STOCKS
Equities remain subdued. Dow and DAX are likely to consolidate/correct in the near-term before seeing a fresh rally. Nikkei remains stronger among the lot. Shanghai can dip in the coming days to test the key support and then can reverse higher again. India’s Sensex and Nifty are coming closer to their crucial range support which has to hold to keep the sideways range intact and avoid further fall.
Dow (27110.80, +33.98, +0.13%) has to sustain above 27000 to negate the corrective fall to 26850 and 26700-26600 that we had mentioned yesterday and rise to 27500. Also we reiterate that a strong rise past 27500 is needed for the index to test 28000 on the upside.
As expected, DAX (12372.61, -7.70, -0.06%) fell to test 12300 and has bounced from there. While below 12400, a further fall to 12200-12100 cannot be ruled out. A strong rise past 12400 is needed for the index to test 12500-12550 on the upside.
Nikkei (22004.38, +3.06, +0.01%) is holding higher and is keeping the bullish view intact to test 22100-22300 on the upside. Any intermediate dips are likely to get support at 21800 and then a little deeper at 21500.
Shanghai (2986.65, +8.53, +0.29%) has declined sharply below 3000. It can test the 2960-2950 support region before resuming its uptrend targeting 3150-3200 over the medium term.
Nifty (10817.60, -185.90, -1.69%) tumbled breaking below 10970 to test 10800 on the downside as expected. 10745 will need a watch now. A break below it can drag Nifty to 10635-10600. But a bounce from 10745 will keep the index in the 10745-11145 sideways range for some more time.
Sensex (36481.09, -642.22, -1.73%) declined below 37000 and has tumbled to close just below 36500. Crucial support is in the 36400-36390 region which has to hold to avoid further fall to 36100-36000. A bounce from the 36400-36390 support zone will keep the broader 36390-37750 sideways range intact.
COMMODITIES
Gold and silver continues to consolidate and seems to be waiting to take cues from the outcome of the US Federal Reserve meeting tonight. Copper has dipped further and can test an important support coming up near current levels. Brent and WTI have come-off sharply as Saudi Arabia will restore the supply the pre-attack levels by end of this month. Oil is now likely to remain subdued.
Brent (64.52) has a key support now at 63.85 which has to be broken for it to move further lower towards 62.40 and 62.20. While 63.85 holds, an intermediate bounce to 66 cannot be ruled out.
WTI (59.10) has support at 58.70 a break below which can drag it to 58 and 57.45. The upside is likely to be capped at 60 now.
Gold (1502) remains stuck in the expected range of 1480 and 1520 as expected. The outcome of the US Fed meeting tonight could be a possible trigger for it to break this range on either side which will decide whether gold is going up to 1540-1555 or fall to 1460-1440.
Silver (17.95) seems to be struggling to breach 18 which is needed for it to gain momentum and rise to 18.25-18.50 again. But while below 18, a fall again to 17.40 and 17.25 cannot be rued out.
Copper (2.63) has dipped further and remains pressured to test the key support level of 2.59 on the downside. While 2.59 holds, a sideways consolidation between 2.59 and 2.65 can be seen for some time. But a break below 2.59 will increase the downside pressure and drag copper lower to 2.52 thereafter.
FOREX
Dollar index and the Euro can consolidate sideways until the outcome of the US Federal Reserve meeting tonight. However, the bias for the Euro looks positive on the charts for it to break the consolidation on the upside. Dollar-Yen is holding above 108 and remains bullish to test 108.50-108. Pound is also looking positive though it could remains sideways in the near term. Aussie is likely to see a corrective fall. USDCNY can consolidate before resuming the downtrend. The sharp fall in oil prices could give a breather to the Rupee today.
The Dollar-Rupee (71.7850) has come-off from the high of 71.9725 yesterday and can test 71.52-71.40 today and further lower levels in the coming days.
Dollar Index (98.27) has come-off failing to breach 98.75. A range-bound move between 98 and 98.75 looks likely until the outcome of the Fed meeting tonight after which the index might see a breakout on either side.
The Euro (1.1069) seems to lack strong sellers below 1.10. Though it can oscillate between 1.0985 and 1.1090 for some time, the bias remains positive and the possibilities are high for the Euro to break above the 1.1090-1.11 resistance region and rise to 1.1165-1.1180 in the short term.
The support at 108.05 on the Dollar-Yen (108.22) is holding well. This keeps the broader bullish view intact for the pair to test 108.50 and 109 in the coming days. A strong rise past 108.25 can accelerate the rally.
The EUR-JPY (119.78) seems to be gaining strength to breach 120 and move further higher towards 120.70. The corrective fall to 118.50-118.30 that we were expecting seems to be not happening.
Aussie (0.6851) fell as expected but has bounced again from the low of 0.6830. However, the near-term view remains negative and the corrective fall is likely to remain intact. Aussie can test 0.6815 on the downside while it remains below the 0.6870-0.6875 resistance region.
Pound (1.2493) is holding well above 1.24 and has risen back again. The bias remains bullish for it to test 1.26 on the upside while it remains above 1.2390.
As expected, USDCNY (7.0879) saw a corrective rise to test 7.10 and has come-off from there. While below 7.10, the broader bearish view is intact to test 7.05-7.0480 on the downside.
INTEREST RATES
The US Treasury yields have dipped further and is giving indication that the corrective rally could have ended. A 25bps rate cut tonight has been factored in the market and the Fed’s hint on the future policy path will be the key in setting the trend for the Treasury yields. The German yields looks mixed and could consolidate before resuming their upmove. The 10Yr GoI remains bullish.
The US 2Yr (1.72%), 5Yr (1.66%), 10Yr (1.81%) and 30Yr (2.27%) have dipped further across tenors. A fall below 2.25% on the 30Yr can accelerate the downmove towards 2.15% and 2.10%. Similarly, the 10Yr can test 1.75% and 1.68% in the coming days while it remains below 1.85%.
The German yields have dipped at the near end (2Yr, 5Yr and 10Yr) while at the far end the 30Yr has risen yesterday. The 2Yr (-0.73%) dipped 2 bps while the 5Yr (-0.72%) and 10Yr (-0.48%) were down 1 bps each. The 30Yr (0.08%) rose 4 bps. As mentioned yesterday, the current uptrend is intact and the 30Yr can target 0.20% on the upside. The 10Yr can test -0.40%.
The 10Yr GoI (6.7343%) is holding well above 6.68% as expected and is keeping the bullish view intact. A break above 6.75% can take the yield higher to 6.80%-6.81% in the short term.
