STOCKS
Some correction seen in equity indices after the US CPI release yesterday. Dow has dipped breaking below our mentioned supports at 36250/36000 and if the fall sustains, we may expect a further decline towards 35000. Dax has support at 16000 which if breaks can drag it down to 15900. Nikkei trades below support at 29500 and if it falls to break below 29000, it can test 28500 on the downside soon. Shanghai on the other hand has bounced from 3450 and can rise to 3550-3575. Nifty and Sensex trade above supports at 17800 and 60000 but it would be prudent to consider a break and fall towards 17600/400 and 59000 respectively.
Dow (36079.94, -240.04, -0.66%) has broken below 36250 mentioned yesterday and could have chances of a fall to 35000 as 36000 breaks. Our earlier mentioned rise to 36500 and 37000 is negated while Dow remains below 36250-36000. Immediate view is bearish below 36250/36000.
DAX (16067.83, +27.36, +0.17%) has dipped slightly today and seems to be holding below 16100 for now. While below 16100 we may expect a decline towards 15900 and a range of 15900-16100 to hold for the next few sessions. Broadly, 15900 is an important support that could hold in the medium term and produce a bounce to 16400 eventually.
Nikkei (29325.75, +217, +0.75%) has failed to rise above 29500 contrary to our expectation. A further decline below 29000 will take it down to 28500 before bouncing from there.
Shanghai (3511.64, +19.18, +0.55%) has risen, sharply bouncing from 3450. A rise to 3550-3575 looks possible in the near term. Any break below 3450, if seen again would be bearish in the medium term. .
Nifty (18017.20, -27.05, -0.15%) has crucial Support at 17800. It would be prudent to consider chances of break which would then target 17600-400. Watch price action near 17800.
Sensex (60352.82, -80.63, -0.13%) too has crucial support at 60000 which if breaks could target 59000 on the downside. Watch price action closely near 60000.
COMMODITIES
Strong US CPI data release yesterday has pulled up Gold, Silver and Copper while it has lead to a sharp decline in Crude prices. But we need to see if the movement sustains or whether it is a data-based short lived move that may correct itself soon.
Brent (82.77) has surprised by falling back below 85 instead of rising towards $87.50 as mentioned yesterday. The overnight low of $82.08 is a crucial Support on the Daily Candles. Need to see if it triggers a rise past $85 to $90. Else, while below $85, there could be chance of break below $82 targeting $80. Very delicate juncture.
WTI (81.49) has also surprised by falling from levels below 85 instead of rising towards resistance at 86. There is scope for a fall towards 82-81 if the current dip continues. Keep a close watch to see if the current fall sustains.
Gold (1845.80) saw a sharp rise yesterday breaking above our mentioned resistance at 1840. This possibly breaks the downtrend since 2100 (aug’20) mentioned yesterday. We need to see if Gold falls back to levels below 1840 or sustains the rise to head higher in the near term. Movement from 1840 levels on either side will bow be crucial to watch as it would decide the next directional course.
Silver (24.65) too has risen from levels seen yesterday. There is immediate resistance near 24.65/70-25 which needs to hold in order for the price to fall back to 24-23.50. Else a sustained rise above 24.65/70-25.00 will be needed to turn further bullish on the price.
Copper (4.3480) is stuck below 4.45 which is holding as an interim resistance for the last few sessions. Unless a break above 4.45 is seen, it would be difficult for Copper to move up further and instead the price can fall towards 4.20/25 soon. Watch price action near current levels.
FOREX
Dollar Index has risen sharply after the strong US CPI data release pulling down Euro to levels below. Our bearish view on Euro has been holding well as we now look for a further fall towards support at 1.14. Dollar-Yen can rise towards 115.50 while above 114. Aussie and Pound are bearish for a fall towards 0.7250/40 and 1.33 respectively. USDCNY can rise to 6.42/43 on a break above 6.41. USDINR can see a decent rise towards 74.40/50/60 on the upside before falling from there. Immediate resistance is seen at 74.60.
Dollar Index (94.93) has risen well and has resistance at 95 and then higher at. Dollar Yen has risen sharply and could rise towards
Euro (1.1483) has fallen as expected and is trading below 1.1493, the 50% retracement of the rise from 1.0636 (Apr-20) to 1.2349 (Jan-21). Medium term Support is seen at 1.14.
EURJPY (130.87) is holding above support at 130.50. We may expect trade within 131.50-130.50 to hold for the near term.
Aussie (0.73087) looks bearish for a fall to 0.7250-0.7240 which is a near term trend support.
Pound (1.3404) needs to bounce from support at 1.34 else a fall towards 1.33 cannot be negated in the coming sessions.
Dollar-Yen (114.06) has proved the break below 113 as very short lived and surged yesterday proving our bearishness towards 112.5-112 as wrong. While above 114, we may look for a rise to 115.50 on the upside.
USDCNY (6.4050) can rise to 6.42/43 if immediate Resistance at 6.41 breaks.
USDINR (74.39) is expected to see a near-term pull-back to 74.20-40-50. Might test 74.50/60 also. A broad range of 73.50-74.50 for the coming sessions hold with a sell-on rallies environment.
INTEREST RATES
The US Treasury yields have surged across tenors after the strong inflation data release yesterday. The US Headline CPI rose sharply by 6.24% (YoY) in October after rising 5.38% in the previous month. While this bounce sustains, the Treasury yields can move up further towards the upper end of our expected range in the coming days. The German Yields have bounced back as expected and can see a corrective rise in the coming days before resuming the broader downtrend again. The 10Yr and 5Yr GoI have risen back sharply yesterday and can move up further if they manage to sustain the bounce in the coming sessions.
The US 2Yr (0.51%), 5Yr (1.22%), 10Yr (1.55%) and 30Yr (1.90%) have risen sharply across tenors. The 10Yr has risen back above 1.5% and while this sustains a rise to the upper end of our expected range of 1.35%-1.65% is possible in the coming days. The 30Yr can now test 2% while this bounce sustains and can even extend the rise to 2.1% on a break above 2%. Broadly it is likely to remain in the range of 1.75%-2.1%/2.2%.
The German 2Yr (-0.71%), 5Yr (-0.54%), 10Yr (-0.25%) and the 30Yr (0.05%) have risen back as expected. The 10Yr has bounced from -0.3% and could rise to -0.2%/-0.1% from here itself without seeing an extended fall to -0.4%. The 30Yr is heading up towards 0.1% in line with our expectation. The yields are likely to resume their broader downtrend after this corrective rise.
The India 10Yr GoI (6.3363%) has risen back above 6.3% contrary to our expectation to extend the fall to 6.2%. While above 6.3% a test of 6.36%-6.37% is possible in the near-term. Inability to breach 6.37% can drag the yield below 6.3% and will keep the chances alive of seeing 6.2% on the downside.
The 5Yr GoI (5.6928%) has held above 5.66% and has risen back well. A further rise past 5.70% can take the yield up to 5.74%-5.75%. The price action at 5.7% will need a close watch.
