.50. Scope for a rise towards 110 is not rules out but could be delayed by a dip, if seen from 109.15 levels.
EUR-JPY (120.94) is stable but is likely to test 121.50 again in the near term. Trade between 120 and 121.50 is likely to continue for the near term.
Pound (1.2842) could dip towards 1.27 in the near term before bouncing back from there. Upside could be capped at 1.30.
Aussie (0.6845) has risen after testing 0.6809 on the downside. 0.6870 is likely to hold as immediate resistance which could push prices back towards 0.68. View is bearish while below 0.6870.
The USDCNY (7.0601) has support near 6.05 and while that holds, the exchange rate could remain stable above 7.05 with a possible extension to 7.10 in the near term.
Dollar-Rupee (70.89) is likely to trade above 70.75 while upside is likely to be capped at 71.05 for the very near term.
INTEREST RATES
Increased risk aversion in the market on the back of the easing US-China trade tensions and the UK getting an extension for Brexit are weighing on the bonds. As a result the yields have gone up. Both the US Treasury and the German yields look positive to rise further in the near term. The US Federal Reserve’s policy meeting outcome is due tomorrow. The 10Yr (07.26 GS 2029) GOI on the other hand continues to trade mixed and can remain range bound.
The US 2Yr (1.66%), 5Yr (1.67%), 10Yr (1.85%) and 30Yr (2.35%) Treasury yields have risen sharply across tenors. The outlook is bullish. The 30Yr has risen past 2.25% and can now test 2.40%. The 10Yr on the other hand can test 1.95% on the upside in the near term.
The German 2Yr (-0.65%) and 5Yr (-0.59%) remained stable while those at the far-end, the 10Yr (-0.33%) and 30Yr (0.20%) were up by 3bps and 7bps respectively. The 30Yr has an immediate resistance at 0.25% which will need a close watch. The 10Y on the other hand has room on the upside to test -0.20% while it sustains above -0.40%.
The 10Yr (07.26 GS 2029) GOI (6.6778%) dipped below 6.70% on Friday. A test of 6.65% on the downside looks likely while it remains below 6.70%. Broadly the yield is likely to remain range bound between 6.65% and 6.75% in the short term.
The 10Yr (06.45 GS 2029) GOI on the other hand fell marginally and has closed lower at 6.5004% on Friday.
