STOCKS
Equity segment remains mixed. Dow has room to dip in the near-term to test a key support from where it can bounce-back. DAX looks vulnerable for a corrective fall. Nikkei needs a watch to see if it can sustain the sharp bounce witnessed yesterday. Shanghai is holding above a key support but has to rise past 2920 to confirm the bullishness. Sensex and Nifty are struggling to gain momentum to break their respective range on the upside which keeps alive the possibilities of a fall again within the range.
Dow (27766.29, -54.8, -0.20%) had dipped further and is heading towards 27600 in line with our expectation. As mentioned yesterday, the region between 27600 and 27500 is a very crucial support to watch. We expect the Dow to bounce from this support zone and keep our bullish view intact to test 28250-28400 on the upside.
DAX (13137.70, -20.44, -0.16%) remains lower and continues to remain vulnerable to see a sharp corrective fall to 12800-12700 which will then delay our preferred rise to 13400-13500 as mentioned yesterday. A strong rise past 13200 is needed to avoid this corrective fall.
Nikkei (23187.45, +148.87, +0.65%) tumbled to a low of 22726 yesterday and has recovered sharply from there. The price action in the next few days will need a close watch to see if the index can sustain above 23000 which will give a cue on whether the corrective fall is over or still pending to test 22500-22400 on the downside.
Shanghai (2913.50, +9.86, +0.34%) is getting strong support at 2890. While above 2890 the bias is bullish to see an eventual rise to 3000 and 3050 in the coming weeks. However, a strong rise past 2920 is needed to confirm the same and negate completely the chances of seeing a fall to 2870-2865which we had mentioned yesterday.
Sensex (40575.17, -76.47, -0.19%) and Nifty (11968.40, -30.70, -0.26%) seems to lack strong buyers to take it past the upper of their respective range of 40000-40750 and 11800-12050. Nifty looks vulnerable for a dip to 11900-11870 while it trades below 12000. Sensex can fall to 40250 if it breaks below 40500.
COMMODITIES
A report on Reuters yesterday mentioned that the OPEC and its allies are likely to extend production cuts until mid-2020 when they meet in December. Saudi Arabia and Russia have signaled to boost adherence to the OPEC production cuts according to the report. Crude prices have moved higher and could continue to trade so for the near term.
Copper prices fell after US legislation supported protesters in Hong Kong and raised concerns in the market indicating that the US-China trade deal would be delayed.
Brent (63.59) and Nymex WTI (58.18) are up sharply heading towards resistance at 64 and 59 respectively. We would watch price action near 64-65 region on Brent to see if the price is slowly turning towards bullishness for the medium term. For now we may see a rise in Brent towards 64-65 while WTI may test 60-61 on the upside.
Gold (1464.20) and Silver (17.05) have dipped slightly. Gold could re-attempt to fall towards 1440 while Silver could test 16.50 on the downside.
Copper (2.6285) has fallen sharply and could test immediate support at 2.60. A break below 2.60 could take it lower towards 2.55 in the near term. However, we would watch for any chances of a bounce fro 2.60 in the early sessions next week.
FOREX
Dollar Index (97.95) is stable trading around 98 levels. Downside is likely to be limited to 97.50-97.00 in the near term while medium term outlook is bullish for a rise back towards 99-99.50 levels. Only if we see a break below 97, we would have to revise our current bullish view.
Euro (1.1063) tested 1.1097 yesterday before coming off from there. Overall the currency is stuck in the 1.1100-1.1050 region and needs to move sharply on either direction to give some more clarity on medium term view. For now while Dollar Index looks bullish for the medium term, we may expect Euro to fall below 1.1050.
Rising Dollar Index and falling Nikkei is keeping Dollar-Yen (108.61) ranged for now as all the three is said to usually move in tandem. While 108 holds as support, we may look at a broad trade region of 108.00-109.50 for the near term.
EUR-JPY (120.16) is stable and could move up towards 122 while above 119. Near term looks bullish.
Pound (1.2913) and Aussie (0.6786) are trading lower today. Pound could fall towards 1.28/26 in the medium term while Aussie could fall towards 0.6750 and even lower.
USDCNY (7.0312) could hold below 7.05/04 if no more uncertain news comes up from the US-China trade front. A dip however could be restricted to 7.00-6.95.
Dollar-Rupee (71.77) is stuck in the narrow 20p region of 71.70-71.90. But unless we see a break on either side of the broader 71.50-72.00 range, it would be difficult to state a near term projection for Dollar-Rupee as view remains mixed. For now while we see support at 71.50 and 71.65 to be holding well we may expect some narrow range trade below 72.
INTEREST RATES
The US Treasury yields have bounced but is likely to reverse lower again as they have key resistances ahead which can cap the upside. The German Yields remains mixed and lower at the near-end (2Yr, 5Yr and 10Yr) while the far-end (30Yr) is bullish to move higher. The 10Yr GoI has bounced sharply yesterday and can move further higher if it can manage to hold on to the gains.
The US 2Yr (1.61%), 5Yr (1.63%), 10Yr (1.78%) and 30Yr (2.24%) have bounced across tenors but is likely to be short-lived. The 30Yr can face resistance at 2.30% and can fall back to 2.15% and 2.12% thereafter. Similarly the 10Yr has resistance at 1.80% which can cap the upside and drag it down to 1.70% and even 1.65% going forward.
The German 2Yr (-0.64%), 5Yr (-0.57%) and 10Yr (-0.33%) remained stable while 30Yr (0.19%) continues to move up. The 10Yr has room to test -0.40% while it remains below -0.30%. The 30Yr on the other hand can test 0.25%-0.28% on a strong break above 0.20%.
The Indian 10Yr (07.26 GS 2029) GOI (6.6590%) has bounced well from its key support level of 6.60%. A further rise to 6.70% and even 6.75% is possible if the yield manages to sustain above 6.64% in the coming sessions.
The 10Yr (06.45 GS 2029) GoI (6.5105%) has bounced sharply yesterday but has a key resistance near current levels at 6.5150%. A strong break above 6.5150% will be needed for it to extend the gains and test 6.53%-6.54% on the upside. Immediate support is at 6.50%.
