STOCKS
The US President Donald Trump getting discharged from the hospital and the hopes of a new stimulus package getting cleared have boosted the market sentiment. As a result the equity segment has seen a strong rise yesterday. Dow has risen past 28000 and could head further higher while it manages to sustain above 28000. DAX can also move further higher if it manages to sustain the rise above 12800 seen yesterday. The chances of a fall that we had been expecting in the Dow and DAX earlier stands reduced now. Nikkei is heading towards the upper end of its 23000-23500 range. Sensex and Nifty can move upto test their crucial resistances at 39700-40000 and 11700 respectively. The price action on the Sensex and Nifty at these resistances will need a close watch.
Dow (28148.64, +465.83, +1.68%) has risen above 28000. While above 28000 the near-term outlook is bullish to test 28500. A strong break above 28500 will then pave way for 29000 eventually. Also while the Dow manages to sustain above 28000 now, the danger of seeing a fall to 27000-26500 that we had been mentioning stands negated.
DAX (12828.31, +139.27, +1.10%) has risen above 12800. It will have to be seen if it can sustain above 12800 now. While above 12800 a further rise to 13000 and 13200 is possible. It will also negate the bearish view of seeing a break below 12400 and a fall to 12000 that we had been mentioning for some time.
Nikkei (23425.91, +113.77, +0.49%) is heading towards the upper end of its 23000-23500 range. Inability to breach 23500 will keep the range intact. On the other hand, a break above 23500 can take the Nikkei higher to 23700 and 24000 in the near-term. From a bigger picture 24000-24500 is a strong resistance zone which can cap the upside for now.
Shanghai (3218.05) is closed till Thursday (08-Oct-20) this week on account of public holidays.
Nifty (11503.35, +86.40, +0.76%)has risen further and is heading towards 11600-11700 as expected. As mentioned in the Evening Comments yesterday, 11700 is a crucial resistance which has to be broken to keep the uptrend intact. The price action at 11700 will need a close watch to see if the Nifty will move up further or reverse lower.
Sensex (38973.70, +276.65, +0.71%) on the other hand has room to test 39700-39800 in the near-term. 39700-40000 is a crucial resistance zone. A strong rise past 40000 will be needed to keep the uptrend intact and also to avoid a fall-back again.
COMMODITIES
Crude prices could slowly move down in the next couple of weeks. We would watch immediate supports near 39.30/32 and 36.43 closely for Brent and WTI respectively. On the weekly charts, a possible rounding top could still be in place. Surprisingly, Gold has risen above 1900, contrary to our expectation but could face rejection from 1920 to fall back towards 1860 or lower. Silver may test 25 before declining from there. Copper looks bullish for a n eventual rise above 3.
Brent (41.35) and Nymex WTI (39.22) trade within a range of 39.30-42.50 and 36.43-41.50 region respectively since the last couple of weeks at least without showing signs of a sharp break on either side. Looking at the Brent weekly chart, the possibly rounding top formation is still intact with lower highs in the last 2-3 weeks. Unless a sharp break above 45 is seen, we may continue to look for bearish targets in the coming 1-2 weeks. Our immediate support being 39.30, a break on the downside has decent possibilities that could bring in 37.50-35 into the picture. Watch price cation near 39.32/30 for now.
WTI on the other hand has crucial support at 36.43 which if holds could keep the price ranged for now.
Gold (1913.80) has broken above 1900 and is headed towards initial resistance at 1920. This move above 1900 has been contrary to our expectation of a fall towards 1880-1860. Watch for a possible rejection from 1920. In the longer run, we may expect a decline to 1880-1860 again.
Similarly, Silver (24.44) has also risen but needs to break above 25 to turn further bullish. While 25 holds, we may expect another dip to 24.0-23.50 in the coming sessions.
Copper (2.9680)# has immediate support at 2.90 and lower support near 2.80 above which the price could be bullish for the longer run. We may expect a rise above 3 soon.
FOREX
Dollar Index trades lower while Aussie, Pound, Euro, EURJPY all look bullish for the day. USDINR could also dip towards 73.
Dollar Index (93.40) has dipped further falling towards 93.10-92.70 in the near term. While the index trades low, we may expect some recovery in other currencies especially the Euro.
Euro (1.1788) has moved up. A test of 1.18 looks possible in the near term which if holds could produce a decline again towards 1.1750-1.17. Watch price action near 1.18.
EURJPY (124.56) has moved above 124.40 and could test 125 over today or tomorrow. Failure to decline from 125 could push the prices back towards 124-123 in the near term.
Dollar-Yen (105.65) has risen slightly. We continue to look for the 105-106 range to hold in the near term.
Aussie (0.7190) has risen slightly but needs to break above 0.72 to move further up towards 0.73-0.74. Watch price action near current levels.
Pound (1.2984) has been slowly inching higher. We would watch if it manages to break above 1.30 in the next 1-2 sessions, which would take it higher towards 1.32 before a decline from there is seen in the longer run. Watch price action near 1.30 in the very near term.
USDINR (73.2950) tested 73.40 yesterday. We may expect a dip to 73.10-70.00 today. A break below 73 if seen could take the pair lower towards 72.90. On the upside, we may expect 73.50 to hold.
INTEREST RATES
The US Treasury yields have risen sharply especially at the far-end (10Yr and 30Yr) yesterday. Hopes of the new virus stimulus package are weighing on the markets. The Treasury yields can move up further in the coming days to test their crucial resistances and then reverse lower again. The German Yields have inched slightly up within its broad downtrend. The upside is likely to be capped and the bearish outlook is likely to remain intact. The 10Yr GoI can move up further while it manages to sustain above 6%.
The US 2Yr (0.14%), 5Yr (0.32%), 10Yr (0.77%) and the 30Yr (1.57%) Treasury yields have risen across tenors especially sharply at the far-end (10Yr and 30Yr). The 30Yr is heading towards 1.60% as expected. It will have to be seen if it can break 1.60% and extend the upside to 1.72%. A further rise past 1.72% is unlikely. The 10Yr has risen past 0.74% and could now head towards 0.80% and 0.90% in the coming days.
The German 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.51%) and the 30Yr (-0.09%) yields have inched up slightly across tenors. However, the upside is likely to be capped. Our bearish view of seeing a fall to -0.60% on the 10Yr and -0.20% on the 30Yr. remains intact. Thereafter a corrective bounce is possible.
The 10Yr GoI (6.0043%)has risen and closed above 6%. It will have to be seen if it can sustain above 6% or not and avoid a fall-back to 5.98% again. While above 6% the outlook will be bullish to see a test of 6.10% on the upside.
