STOCKS
Equities are trading lower globally but the Indian equity indices seem to be outperforming the other indices globally. We look for more bearishness in most indices. Dow and Dax can test 33750/600 and 15200-15000 respectively while Nikkei can test 28500-28000. Shanghai looks bullish while above 3500. Nifty and Sensex have fallen too but the downside could be limited just now.
Dow (33843.92, -546.80, -1.59%) bounced slightly in a corrective move yesterday but has then come off sharply breaking below 34000. We would now wait to see if support at 33750/600 holds to produce a bounce else a further decline to 33190 is possible.
DAX (15260.69, -104.58, -0.68%) has fallen back to 15246 and may test 15200/00 in the near term before bouncing back towards 15500 or higher.
Nikkei (28861.83, -590.83, -2.01%) has fallen sharply and can test the level of 28500 or even 28000 in the coming sessions. 28000 is a strong support which can hold for now and produce a bounce towards 29000 again in the medium term.
Shanghai (3568.17, +31.87, +0.90%) has risen slightly today. As mentioned yesterday while above 3500, the view is bullish to see a test of 3600 and 3700 in the coming sessions.
Nifty (17618.15, -93.15, -0.53%) has closed above the crucial support at 17600 after testing the low of 17585 yesterday. The range of 17600-17800/850 mentioned previously can hold for now while above 17600. However, a break below 17600 can take Nifty down towards 17400/200 levels.
Sensex (59126.36, -286.91, -0.48%) has come down further to test the level of 59000. The index can bounce from the level of 59000 and can rise steadily towards 60000. Else a decline towards 58000 can be possible soon.
COMMODITIES
Crude prices have risen as compared to levels seen yesterday. But we need to see a fall in Brent below 76 and below 74 in WTI to ensure a top and expect bearishness from current levels. Gold has risen well from support near 1700/20 and has cope to rise towards 1800/50 on the upside before coming off from there. Silver could trade within 21-23.50 for the next few weeks. Copper may test support near 4.0 before bouncing back from there towards 4.30/40 in the next 1-2 weeks.
Brent (78.23) and WTI (74.98) have come down a bit although trade above levels seen yesterday. We need to see some more fall in crude prices below 76 and 74 respectively to ensure a top is in place and that the medium term view is bearish. We wait to watch price action for a few more sessions.
Gold (1754) rose sharply as support near 1700/20 has held well. We may look for an eventual rise to 1800/50 on the upside before again facing a rejection from there. Broad range of 1700-1850 may hold for the next few weeks.
Silver (22.09) has recovered to rise above 22 and needs to sustain in order to move further up from here. A broad range of 21-23.50 may hold on Silver for the next couple of weeks.
Copper (4.0720) has declined sharply and is heading towards support near 4.00 which if holds can produce a bounce back to 4.30/40 in the near term. Watch price action near 4.00 for now.
FOREX
Dollar continues to trade higher above 94. Euro has been dragged lower below 1.16 and could head towards 1.15-1.1459, while USDJPY has also declined sharply from resistance at 112 despite strength in Dollar Index. EURJPY has been dragged into the 128-130.50 range again and Aussie and Pound look bearish just now. USDCNY needs to hold above 6.44 to rise back to 6.47/48, else a fall to 6.41/40 is possible. USDINR may try to bounce from 74.10/00 towards 74.30. We do not negate a rise towards 74.50 in the coming week.
Dollar Index (94.30) holds above 94 but can fairly remain below 94.60 for the near term, ranging within 94.60-94.00 before a sharp fall is seen.
Euro (1.1577) has broken below 1.16 as warned on our Oct’21 monthly report. We would now be cautious to see a fall towards 1.1500-1.1459 before a short rise is seen. Overall view is bearish while below 1.16.(Get our Euro monthly report for October’21 here: https://kshitij.com/eurusd-forecast-payment-details/oct-21 )
EURJPY (128.82) has been pulled into the earlier range of 128-130.50 and can test the lower end of the range before rising back again in the medium term.
Dollar-Yen (111.26) has declined sharply from 112.079, the immediate crucial resistance despite the Dollar trading higher and while that holds a fall to 111-110.80 looks possible before again bouncing back from there.
Aussie (0.7222) is stuck within 0.7160-0.0.7264 region and may remain so for sometime before breaking on either side of the range.
Pound (1.3455) bounced to 1.3517 but has fallen back again today, heading towards 1.34 on the downside. We may expect a bounce from 1.34 soon.
USDCNY (6.4452) has fallen sharply to test the lower end of the 6.47/48-6.44 range that we have been mentioning for quite a few days. We need to see if the pair breaks below 6.44 to head towards 6.41/40 or bounce back from 6.44 back towards resistance near 6.48. For now, the momentum looks strongly bearish.
USDINR (74.23) came off from 74.3550 yesterday contrary to our expectation of a rise to 74.45/50. While the corrective fall continues, we may expect a dip to support at 74.10/00. However, we do not negate a test of 74.45/50 again in the coming week. Watch price action near current levels.
INTEREST RATES
The US Treasury yields have dipped further. A sustained fall in the coming days can drag the yields lower from here itself without seeing a test of the resistances on the upside that we had mentioned earlier. The German yields have room to move up further and test their key resistances before reversing lower again. The 5Yr and 10Yr GoI are holding well above their immediate supports and can see a rise in the near-term.
The US 2Yr (0.28%), 5Yr (0.96%), 10Yr (1.48%) and the 30Yr (2.04%) have dipped further. While the dip below 1.5% in the 10Yr sustains, the fall-back to 1.4%-1.3% can happen from here itself without seeing 1.6% on the upside. The 30Yr still has room to move up to 2.1% while it sustains above 2% before reversing lower to 1.9%-1.8% again.
The German 2Yr (-0.70), 5Yr (-0.56%), 10Yr (-0.20%) and 30Yr (0.27%) yields remain higher and keep our bullish view intact. The 30Yr is heading up towards 0.3%-0.35% in line with our expectation. The 10Yr can rise to -0.1% on a break above -0.2%. Thereafter the yields can reverse lower again.
The Indian 10Yr GoI (6.2147%) sustains above 6.2% and keeps alive the chances of seeing 6.25%-6.26% on the upside in the near-term. The 5Yr GoI (5.6674%) on the other hand is bouncing from the support at 5.64% and can test 5.68%-5.70%. As mentioned yesterday, a consolidation between 5.64% and 5.70% is possible in the near-term.
