STOCKS
Equities are under pressure as the threat of the coronovirus spreading across the globe is keeping the market nervous. Dow and DAX have tumbled breaking below their key supports and are now bearish to fall further. Nikkei is moving down in line with our expectation and is coming closer to a crucial support which will need a close watch. Sensex and Nifty have come down yesterday failing to sustain the gains seen on Friday. They both look vulnerable to fall further following the global markets.
Dow (28535.80, -453.93, -1.57%) has tumbled below its crucial support level of 28750. and has negated the chances of moving above 29000 immediately. Intermediate resistances are at 28675 and 28800-28850 which can cap the upside now. While below these resistances the outlook is bearish to see a fall to 28000-27750.
DAX (13204.77, -371.91, -2.74%) has broken its 13350-13650 range on the downside. Immediate support is at 13200. A break below it can drag the index further lower to 12980.
Nikkei (23125.29, -218.22, -0.93%) has moved further lower as expected and can test 23000 on the downside in line with our expectation. As mentioned yesterday, 23000 is a crucial support. A strong break below it will pave way for a further fall to 22000-21500. We will have to watch the price action around 23000 closely.
Nifty (12119, -129.25, -1.06%) has failed to sustain above 12200 and has declined yesterday. While below 12200 a further fall to 12000 is likely in the near-term. It will have to be seen if Nifty can bounce from 12000 or not.
Sensex (41155.12, -458.07, -1.10%) has tumbled below 41400 and can test 41000 now. A break below 41000 will drag it to 40700-40670.
Shanghai (2976.53) is closed for the Chinese New Year holidays and will reopen on Friday (31-Jan-2020).
COMMODITIES
The outbreak of coronavirus in China has been pulling investors towards buying of safe-haven metals leading to rally in Gold and Silver prices and has sent Crude and copper prices sharply lower. If the negative impact of the virus continues to increase, we may see further rally in Gold in the near term and an unexpected but sharper fall in Crude and Copper prices. But charts suggest resistance coming up near $1600 on Gold and supports on Crude prices which would be crucial levels to watch. Copper, however looks bearish.
Gold (1580.80) has been rising sharply and could head towards resistance at 1600 in the near term while above 1580. Near term looks bullish for the remaining sessions of the week before a possible dip is seen.
Silver (18.09) is stuck in a sideways range above 17.75 and is likely to be capped by 18.50/75 on the upside. We may soon expect a sharp corrective dip towards 17.5 in the medium term.
Brent (59.04) has dipped sharply while Nymex WTI (52.92) seems to be stable at levels seen yesterday. Brent saw an intra-day low of 58.52 yesterday exactly at the weekly support trend line. An immediate bounce from here is needed to keep the support intact and expect prices to move higher targeting 62-64 levels in the near to medium term. We would watch price action at 58.52. If the falling momentum continues to remain strong, we may expect sharper fall in Brent prices towards 56-54. WTI on the other hand has already broken below the trend support seen on the charts and could get a bounce from 51-50. A break below 50 could be vulnerable to a sharper unexpected fall.
Watch crucial levels of 58.50-58.00 on Brent and 51-50 on WTI for a near term bounce.
Copper (2.5985) has fallen below 2.60. Charts suggest room for a possible fall towards 2.55-2.50. Near to medium term looks bearish.
FOREX
Dollar Index (97.95) seems to be slowly inching higher and has scope for rising towards 98.00-98.25 in the near term.
Euro (1.1019) is looking bearish and while the Dollar Index inches higher, we may expect some more fall in Euro towards 1.10 which could be a near term support. Only a fall below 1.10, if seen (less preferred just now) would increase chances of a fall towards 1.09 or lower in the longer run.
Dollar-Yen (108.97) has broken below 109 and if the fall continues, we may expect a fall towards 108.50 or even 108 in the near term.
EURJPY (120.11) has important support near 120 which if holds could pull up EURJPY towards 122. A fall below 120 could be vulnerable for further bearishness towards 119. Watch price action near immediate support.
Pound (1.3057) is trading stable above 1.30. Our earlier expected range of 1.30-1.32 is likely to hold for the near term.
Aussie (0.6755) has given bearish indication after breaking below support at 0.68. AS mentioned earlier, lower targets now turn towards 0.67-0.6650. View is bearish while below 0.68.
Dollar-Rupee (71.44) traded higher yesterday. It would be important to see if it holds below 71.50 and falls back towards 71.20 or lower in the near term. A rise above 71.50, if seen and sustains could indicate further bullishness towards 71.80/90-72.00. Watch price action near 71.50.
INTEREST RATES
The US Treasury Yields remain subdued and is likely to fall further as the coronavirus spread continues to weigh on the market sentiment. The German Yields have declined below their key supports and have room to fall further. The 10Yr GoI can dip in the near-term to test its support and then can reverse higher again.
The US 2Yr (1.43%) and 5Yr (1.44%) Treasury yields have dipped slightly by 1 bps and 2bps respectively while the 10Yr (1.60%) and 30Yr (2.05%) have declined by 4 bps each. The bearish outlook is intact. As mentioned yesterday, the 30Yr can fall to 2%-1.9% and the 10Yr can test 1.53%-1.50% on the downside in the coming days.
The German 2Yr (-0.64%), 5Yr (-0.63%), 10Yr (-0.39%) and 30Yr (0.12%) yields have declined sharply across tenors. . The 10Yr and 30Yr have declined sharply below their key supports which has negated our previous bullish view. The 30Yr can test its next important support in the 0.08%-0.07% region and need to see if it can bounce from there or not. The 10Yr can fall to -0.50% on a break below -0.41% in the near-term.
The 10Yr GoI (6.5562%) is moving down in line with our expectation. The near-term outlook is negative to test 6.51% from where a bounce-back move to 6.60% can be seen again.
