STOCKS
Trump’s tweet over the weekend continues to weigh on the equities. The sell-off continues. Nervousness seems to be turning high in the market as seen from the volatility index.
The CBOE Volatility Index (19.32) has surged from around 13 (on Friday, before Trump’s tweet)) to 19.32 now. The charts suggets the possibility of further rise to 28-29 indicating more fall is on the cards in the equity segment.
Dow (25965.09 -473.39 (-1.79%) has bounced a key support at 25800. Failure to rise past 26000 will be bearish for a fall to 25500 or even 25000 in the coming weeks. Need a close watch.
DAX (12092.74, -194.14, -1.58%) has tumbled failing to rise past 12300. The outlook is bearish to test 11900 in the near term.
Nikkei (21584.26, -339.46, -1.55%) has declined below the support at 21850 and looks vulnerable for a fall to 21000 on a break below 21500.
Shanghai (2886.66, -39.75, -1.36%) has declined below 2900 and is bearish to test 2800 in the short term.
As expected, Sensex (38276.63, -323.71 -0.84%) and Nifty (11497.90, -100.35, -0.87%) have broken their range below 38500 and 11550 respectively. The outlook is now bearish . Sensex can test 38000 while the Nifty can fall to 11350-11300.
COMMODITIES
Risk aversion in the market is helping gold and silver to hold up. They can move higher in the coming days. Copper is consolidating within its downtrend. Oil remains bearish and can fall further in the near term.
Gold (1287.5) is getting support in the 1280-1278 region. It can break 1290 and rise to 1295-1300 in the near term.
Similarly, Silver (14.95) can break its resistance at 15.03 and rise to 15.15-15.20 in the coming days.
Copper (2.80) is consolidating between 2.78 and 2.84. A test 2.86 is possible before we see a fresh fall to 2.70 in the short term.
The expected bounce before a fresh fall in the Brent (69.53) has not happened. The bearish outlook is intact. Brent can break 68 and fall to 66-65.
WTI (61.91) is relatively stable than Brent. However, the outlook is bearish for a fall to 60-58 while it remains below 64.
FOREX
Overall Dollar strength could come into play against major currencies. Euro could test 1.1225/30 before falling off from there while the Aussie, Yen and Euro-Yen could also strengthen. The Indian Rupee looks weak towards 69.80.
Dollar Index (97.47) is almost stable near levels seen yesterday. 98-99 is a possibility for the near term.
Euro (1.1203) could test daily resistance near 1.1225-1.1230 over the next 1-2 sessions before again falling towards 1.12 or lower. Overall broad range of 1.13-1.11 could be seen in the near term.
The Euro-Yen (123.27) looks bearish in the near term while below 123.50 and could eventually test lower levels of 122 in the near term. Medium term view for EUR-JPY is bearish while the pair sustains below 124.00/123.50.
Dollar Yen (110.03) has come down sharply as expected and could test 109.70 on the downside soon before bouncing back from there. Note that 109.70-110.00 is an important near term support zone.
Aussie (0.7021) has been slowly rising for the past 3-sessions from 0.6962. While Aussie remains above 0.70, it could continue to rise towards 0.7050/0.7100 in the near term.
USDCNY (6.7683) is trading lower today after testing 6.78 yesterday. The fall could be limited to 6.76 just now which could be a decent interim support. A bounce from 6.76 could take it higher towards 6.80 on the upside. Any unexpected events from the Trump-China trade scenario this week could again induce a sharp rise in USDCNY. Weakness in Yuan could continue for the next week as well.
Dollar-Rupee (69.4350) was almost stable yesterday and while the immediate channel support on the daily candles hold, Dollar-Rupee could be bullish in the near term. We keep possibility of a rise towards 69.60/65 and maybe even higher towards 69.75/80 as the preferred view just now. A fall towards 69 envisaged in the recent readings could be delayed for now. USDINR offshore NDF trades at 69.63, indicating a possible gap up opening today on the OTC markets.
INTEREST RATES
The US Yields continue to trade lower and look bearish for the near term. The 30Yr (2.87%) could fall towards 2.85%, 10Yr (2.46%) could fall towards 2.45/40%, while the 5Yr (2.27%) could test 2.25-2.20% in the near term. Yields look bearish just now.
The US-JGB 10Yr (2.51%) is down from 2.54%. The spread looks bearish and could fall in the near term indicating some more Yen strength going forwards.
The German yields have fallen. The 5Yr (-0.4566%), 10Yr (-0.036%) and the 30YR (0.615%) are trading lower from yesterday’s levels of -0.434%, -0.009% and 0.637% respectively. Near term looks bearish for the German yields.
The Indian 10Yr GOI (7.4790%) is likely to test 7.40% on the downside before it attempts a bounce back towards 7.50% or higher in the longer run. Near term looks weak.
