STOCKS
Sharp fall in the global equities overnight in the US and European markets and in the early trades in the Asians. Trump’s decision to restore tariffs on metal imports from Brazil and Argentina has played a spoil sport at a time when the market is hoping for the US-China trade deal to go through smoothly. All the major indices, the Dow, DAX, Nikkei and Shanghai looks vulnerable to extend the fall going forward. Sensex and Nifty can be dragged lower today following the sell-off in the global indices.
Dow (27783.04, -268.37, -0.96%) has declined sharply below 28000 and can now test its crucial support region of 27600-27500. It will have to be seen if the Dow manages to bounce again from this support zone or not. A break below 27500 will be bearish to see 27000 on the downside.
DAX (12964.68, -271.7, -2.05%) has decline sharply below 13100 indicating a downside breakout of its sideways range. The region between 13050 and 13100 will be a good resistance now. While below 13100 the outlook is bearish to see a fall to 12700 on the downside.
Nikkei (23328.27, -201.23, -0.86%) has failed to sustain above 23500 and can fall to 23000-22800 again. Our bullish view to see 24000 on the upside will get delayed now.
Shanghai (2864.71, -11.1, -0.39%) remains below 2900 and has declined well below 2880. As mentioned yesterday, while below 2900, the outlook is bearish to see a revisit of 2800 on the downside.
The sell-off in the global equities could weigh on the domestic market today. The {Sensex (40802.17, +8.36, +0.02%) can break its immediate support level of 40500 and fall to 40250 and even 40000 while it sustains below 40500. {Nifty (12048.20, -7.85, -0.07%) on the other hand can break its support at 11970 and fall to 11900 and even lower.
COMMODITIES
Overall ranged movement in most commodities which need to break on either side of the mentioned ranges to give directional clarity for the medium term.
Brent (61.11) and WTI (56.17) are almost stable after bouncing back sharply yesterday. Broad trade region for the near term is 59.50-65 for Brent and 55-60 for WTI. While the respective resistances hold, we may look for a fall towards the lower end of the mentioned ranges.
Gold (1468.40) is stuck in the narrow 1480-1460 region without much movement since the last 15-16 sessions. Resistance is seen near 1490/95 and while that holds, we may expect a short test of 1450/40 before again rising back from there in the medium term.
Silver (17.00) can test 16.50-16.00 in the near term before bouncing higher from there.
Copper (2.6510) is stuck in the 2.6250-2.7250 region and is likely to trade within the said range for some more time. Unless a break on either side is seen, it would be difficult to get a clear directional picture for the medium term.
FOREX
PMI data released yesterday for major countries have induced volatility across currency pairs. Dollar trades weak across global currencies while Aussie has risen sharply gaining the most among the other currency pairs mentioned below. However, we would look at respective resistance and support levels while the currencies may gain some more in today’s session as Dollar trades weak.
Dollar Index (97.93) has come down sharply below 98 as resistance near 98.50 is holding well. The index dropped after a lower ISM manufacturing PMI data that came out at 48.1 for Nov against market expectation of 48.3. Note that 97.60/65 could now act as a decent support in the near term.
Euro (1.1072) could re-test 1.11 on the upside before again coming back towards 1.10. For now, we may see trade in the 1.11-1.10 region.
Dollar-Yen (109.14) has come off but has crucial resistance near 110. While that holds, the current fall could extend towards 109 in the near term before we expect a bounce from there.
EUR-JPY (120.86) has near term daily resistance at 121 which could produce a rejection towards 120-119.50 in the near term. View is bearish while 121 holds. Watch price action near 121.
Pound (1.2933) could test 1.2965 (daily trend resistance has come down from 1.30 to 1.2965) and probably face a rejection to 1.28 in the coming sessions. Near term view is bearish.
Aussie (0.6818) rose sharply to start December on a positive note after China PMI came out better than expectation giving some hope to Aussie. On the charts there is scope to rise towards 0.6850-0.6875 in the near term. With Dollar trading weak across major currencies, Aussie could find some more strength in the near term.
USDCNY (7.0389) is trading within our mentioned 7.0455-7.0188 region and may continue to do so today also. Watch price action near 7.0455, if tested over the next couple of sessions.
Dollar-Rupee (71.66) came-off well from the high of 71.8075 in the second half of the session yesterday but view is unclear just now as we see equal chances of testing 72 or 71.50 from current levels. The fall in Dollar Index could possibly aid in some rupee strength today. If that is seen, USDINR may trade below 71.80/85 today also.
INTEREST RATES
The strong bounce in the US Treasury yields witnessed on Friday is losing steam. Trump’s decision to restore the tariffs on steel and aluminum imports from Brazil and Argentina has brought renewed concerns. It will have to be seen if the Treasury yields dip further or move higher again. The supports on the German yields have held very well and a sharp bounce has happened as expected. The German yields can move further higher in the coming days. The 10Yr GoI has bounced and is bullish to see further rise in the coming days.
The US 2Yr (1.60%) and 5Yr (1.65%), 10Yr (1.82%) and 30Yr (2.27%) have dipped slightly. We will have to watch the movement for a couple of days to see whether the yields dip further or move higher again. The 10Yr has key support at 1.75% which needs to hold to avoid a fall to 1.70% and 1.65% and keep the possibilities alive of seeing a rise to 2%. The 30Yr on the other hand can test 2.35% if it reverses higher again.
The German 2Yr (-0.62%), 5Yr (-0.53%), 10Yr (-0.28%) and 30Yr (0.23%) yields have surged across tenors. The support at -0.40% on the 10Yr has held very well as expected and a rise to -0.20% and even higher levels is possible in the coming days. The 30Yr has resistance at current levels which is likely to be broken. Such a break can take the 30Yr yield higher to 0.30% and 0.35%.
The 10Yr GoI (6.4888%) has bounced well and is getting support at 6.45% now. While above 6.45% the outlook is bullish. The yield can breach 6.50% and rise to 6.60%-6.70% in the coming days.
