STOCKS
The equity segment continues to trade weak. Dow remains below 27000 and remains vulnerable to test 26000. While below12800 DAX can fall to 12000 on a break below 12400. Nikkei is managing to retain its 23000-23500 amid the weakness in other equity indices. Shanghai can fall within its broad 3180-3450 range. Sensex and Nifty have tumbled yesterday and have room to fall further to test their intermediate supports from where a near-term bounce is possible.
Dow (26815.44, +52.31, +0.20%) remains below 27000. The broader bearish view of seeing 26000 and even lower levels remain intact. While the index manages to sustain above 26500 for now, an intermediate bounce to 27500 cannot be ruled out before the expected fall to 26000 happens.
DAX (12606.57, −36.40, -0.29%) remains weak and bearish to see a fall to 12000 and even lower levels. A break below 12400 can accelerate the fall. 12800 is an immediate resistance and 13000 is slightly higher resistance that can cap the upside for now.
Nikkei (23234.09, +146.27, +0.63%) is moving up after testing 23000 yesterday. The 23000-23500 range continues to remain intact in spite of the weakness in global equities. As we have been mentioning for some time, a breakout of this range will decide whether Nikkei will go up to 24000 or fall to 22500-22000.
Shanghai (3226.38, +3.20, +0.1%) has declined further and keeps our near-term bearish view of testing 3180 on the downside. As mentioned yesterday, the chances of the fall extending to 3160-3150 cannot be ruled out. We reiterate that 3180-3150 will be a broad support zone which will need a close watch to see if Shanghai can bounce-back from there or not.
Nifty (10805.55, -326.30, -2.93%) tumbled below 11000 and tested 10800 as expected. Indeed the fall was much faster that we had expected. 10800-10750 will be an important support zone to watch today. While it holds, a corrective bounce to 11000 is possible in the near-term. As mentioned in the Evening Comments yesterday, a strong rise past 11250 will be needed to avoid a much deeper fall breaking below 10750.
Sensex (36553.60, −1,114.82, -2.96%) has declined well beyond our mentioned level of can test 37000 and has room to test 36000. An intermediate bounce from 36000 to 37000 or even higher cannot be ruled out. A break below 36000 can see 35000-34500 eventually.
COMMODITIES
Commodities have recovered a bit after the sharp fall seen yesterday. WE would be cautious to see if the rise sustains to indicate bullishness from here or if it is a temporary and short lived correction that could again resume on the downside soon. Watch important supports and resistances in the near term.
Brent (42.03) and Nymex WTI (40.43) have risen, clarifying immediate doubts of further bearish move from here. While immediate supports at 39.32 (Brent) and 36.43 (WTI) seems to hold well for now, we look for gradual bullishness in crude prices in the next 1-2 weeks. Above the mentioned supports, prices look bullish.
Gold (1871.70) has recovered a bit rising from lower levels seen yesterday. The current bounce is likely to be short lived and while it remains below 1880, chances of testing 1840-1820 remains on the cards.
Silver (23.16) has bounced back above 23 too but needs to sustain at 23+ levels to move up further in the upcoming sessions. Chances of falling back towards 22 and lower towards 21-20 cannot be negated in the next 1-2 weeks.
Copper (2.9840) is trading higher but needs to decisively break above 3.00 in order to move up further. Watch price action near 3.
FOREX
Dollar Index remains stable but looks bullish for the near term. Euro cannot rule out further fall while below 1.17. Aussie and Pound have bounced back but we would watch closely to see if the bounce is temporary or indicative of a fresh rise. EURJPY is also trading slightly higher but watch if it manages to hold above 123 over the next few sessions. USDINR may test crucial resistance at 74.0-74.05 from where a rejection looks possible.
Dollar Index (94.35) holds stable without much movement but while it sustains above 94, we may expect a test of 95.15 on the upside.
Euro (1.1666) has risen slightly but trades below 1.17 just now. While 1.17 holds as a decent resistance, we may expect a fall towards 1.1540 eventually.
EURJPY (123.05) has risen slightly but may be restricted to 123.33-123.45 in the near term before falling back again towards 123 or lower.
Dollar-Yen (105.46) is moving higher and could test 105.75-106.00 on the upside before falling back from there. Immediate view is to see some more rise from here.
Aussie (0.7058) tested 0.7016 but has bounced well from there as immediate support near 0.70 is holding for now. This bounce has to sustain in order to take the currency higher towards 0.71-0.7120 in the near term.
Pound (1.2756) can test 1.28 or higher at 1.2860 before falling back from there. Note that 1.2653 is now a crucial near term support on the downside.
USDCNY (6.8117) may attempt to test 6.85 in the near term which if manages to break further on the upside could lead to a gradual rise towards 6.90/95 in the coming 1-2 weeks.
USDINR (73.91) moved up sharply to test 73.95 before closing near the day’s high yesterday. 74.0-74.05 are important resistances to watch today which is expected to hold ad produce a rejection towards 73.60/50 and lower again in the coming week. A break above 74.05, if seen may force us to look at fresh higher targets.
INTEREST RATES
The US Treasury yields remain stable and continue to look mixed in the near-term. While the broader view is bearish, whether a fresh fall will happen from here itself or after one leg of rise remains unclear. The German Yields also remain stable and keep alive the chances of seeing a near-term bounce before resuming the downtrend. The 10Yr GoI retains its 5.98%-6.03% range and could move up towards the upper end of this range today.
The US 2Yr (0.13%), 5Yr (0.28%), 10Yr (0.68%) and the 30Yr (1.42%) Treasury yields remain stable and continue to look mixed in the near-term. The broader view remains bearish. As mentioned yesterday, the 30Yr can fall to 1.30%-1.25% over the medium-term. A breakout on either side of 1.40%-1.50% will decide whether the above mentioned fall will happen from here itself or after a rise to 1.60%. The 10Yr remains stuck in the 0.65%-0.73% and has equal chances of either to move up to 0.80%-0.90% or fall to 0.50% from here.
The German 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.50%) and the 30Yr (-0.06%) yields continue to trade lower and stable. As mentioned yesterday an intermediate bounce to 0% (30Yr) and -0.43% (10Yr) is a possibility before the broader downtrend resumes to target -0.20% (30Yr) and -0.60%/-0.70% (10Yr) over the medium-term.
As expected, the 10Yr GoI (6.0067%) dipped to test the lower end of its 5.98%-6.03% range and has bounced-back from the low of 5.9796% yesterday. The 5.98%-6.03% range remains intact and the yield can move up to 6.03% while it sustains above 6% today. From a bigger picture, a strong break above 6.05% is needed to become bullish to see a rise to 6.10% and higher levels.
