STOCKS
Major indices like the Dow need to surpass a key near-term resistance in order to become bullish again. Until then the danger is still alive of seeing a sharp fall. We will have to wait and watch. DAX is under pressure and has room to fall further. Nikkei has bounced-back into the range and can continue to trade sideways. Sensex and Nifty are poised near crucial levels which need to hold in order to avoid further fall. Both Sensex and Nifty will need a close watch today.
Dow (28859.44, +124.99, +0.43%) has recovered sharply from an intraday low of 28489.76. A consolidation between 28450 and 29000 looks possible in the near-term. A breakout of this consolidation will then decide whether the index will go back up to 29300-29500 or fall to 28000-27750. We will have to wait and watch.
DAX (13157.12, -187.88, -1.41%) remains under pressure and has dipped below 13200 thereby keeping our bearish bias intact. As mentioned yesterday, the index is vulnerable to see a fall in the near-term to 12980 – an important support that will need a close watch.
Nikkei (23249.34, +271.59, 1.18%) fell below 23000 yesterday but has managed to bounce-back today. The 23000-24100 range seems to be holding well as of now. A break above 23400 will ease the downside pressure and will pave way for 23600 and 23800. The danger of seeing a fall to 22000-21500 that we had indicated yesterday has eased slightly.
Shanghai (2976.53) remains closed as the New Year holidays have been extended on the back of the coronovirus concerns. The Chinese markets are closed until 03-Feb-2020.
Nifty (12035.80, -93.70, -0.77%) will need a close watch today to see if it can sustain above the crucial support level of 11980 or not. A break below this support will see a sharp fall to 11900 and even 11850 in the coming days. But while this support holds, a bounce to 12200 can be seen. A strong break above 12200 is needed to ease the downside pressure and negate the chances of falling below 11980.
Sensex (40913.82, -284.84, -0.69%) on the other hand is facing resistance at 41400. It looks vulnerable to test the crucial support level of 40670 ahead of the Union Budget tomorrow. While 40670 holds, a bounce to 41400-41500 is possible. But a break below 40670 will increase the danger of the fall extending to 40000. We will have to wait and watch.
Please note that the Indian stock exchanges (BSE and NSE) are open for trading tomorrow (Saturday, 01-Feb-2020) on account of the Union Budget.
COMMODITIES
EIA weekly stock inventory report stated a rise in crude stockpiles by 3.5mln barrels adding on the already weak crude prices, pushing them down again. This rise by 3.5mln barrels was significantly higher than the forecast of 0.7mln barrels. Mostly all below mentioned commodities are likely to see some sideways ranged movement in the near term before a sharp move is expected.
Brent (58.23) has fallen sharply but while above 58.0-57.5, there could be some chances of a bounce back in the near term. However, we may expect some range trade in the 57.50-61 region (downside revised from 58.5 mentioned yesterday) before a further bounce is seen.
Nymex WTI (53.13) trades above 52 and while resistance near 54.0-54.50 holds, WTI may trade sideways in the 54.50-52 region for sometime.
Gold (1575.90) has immediate support and resistance levels at 1560/70 and 1600 respectively and is likely to spend some time within the 1560-1600 region before a fall is seen towards 1540 or lower in the longer run.
Silver (17.81) has risen from levels below 17.50 and has some scope of re-testing 18.5 levels in the near term. But charts have scope for a fall towards 17 or lower in the longer run.
Copper (2.5525) is stable. Crucial support is seen near 2.50 from where a bounce is expected in the coming week. Overall we could see some recovery in the China markets in the near term.
FOREX
Dollar Index (97.91) dipped below 98 but while above 97.75, there is scope for a rise towards 98.25/35 in the near term.
Euro (1.1025) has moved up a bit and could rise towards 1.1060 in the near term. Immediate support at 1.10 is likely to hold just now before eventually breaking lower towards 1.09.
Dollar-Yen (109.06) is stable near 109 levels but has scope for a further fall towards 108 in the near term before it moves up again in the medium term.
EURJPY (120.24) is trading near 120 and if it falls lower again, we may expect an initial fall towards 119 or lower. Watch price action near 120.
Pound (1.3097) has moved up and could re-test 1.32 on the upside. While the longer term trend looks bullish, we may expect a slow rise in the medium term. A break below 1.30 is needed to turn bearish on Pound.
Aussie (0.6714) has dipped further. 0.6650 is the weekly support from where a bounce is expected. Near term is bearish.
Dollar-Rupee (71.4925) closed just near 71.50 after trading higher. A sustained trade above 71.50 could take it higher towards 72 in the near term. Immediate view is bullish.
INTEREST RATES
The US Treasury Yields remains subdued and keeps our bearish view intact. A further fall is likely in the coming days. The German yields have declined below their key supports and can move down further if they fail to bounce-back from current levels. The 10Yr GoI can dip in the near-term to test its key support and then can reverse higher again.
The US 2Yr (1.40%), 5Yr (1.40%), 10Yr (1.58%) and 30Yr (2.05%) Treasury yields continues to trade lower. As mentioned yesterday, the outlook is bearish and the 10Yr can fall to 1.53%-1.50% and the 30Yr can test 2%-1.9% on the downside in the near-term.
The German 2Yr (-0.66%), 5Yr (-0.62%), 10Yr (-0.41%) and 30Yr (0.09%) yields have declined further across tenors. . The 30Yr has declined below its key support level of 0.13% and can test 0.07% now a break below which can drag it further to 0%. The 10Yr on the other hand can fall to -0.50% while it remains below -0.40%.
The 10Yr GoI (6.5598%) remained stable above 6.55% yesterday and keeps the chances of seeing 6.52%-6.51% on the downside. A break below 6.55% can trigger this fall. However, as mentioned yesterday, we expect the yields to reverse higher again from the 6.52%-6.51% support region.
