STOCKS
Dow has been stable overnight but we look at resistance near 35000/200 to hold and produce a fall towards 34000-33750 in the near to medium term. Dax has risen well and could head towards resistance near 15400/500. Nikkei has held above 28000 but needs to sustain the rise in order to move up further towards 29000-29250. Shanghai could be ranged within 3500-3575/3600 region for now. Nifty and Sensex have been rising well and could face some profit taking below 18400 and 61000 respectively. Till then, some more upside is possible.
Dow (34377.81, -0.53, -0.0015%) has been stable We reiterate strong resistance near 35000-35200 which if holds, the index could fall towards 34000-33750 again in the near term. Immediate view is bearish while below the mentioned resistance.
DAX (15249.38, +102.51, +0.68%) broke above 15200 and has closed higher indicating a possible rise to 15400/500 in the near term. As mentioned yesterday, 15400/500 is an important resistance in the near term and could produce rejection in the next few sessions.
Nikkei (28417.32, +277.17, +0.98%) has held above 28000 but that needs to sustain in order to take the index higher towards 29000-29250 in the medium term. Failure to break above 28500-28600 will keep a narrow range of 27500-28600 for the near term.
Shanghai (3557.48, -4.43, -0.12%) has dipped a bit and could trade within 3500-3575/3600 region both being immediate support and resistance levels. A break below 3500, if seen can drag the index down to 3450/3425 before rebounding from there. 3600 looks like a strong resistance just now.
Nifty (18161.75, +169.80, +0.94%) rose well yesterday and can rise towards 18250. A break above that if seen can take the index higher towards 18400. Some profit taking can be seen below 18400.
Sensex (60737.05, +452.74, +0.75%) also rose sharply yesterday but could see some profit taking near 61000 where a pause looks possible.
COMMODITIES
Crude prices hold below immediate resistance levels and can dip towards 81-80 (Brent) and 78-77 (WTI) while the resistances hold. Gold has risen sharply breaking above the 1740-1780 range and while it sustains, it may slowly move up towards 1800-1820/40 on the upside. Silver too may break above 23 to head towards 23.50-24.00. Copper has rallied breaking below 4.50 and could be headed towards 4.65/80 on the upside. Immediate view is bullish for precious metals and Copper while Crude can dip a bit in the near term.
Brent (83.30) is holding below immediate trend resistance near 84. While below the 84-85 resistance zone, we may expect a dip towards 81-80 in the near term. WTI (80.51) can dip towards 78-77 while below 81. We continue to be cautious at current levels to go long as upside is likely to be limited.
Gold (1790) has finally risen after almost 2-weeks of sideways trade within a narrow range. Breaking above 1780, the price could be headed towards 1800-1820/40 would come into the picture while above 1780. View is bullish above 1780.
Silver (22.98) has risen to the upper end of the 22-23 range that we have been mentioning for quite a few days. A sustained break above 23 can take the price to 23.50-24 eventually else a sharp decline from immediate trend resistance at 23 is needed to take it towards 22 again. Although Gold has broken on the upside and indicates possible upmove, we need to see if Silver too supports bullishness by breaking above 23.
Copper (4.5105) surged breaking above our mentioned resistance of 4.35/40. This has been a sharp movement. Sustained trade above 4.50 can open up chances of a rally towards 4.65/80 on the upside. Watch price action near 4.50.
FOREX
Dollar Index has dipped a bit yesterday but we need to see if it breaks below 93.90 or rises back above 94. Euro has risen but should be able to break above 1.1625 to head higher else a fall towards 1.15 remains intact. Dollar Yen could trade within 113.80-113.00 for now. EURJPY could test 132 before facing any rejection. Pound needs to break above 1.37 in the current rise to move up towards 1.38. USDCNY has scope to fall towards 6.41/3750 while USDINR could dip today if Brent crude falls. A ecline below 75.10 would be significant. Watch support at 75.30/20.
The Dollar has retreated a bit yesterday, with the Dollar Index (94.04) dipping below 94.25, Euro (1.1593) rising to near 1.16 and Dollar-Yen (113.47) consolidating between 113.80-113.00. We will be watching if the Dollar Index breaks below 93.90 as well and if the Euro is able to rise past 1.1625, or not.
EURJPY (131.64) has risen well and may continue to rise towards 132 on the upside before facing rejection from there. Immediate view is bullish.
We should watch Gold (1790) as well, as it seems to be breaking its range on the upside. A break above $1800 can target $1840? Aussie (0.7342) rose to 0.7395 today morning. Could it be trying to break its downtrend since 0.79, instead of being ranged between 0.7400-7250? A break above 0.74 (if seen) would be significant.
Pound (1.3668) is rising again to test 1.37 and if it manages to break higher, we may expect a rise to 1.38 on the upside in the medium term. Watch price action near 1.37.
In a significant development, USDCNY (6.4380) fell to 6.4234 yesterday. This opens up the downside to 6.41 near-term and 6.3750 medium term.
USDINR (75.28/31 on offshore) dipped to 75.20 yesterday and is testing the 75.30 Support. A fall below 75.10 might suggest a top is in place. A fall towards 81-80 on Brent, if seen, would help.
INTEREST RATES
The US Treasury Yields at the far-end have declined further and have room to dip towards their near-term supports. As mentioned yesterday, the yields will have to break these supports to confirm a reversal and all further. We will have to wait and watch. The US Federal Reserve’s minutes of the September meeting released yesterday indicated that the asset purchase taper would begin by mid-November. The Fed’s next meeting is scheduled for 2 & 3-Nov. On the data front the US Headline CPI rose 5.44% in September from 5.2% a year ago and the Core CPI rose 4.04% (YoY). The German yields have reversed lower sharply from their resistance zones as expected and can see a fresh fall going forward in line with our expectation. The 10Yr GoI is inching down after testing its key resistance. The chances are high for it to see a further fall from here. The 5Yr GoI is at the lower end of its range, and we expect it to break the range on the downside and fall further.
The US 2Yr (0.36%) and 5Yr (1.07%) Treasury yields remain stable while the 10Yr (1.55%) and the 30Yr (2.05%) %) have dipped further. As mentioned yesterday, a fall below 1.5% (10Yr) and 2% (30Yr) will confirm a reversal and drag the yields back to 1.4%-1.3% (10Yr) and 1.85%-1.8% (30Yr) in the coming weeks. As such the price action at 1.5% (10Yr) and 2% (30Yr) will need a close watch because if the yields manage to sustain above these levels, it could still keep the chances alive of rising above 1.65% (10Yr) and 2.2% (30Yr).
The German 2Yr (-0.68), 5Yr (-0.48%), 10Yr (-0.13%) and 30Yr (0.29%) yields have declined sharply across tenors. The -0.1%/-0.05% (10Yr) and 0.35%/0.45% (30Yr) resistance regions have held very well in line with our expectation. A further fall from here can drag the yields lower to -0.2% and 0.2% initially and further lower eventually.
The Indian 10Yr GoI (6.3145%) has been inching down over the last couple of days. A break below 6.3% will confirm the reversal and drag it to 6.26%-6.25% initially and then to 6.2% and lower eventually over the medium-term.
The 5Yr GoI (5.6631%) fell sharply and is poised near the lower end of its 5.66%-5.76%. The bias is bearish to break the range below 5.66% and see a fall to 5.62%-5.6% in the coming days. A bounce from 5.66% can keep the yield in the sideways range for some more time.
