STOCKS
Sharp and strong movements in almost all the equity indices is seen. While the equities look weak, the correction mode could last for another week possibly. There are important supports coming up near current levels and if they break, a sharp bearish trend could set in. We wait for confirmation if the price breaks below immediate supports.
Dow (25052.83, -2.13%) has fallen about 2% in a single session, indeed a sharp 1-day down move. There is support near current levels which if holds could take the index upwards; else the fall could continue towards 23500 in the medium term.
Dax (11539.35, -1.48%) has broken below important weekly support near 11600 and if the index does not recover immediately to rise above current levels, Dax could be vulnerable to a fall towards 11200-11100 levels soon. The falling momentum like strong just now.
Nikkei ( 22493.65, -0.43%) has important support near 22450-22430 levels and while that holds, Nikkei could bounce back towards 24000 in the medium term. It would be important to see if the support holds, else the index could be vulnerable to a sharp fall towards 22000.
Shanghai (2562.56, -0.81%) has fallen and come down to test support near 2550 mentioned yesterday. If support in the 2500-2550 zone holds, some recovery could be expected next week. Only if the index breaks below 2500, we would focus on lower support at 2450.
Nifty (10234.65, -2.16%) fell to 10138 yesterday and bounced back a bit to close above 10200. While there is still some scope of testing 10000 on the downside, we could see a sharp bounce next week. A possible wedge like formation looks likely on the daily chart which if holds could bring a sharp bullish reversal in the near term.
COMMODITIES
Brent (80.63) has seen a decent fall. As mentioned in yesterday’s edition, we may look for a fall towards 78-77 region in the near term. View is bearish for the next 3-4 sessions.
WTI (71.22) has come closer to testing important support near 70-71 region. This could be tested by mid-next week and the support if holds could take the price upwards later on. For now, WTI looks bearish.
Gold (1222.50) has risen sharply in line with our expectation. Yesterday we had mentioned that the Gold price seemed to be forming a sideways base before starting a fresh upmove. For now, this seems to have begun. But a sustained movement above 1210 would give us some confirmation of further rise towards 1230-1250 in the medium term. Overall near term trend remains bullish.
Copper (2.7910) is almost stable ranged within the 2.70-2.85 zone. As mentioned yesterday, there is some scope of falling towards 2.65 in the near term. Overall the next few sessions could continue to remain ranged below 2.85
FOREX
Euro could pause in its rise near 1.162. A break below 74 on USDINR today could confirm further Rupee strength in the near term.
Euro (1.1604) could pause at resistance near 1.162 (provided by the 21 days MA). A break below 1.158 could lead to a retest of 1.155 in today’s session. An ultimate test of 1.165-1.170 in the next 1-2 weeks is likely.
Dollar Index (95.04) is coming near to support at 94.98 (21 days MA). After pausing there for sometime, it is likely to drop to lower support near 94.5 by next week.
Dollar Yen (112.27) has important supports coming up : 55 days MA giving support near 111.78, trendline support in the 111.5-111.0 region. A break below 111 could be very bearish.
Euro-Yen (130.19) has immediate channel resistance at 130.20-30, which if broken could change the bias towards the upside in the next few sessions. The 21 weeks MA near 129.16 continues to be an important support to watch out in the near term.
Pound’s (1.3236) upmove has paused at resistance near 1.325 on daily candles. However a break of that level to target 1.33-1.34 could happen in the next week. A close below the 21 weeks MA (1.309) today would however negate the upside bias for next week.
Aussie (0.7121) hasn’t been able to break below 0.705 yet. There is good chance of an upmove towards resistance near 0.715-0.720 in the coming week. A break above that would be required to negate the possibility of a downside below 0.705.
Dollar Rupee (74.125): Factors could be aligning for Rupee strength. But need confirmation by way of break below 74.00 today. NDF trading @ 73.86 – hence, chances of a break of 74 in onshore markets is high.
INTEREST RATES
India 10 year yield (7.98%) has again broken below Support @ 8%. If this break sustains, then lower support near 7.90% could be approached.
The US 10 Year (3.16%) and 30 year (3.34%) : While below 3.2% and 3.4%, there are chances of a further near term downmove to 3.10% and 3.30% respectively.
The US 30-5 yield differential (0.32%) has started rising and could move up further towards resistance near 0.50% in the near term.
10 Year German-US spread (-2.64%): As expected, resistance near -2.60% on medium term chart is holding for the spread. It could drop to -2.70% again over the next week.
German 10 year yield (0.52%), as expected, is dipping from resistance on medium term chart and could target 0.40% next week.
Japan 30-5 year yield spread (0.97%) has broken above long term resistance near 0.95%. If this break persists, it could imply that the 30-10 (0.76%) could also break above resistance near 0.82%. If that happens, it could be very bullish for bond yields globally.
However, the Japanese 10 Year yield (0.14%) has support at current level – if it rises from here, then the above bullish possibility stays intact.
