STOCKS
Equities seem to come under pressure as they lack momentum to move up sharply from current levels. Dow remains below 28500 and looks vulnerable to test 27000 on the downside. DAX is coming closer to its crucial 12400-12350 support zone, a break below which can trigger a much deeper fall. Nikkei has broken its 23500-23800 range on the downside and can fall to 23000 and even lower. Shanghai can move down towards the lower end of its 3180-3450 range rather than moving up that we had expected earlier. Sensex and Nifty can consolidate sideways and will need a strong rise past 41000 and 12100 respectively in order to gain bullish momentum.
Dow 28210.82, −97.97, -0.35%) continues to trade below lower. 28500 itself is acting as a good immediate resistance. This keeps our broader bearish view of seeing a fall to 27500-27000. We reiterate that only a strong rise past 29100 will turn the outlook bullish and negate the bearish view of seeing 27000 on the downside
DAX (12557.64, −179.31, -1.41%) has declined further and is heading towards the crucial 12400-12350 support zone as expected. As we have been mentioning over the last few days, the price action in the 12400-12350 region will have to be watched closely to see if the DAX can bounce-back to 12800 levels again or will fall to 12000 and lower.
Nikkei (23454.85, −184.61, -0.78%) has broken the 23500-23800 range on the downside. While this break sustains a fall to 23000 is possible. It will also negate the chances of seeing 24000 on the upside. A further break below 23000 will then pave way for a much deeper fall to 22200-22000 eventually. We will have to wait and watch.
Shanghai (3296.69, −28.34, -0.85%) is struggling sustain higher and has dipped below 3300. Inability to bounce-back above 3300 from here can drag the index lower to the lower end of the 3180-3450 range rather than seeing a rise to 3450 (the upper end of the range) that we had been expecting earlier.
Sensex (40707.31, +162.94, +0.40%) and Nifty (11937.65, +40.85, +0.34%) were volatile and made some wild swings yesterday. Our view remains the same. 41000 on the Sensex and 12100 on Nifty are crucial resistances which have to be broken in order to boost the bullish momentum and a further rise to 42000 (Sensex) and 12250-12500 (Nifty). While these resistances hold Sensex and Nifty can oscillate in a broad range of 39500-41000 and 11600-12100 respectively for some time.
COMMODITIES
Commodities dip after testing immediate resistances and could trade lower for a couple of sessions before again rebounding to resume the uptrend. Crude prices could be ranged within a narrow band while Gold and Copper could dip towards 1900 and 3.10 respectively before again bouncing back to higher levels. Silver however looks bullish while above 24.
Brent (41.52) and Nymex WTI (39.79) have dipped again and while the prices are unable to sustain above 43 and 41.50 respectively, we may look for a sideways narrow ranged movement for the near term. Watch for a possible dip to 40 and 38 before again rising back towards higher levels. View is ranged to bearish for the near to longer term.
Gold (1916.60) and Silver (24.88) have dipped too after a brief rise seen yesterday. Gold has fallen from 1929.40, in line with our expected resistance at 1930 and could now be headed towards 1900 or lower while Silver is fairly bullish above 24 and needs to rise back above 25 again to resume its rise towards our targeted 26-27 levels.
Copper (3.1775) has dipped slightly from 3.1960, almost testing our expected 3.20. As we have been mentioning decent resistance at 3.20, we may expect the dip to continue towards 3.15/10 before again resuming the uptrend to eventually break above 3.20.
FOREX
Dollar Index trades lower and could fall some more from current levels. EURJPY, Euro, Aussie and Pound looks bullish for the near term. USDCNY has bounced a bit but while the Dollar Index trades lower, USDJPY could test 104. USDINR looks bullish towards 73.70/80 on a break above 73.50, in spite of Dollar weakness.
Dollar Index (92.618) has fallen as expected but has broken below our mentioned 92.68. While the fall sustains, we may see a test of 92 before a bounce is seen from there. Immediate support is seen at 92.
Euro (1.1842) sustains higher too and has dipped slightly from 1.1881. We may expect a test of 1.19 before a dip towards 1.18 or lower is seen. Further, the Dollar Index has to break below 92 to pull up Euro beyond 1.19 which looks less likely now. View is to see upside capped at 1.19 for the near term.
EURJPY (123.99) has supports at123.69 and 123.17 respectively and while they hold, we may expect a bounce back in the pair towards 124.5 again. On the upside while immediate resistance at 125 holds, the pair may find it difficult to rise towards 126-127. Overall we may expect ranged movement within 123.17-125 for the time being.
Dollar-Yen (104.72) tested 104.34 yesterday but has bounced slightly from there. While the Dollar Index heads towards 92, we may expect a test of 104 on the USDJPY before again bouncing back towards 105-106.
Aussie (0.7097) has risen and could continue to move up towards 0.72-0.73 soon. View is bullish while above 0.70.
Pound (1.3129) tested 1.3177 yesterday before falling off from there while below 1.32, we may expect a dip to 1.31-1.30 before again attempting to rise higher.
USDCNY (6.6674) has bounced slightly but while below 6.68, we do not fully negate a fall to 6.58. A gradual rise back to 6.68-6.70 could be on the cards for the medium term.
USDINR (73.5850) could rise towards 73.70/80 on the upside on a strong opening above 73.50 today before falling again from there. View is bullish while above 73.50.
INTEREST RATES
The US Treasury yields sustain higher as the market hopes for a deal to be struck on the next virus stimulus package before the elections. The short-view remains bullish and the Treasury yields can move up to test their key resistances and then reverse lower again eventually. The German yields have bounced back and can see a corrective rise if they manage to sustain higher. The 10Yr GoI has come-off yesterday and can dip further in the near-term.
The US 2Yr (0.15%), 5Yr (0.35%), 10Yr (0.81%) and the 30Yr (1.62%) Treasury yields sustains higher. We retain the bullish view of seeing a rise to 1.72%-1.75% on the 30Yr while the yield sustains above 1.60%. The 10Yr on the other hand can target 0.90% while it sustains the break above 0.80%. Thereafter we expect the Treasury yields to reverse lower again.
The German 2Yr (-0.78%), 5Yr (-0.79%), 10Yr (-0.59%) and the 30Yr (-0.18%) yields have bounced-back further and has brought back again the chances of a corrective rise into the picture. slightly. While above -0.60% (10Yr) and -0.20% (30Yr) the yields can move up to -0.50% (10Yr) and -0.10% (30Yr) in the near-term. Thereafter the broader downtrend can resume to target -0.70% (10Yr) and -0.35% (30Yr) on the downside over the medium-term.
The 10Yr GoI (5.9122%) has come down sharply and could now fall towards 5.90%-5.8850% as mentioned yesterday. The chances of seeing an extended rise to 5.98%-6% that we had been expecting stands reduced now. 5.8850% will be an important support which will need a close watch to see if the yield can bounce-back or will fall to 5.85%-5.80% going forward.
