STOCKS
Fear of recession is keeping the global equity markets volatile and mixed with an upmove one day and a fall the other day. The price action for a few sessions/days will need a close watch to get a clear indication on the next move. The bias however remains in favor of a fall going forward in many indices.
The 21-day moving average (25735) resistance continues to cap the upside in Dow (25625.59, -32.14, -0.13%). This keeps the possibility alive of the index falling to 25200 levels. The index will get a breather only on a decisive close above the 21-day moving average which will then pave way for a test of 26000 and 26100.
DAX (11419.04, -0.44, 0.00%) has sustain above 11400 to keep alive the chances of testing 11500 and 11550 levels. A fall below 11400 can take it lower to 11300.
Nikkei (21019.41, -359.32, -1.68%) has tumbled below the 100-day moving average support level of 21228 and looks vulnerable to test 20900.
Shanghai (3018.15, -4.57, -0.15%), though has bounced from around 2988, needs a strong rise past 3039 (21-day moving average) to gain strength and revisit 3100-3120 levels. Inability to breach 3039 can pull it lower to 2970 and will keep the possibility high of the index falling to 2900.
Sensex (38132.88, -100.53, -0.26%) has to sustain above 38000 in order to move up to 38500 and higher levels again. A break below 38000 can drag it to the crucial support level of 37730. A fall below 37730 can trigger profit-booking and drag the index to 37250 in the coming days.
Nifty 50 (11445.05, -38.20, -0.33%) can fall to 11350 while it trades below 11500. A break below 11350 can pull it further lower to 11240. A decisive close above 11500 is needed for it to gain bullish momentum to target 11700-11750 levels thereafter.
COMMODITIES
Commodities are struggling to gain strength as the dollar index has been inching higher over the last few days. Gold and Silver has come-off yesterday contrary to our expectation for an upmove. Oil and copper remains mixed in the near term.
The rally to 1330 that we have been mentioning over the last few days has not materialized in Gold (1309). While below 1313, a dip to 1305 and 1300 is possible in the near term.
Silver (15.29) has declined below the support level of 15.35 and can test 15.2 in the coming sessions. A break below it can drag it to 15. A strong rise past 15.4 is needed for it to test 15.5 and 15.6 levels again.
Copper (2.86) remains mixed and can remain volatile between the support at 2.84 and resistance at 2.89. A breakout on either side of 2.84 or 2.89 will decide the next move.
WTI (59.15) is still struggling to get strong follow through buyers above 60. A dip to 58 is possible on a break below 58 in the near term.
Brent (67.6) has come-off from around 68.35 and can dip to 67. A range bound move between 66.5 and 68.5 can be seen for sometime before we see a fresh rally to 70.
FOREX
Currencies are mixed. Euro could strengthen a bit while US Dollar Index could face some resistance near 97.00/20. Euro-Yen looks weak. EM currencies including USDINR has weakened a bit against the US Dollar since yesterday.
Dollar-Index (96.89) is trading below resistance zone of 97.0-97.20. While 97.20/00 holds, the index could see some corrective fall in the near term targeting 96.50 or lower again.
Euro (1.1254) is almost stable and while below 1.13, chances of falling towards 1.12/11 remains on the cards. If Dollar index falls from 97.0/20, downside for Euro could be limited.
Euro-Yen (123.99) has fallen towards our downside levels of 123.60 mentioned yesterday. While below 124.40/00, Euro-Yen looks bearish towards 123.00-122.80 levels in the near term.
Dollar Yen (110.18) could see a short corrective upmove towards 112 in the near term. In the longer term, a chance of a fall towards 109.50/00 is still in place.
Aussie (0.7089) has fallen and while resistance at 0.7150 holds, Aussie could fall towards 0.70-0.6950 levels.
Pound (1.3182) is almost stable. Immediate support is seen near 1.31 which if holds could take Pound towards 1.33/34 again on the upside.
USDCNY (6.7322) is has moved up rising beyond our expected 6.72. While above 6.73, Yuan may continue to weaken towards 6.75 which is an interim resistance and could probably push down prices in the medium term.
Dollar-Rupee (68.88) could move up today to possibly open with a gap up near 69 as indicated by the NDF rates at 69.09. A break above 69 would take it again to test 69.25 over the next 1-2 sessions.
INTEREST RATES
Overall the sharp recent fall in the yields and yields spreads could recover in the coming sessions as they trade near support levels.
The US yields have fallen as expected. The 10YR (2.35%) and 30Yr (2.80%) has exactly fallen as expected and could possibly pause near current levels attempting to recover a bit in the coming sessions. There is some scope of falling towards 2.70% (30YR) and 2.30% (10Yr) which could be the maximum downside that we may look for just now. Preference is for a corrective upmove from near current levels.
The German-JGB 10Yr (0.01%) has also come down to test support and could possibly bounce back from here towards 0.06%. This rise could pull up Euro-Yen in the near term.
The US-JGB 10Yr (2.44%) has also got support near 2.4% which could hold in the near term producing a bounce towards 2.50% or higher.
The 10YR GOI (7.4823%) needs to decide if it would hold above 7.45% and rise up towards 7.55% or break below 7.45% to target 7.35/30% on the downside.
