STOCKS
Global indices remain mixed. Dow has a key support which needs to hold to keep the possibilities alive of seeing a rise again. DAX and Nikkei look relatively bullish than the others. Shanghai has declined sharply and is under pressure on the back of the concerns over the coronavirus outbreak. Sensex and Nifty have declined below their key supports and are vulnerable to see further fall.
Dow (29196.04, -152.06, -0.52%) has come-off sharply yesterday but might find support in the 29100-29000 zone. The index will come under pressure only on a break below 29000. While above 29000, the bullish outlook is intact to see a rise to 29733 in the coming weeks.
DAX (13555.87, +6.93, +0.05%) is bullish to test 13670-13700 on the upside while it sustains above 13500. A strong rise past 13560 can accelerate the rally. Strong support is in the 13500-13450 region.
The support at 23800 mentioned yesterday on the Nikkei (23936.67, +72.11, +0.30%) is holding well. The index has bounced and need to be seen if it can breach 24000 decisively which will pave way for a rise to 25000. As mentioned yesterday a break below 23800 will negate the bullish view and will drag the index lower to 23650 and 23500.
Contrary to our expectation Shanghai (3023.52, -28.62, -0.94%) has declined below 3035 and could be bearish now to test 3000 and even 2970-2960 on the downside.
Sensex (41323.81, -205.10, -0.49%) has declined below 41400 and is under pressure. 41400 and 41480 are the important resistances to watch now that can cap the upside. While below these supports, a fall to 41000 is possible in the coming days.
Nifty (12169.85, -54.70, -0.45%) has declined below 12200 and is likely to test 12145 now. The outlook is bearish. A further break below 12145 will then see the fall extending to 12110 and even 12000 in the coming days.
COMMODITIES
Overall commodity prices are trading lower. News states a strain of coronavirus in China that has increased death toll to 6. But it is to be seen if that could impact the demand for Copper.
Brent (64.32) is trading lower and could re-test support at 64 on the downside before again bouncing back to higher levels. Near term looks bearish.
Nymex WTI (58.08) is headed towards 57.50-57.00. While we may expect a bounce from there, a break below 57 could drag price down to 54 in the medium term. Watch price action near 57 in the coming sessions. A bounce from 64 in Brent could pull up WTI prices as well.
Gold (1552.80) rose sharply yesterday but could not break above 1570. Instead it has come down to 1550 and could re-test support near 1540 over the next 1-2 sessions. We do not negate a possible bounce from 1540 but in the medium term 1520-1500 looks likely to be tested.
Silver (17.71) has broken sharply below support near 18 contrary to our expectation of a rise towards 18.75 and while it trades lower, we may expect a fall towards 17.50/40.
Copper (2.7980) declined sharply and could test 2.7750 before bouncing back from there. Watch price action near 2.7750. A break on the downside if seen would be vulnerable for a further fall.
FOREX
Dollar Index (97.66) tested 97.39 as expected before bouncing back. While 97.40 holds, we may expect the index to rise back towards 97.84-98.00 in the near term.
Euro (1.1080) is trading above support at 1.1070 and while that holds, we may expect a rise towards 1.1125-1.1150 in the near term. But if the dollar index rises from current levels, Euro could see some more fall towards 1.1050.
Dollar-Yen (110.03) has risen slightly and while above 109.72, it is likely to move higher towards 110.25/30.
EURJPY (121.93) has fallen as expected and has scope for falling towards 120.78 in the near term. View is bearish while below 123. Interim support is visible at 121.50 which could produce a slight bounce but we may expect eventual fall towards 120.78.
Pound (1.3041) could rise while above support near 1.30. View remains intact for a rise towards 1.32.
Aussie (0.6841) tested 0.6827 in line with our expectation and has bounced back from there. While the pair trades above 0.6825, it could again trade higher towards 0.6890.
USDCNY (6.8976) could rise towards 6.92/93 in the near term.
Dollar-Rupee (71.21) rose higher yesterday and could hold below 71.30 to see a corrective dip for a couple of sessions before again rising higher. On the charts there is scope for a rise towards 71.50
INTEREST RATES
The US Treasury yields have dipped below their key near-term supports and can fall further if they sustain below it. The German Yields have room to decline in the near-term and then can resume their overall uptrend. The 10Yr GoI can remain stuck in a narrow range before moving higher.
The US 2Yr (1.53%), 5Yr (1.58%), 10Yr (1.78%) and 30Yr (2.24%) Treasury yields have dipped across tenors. The 30Yr and the 10Yr have dipped below their respective support levels of 2.25% and 1.79%. While below these supports, the 30Yr can test 2.20% and even 2.15% on the downside. The 10Yr on the other hand can dip to 1.73%.
The German 2Yr (-0.59%), 5Yr (-0.53%) yields dipped marginally by 1 bps and 2 bps respectively while the 10Yr (-0.25%) and 30Yr (0.25%) were down a little deeper by 4 bps each. . The 10Yr can fall to -0.30% on a break below the current support level of -0.25%. The 30Yr has room to test 0.20%-0.18% on the downside and then can reverse higher.
The 10Yr GoI (6.6376%) seems to lack strength to breach 6.65%.%. While below 6.65% the yield can remain stuck between 6.60% and 6.65%. But eventually it is likely to breach 6.65% and rise to 6.70% in the coming days. 6.61%-6.60% is a strong support that can limit the downside.
