STOCKS
The preferred rise in the global indices seems to be getting delayed. A narrow sideways consolidation or a near-term dip to test the supports looks a possibility in the major indices. Dow has dipped yesterday but has supports at 23000 and 22500 which can hold in the near-term. DAX and Nikkei can trade in a narrow sideways range in the near-term before moving higher. Sensex and Nifty can dip in the near-term and then can see a bounce. Shanghai continues to remain bullish.
Dow (23504.35, −445.41, -1.86%) has come down again failing to break above 24000. Supports are at 23000 and 22500 while above which our view of seeing a rise to 24500-25000 will continue to remain intact. As mentioned yesterday, a strong break above 24000 is needed to accelerate the upmove. A range bound move between 22500/23000 and 24000 is a possibility before our preferred rise to 24500-25000 happens.
DAX (10279.76, −416.80, -3.90%) has declined sharply but might find support in the 10200-10100 region and bounce-back again. While above 10100 we continue to retain our bullish view of seeing a rise to 11000-11200. The view will turn negative only on a strong break below 10100 in which case we will have to allow for a further fall to 9900-9800.
Nikkei (19315.45, −234.64, -1.20%) failed to sustain the break above 19500 yesterday. It can continue to remain stuck between 19000-19500/19700 for some time before our preferred rise to 20300-20500 happens.
Shanghai (2815.46, +4.29, +0.15%) sustains above 2800 but is not gathering momentum to breach 2825decisively. The bullish view to see 2850-2870 on the upside remains intact. But we will have to watch the price action in the coming days to see if a fall to 2775-2750 happens again before the rise to 2850-2870 happens.
The struggle to sustain above 31000 on Sensex (30379.81, -310.21, -1.01%) continues. A dip to 30000-29000 looks possible now in the near-term. A strong fall below 29000 will negate the chances of seeing 32000-33000 on the upside. We will have to wait and watch.
Nifty (8925.30, -68.55, -0.76%) broke above 9250 but failed to sustain it. While the chances of seeing 9400-9500 on the upside are still not completely negated, the price action today will need a close watch. 8800 is an important near-term support to watch which has to hold in order to avoid a fall to 8600.
COMMODITIES
Crude prices fell after US reported a 19mln barrel increase in inventories. Crude prices look bearish to stable for now but may see eventual rise in the coming weeks. The positive impact of OPEC+ production cuts has been wiped off by the large crude inventory builds. Higher-than-expected import of copper concentrates by China and speculation of increased supply in the coming days in China seems to having downward pressure on Copper prices as the metal trades lower. Near term looks bearish. Gold looks bullish for the near term while Silver could consolidate sideways.
Brent (28.58) is trading lower today and may take a few sessions to rise back to 30+ levels. As mentioned yesterday, downside is likely to be limited to $25-23 within the current fall and we could soon see a bounce back by end of next week. Nymex WTI (20.47) is stable near levels seen yesterday. Near term is very crucial because if the price falls below current levels, it may test fresh lows in the near term falling towards $17-15. While we would prefer a bounce from current levels, we would also remain cautious of a further decline.
Gold (1743.60) tested 1731 yesterday, slightly lower than our mentioned support at 1740 before bouncing back from there. If the upside momentum remains intact, we may expect prices to rise towards 1785-1800 in the near term. Only a sustained break below 1730 would bring in chances of a fall going forward.
Silver (15.61) has dipped slightly and could see some sideways movement in the 15.0-16.5 region before moving on either side. A break above 16.5 would bring in our earlier mentioned levels of 17 or higher.
Copper (2.3010) is almost stable. While below 2.35, the price looks bearish and could fall towards 2.20/15.
FOREX
Currencies are mixed. Aussie, Euro and Pound trades lower on stronger US Dollar. USDJPY could rise from immediate supports. EURJPY looks bullish. Weakness in Yuan could lead to weakness in Rupee.
Dollar Index (99.83) has moved up but has immediate near term resistance at 100. A rejection from 100 could take the index down again towards 98.50-97.50 in the near term before again bouncing back in the medium term. However, watch for price action near 100 as a break on the upside if seen and sustains would indicate a reversal of the near term movement.
Euro (1.0878) has fallen from levels near 1.0979 seen yesterday morning on a stronger US Dollar. Euro could test 1.0830-1.0800 before bouncing back towards 1.09 again in the medium term.
Dollar-Yen (107.86) has bounced back from levels below 107.50. Near term looks bullish while above 107 targeting 108.50-109.50 in the near term.
EURJPY (117.36) could bounce back from here towards 118+ levels in the near term. View is bullish while above 117.
Aussie (0.6285) has fallen as Copper prices fall in both MCX and LME exchanges. Our mentioned resistance near 0.65 seems to be holding well for now and we may expect a further decline towards 0.62 in the near term. Immediate view is bearish.
Pound (1.2477) has fallen contrary to our expectation of a bullish view towards 1.29-30 mentioned yesterday. While Pound trades below 1.27, we may expect the current fall to extend towards 1.23/20 in the near term.
USDCNY (7.0765) has moved up instead of heading lower towards 7. Near term bullishness could come into the picture again with a possible test of 7.10/12 in the near term.
USDINR (76.45) could continue to rise over today and tomorrow. We would keep a close watch at 76.60, the immediate and crucial resistance above current levels. A break above 76.60 would open up chances of testing 77.50-78.00 in the near term. But preference would be for a rejection from 76.60.
INTEREST RATES
The US Treasury yields have declined sharply after a bad Retail Sales and Industrial Production data release yesterday. The outlook is bearish for the Treasury yields and a further fall is possible in the coming days. The German yields have also declined sharply and looks bearish to fall further. The 10Yr GoI has reversed lower as expected after testing its crucial resistance and is likely to resume its overall downtrend.
The US 2Yr (0.20%), 5Yr (0.30%), 10Yr (0.64%) and 30Yr (1.28%) Treasury yields have declined sharply across tenors. The key resistance levels of 0.80% on the 10Yr and 1.4% on the 30Yr has held very well and the broader downtrend seems to have resumed. The 10Yr can now test 0.60%-0.58% in the near-term and then 0.40% eventually while it remains below 0.80%. The 30Yr on the other hand can test 1.2% and 1.1% in the coming days while it trades below 1.4%.
The German 2Yr (-0.73%), 5Yr (-0.66%), 10Yr (-0.47%) and 30Yr (-0.08%) yields have come down sharply across tenors thereby negating the chances of seeing any further rise. The outlook has turned bearish. The 10Yr can test -0.55% and -0.60% in the near-term and can extend the fall to -0.80% on a break below -0.60%. The 30Yr is vulnerable to fall towards -0.20% and even -0.40% in the coming days.
The resistance at 6.50% on the 10Yr GoI (6.4954%) has held very well and the yield has come-off sharply yesterday. A test of 6.35% and even 6.30% looks likely now on a break below 6.40%. In case if the 10Yr GoI manages to hold above 6.40%, a range bound move between 6.40% and 6.50% can be seen for a few sessions before our preferred fall happens.
