STOCKS
Equities look mixed. The bounce in the Dow retains the bullishness but need to be seen if it can continue to sustain above 29000. DAX is moving down but at a slower pace which keeps alive the chances of reversing higher again. Sensex and Nifty looks vulnerable to fall further. Shanghai has room to move further higher but is coming closer to a crucial resistance zone that can cap the upside and trigger a corrective fall in the coming days. Nikkei is closed today.
The support at 29000 mentioned yesterday on the Dow (29102.51, -277.26, -0.94%) has held very well and the index has bounced. While above the 29000-28900 support zone, the bullish outlook will remain intact for seeing a rise to 29750-30000. As mentioned yesterday, only a strong break below 28900 will negate the bullishness and will turn the outlook negative for a fall to 28500 again.
DAX (13513.81, -61.01, -0.45%) has been inching lower to test 13400 as expected. But the pace of fall has been much slower which keeps the chances high of the index reversing higher again from 13400. Such a bounce will keep the possibilities alive of seeing break above 13600 and an extended rise to 13750. We will have to wait and watch. A strong break below 13400 is needed to strengthen the downmove and drag the index lower to 13200-13000 again.
As expected Shanghai (2907.24, +16.75, 0.58%) has moved higher to test 2900 and is heading up towards 2925. Cluster of resistances are poised in between 2925 and 2950 which can halt the current upmove. A corrective from the 2925-2950 region to 2900-2875 is possible as we move towards the end of this week.
Nifty (12031.50, -66.85, -0.55%) fell to test 12000 as expected and is managing to sustain above this psychological levels. The bias remains negative and the index looks vulnerable to break 12000 and fall to 11900-11800 in the near-term.
Sensex (40979.62, -162.23, -0.39%) on the other hand has an immediate resistance in the 41250-41260 region. While below this resistance, a fall to 40500 can be seen in the near-term and the index is likely to remain under pressure to revisit 40200-40000 levels on the downside.
Nikkei (23685.98, −142, -0.60%) is closed today.
COMMODITIES
News of rapidly spreading coronavirus seems to be resurfacing impacting crude oil demand and dragging oil prices lower. Demand for Chinese energy seems to be falling on one hand and difficulty to manage supplies amidst negative demand is concerning for Russia and Saudi Arabia. Gold looks stable and Silver has room to move up. Copper may be bullish just now within a longer term broad range.
Nymex WTI (50.26) is up slightly while Brent (54.09) has dipped to test support near 54. Brent is trading just above crucial support levels of 53.50-53.65 and if that breaks further, we may have to consider a sharp fall towards 50-45 in the medium term. Preference would be to see a bounce from 53.50 at least that could lead to a pullback in prices towards 60. WTI has similar support at 50 which needs to hold to take price higher towards 54-56; else a sharp decline could be on its way taking it down towards Dec’18 lows near 42. Watch crucial supports for the next few sessions for confirmation.
Gold (1571.70) is almost stable just now but has decent chances of rising back towards 1600 in the near term. Overall trade in the 1540-1600 region looks likely for the near term.
Silver (17.73) is trading above trend support on the daily candles and has enough room towards 18.50-18.75 on the upside.
Copper (2.5840) has important support on the long term charts at 2.50 which was briefly tested last week and while that holds, we may expect a rise towards 2.65 in the near term. Broad trade range of 2.65-2.50 is likely to hold in the near term.
FOREX
US Dollar Index (98.86) has been moving up sharply and could test monthly resistance near 99. Note that 99 is a crucial immediate resistance from where a rejection is expected. Even if 99 break to the upside the rise in index could be limited to 100 before a sharp fall is seen in the medium term.
Euro (1.0914) could test 1.09 on the downside before bouncing back towards 1.11-1.12 in the longer run. View is bearish for the near term.
Dollar-Yen (109.86) has risen slightly. There is room for a rise towards 110.50 before a dip back towards 108.50 is seen.
EURJPY (119.92) is likely to fall towards 119 in the medium term. View is bearish.
Pound (1.2916) has room to fall towards 1.28 before a bounce is expected in the medium term. View is bearish.
Aussie (0.6704) could have some scope of falling towards support near 0.66 before bouncing back to 0.68-0.70 in the medium term.
USDCNY (6.9752) is likely to trade in the 7.04-6.95 region for the next few sessions.
USDINR (71.2950) needs to break on either side of the 71.50-71.08 region to give clarity on further direction. However, interim support is seen near 71.16 which could hold for the day and keep Dollar-Rupee above 71.16 with a possible test of 71.50 on the upside.
INTEREST RATES
The increasing death toll due to corona virus attack is keeping the market concerned. As a result, the US Treasury yields continue to trade lower and have key supports coming up that need to hold in order to avoid another fresh fall. The German yields have dipped further thereby reducing the chances of a rise that we had been looking for last week. They can fall further in the coming days. The 10Yr GoI can consolidate in the near-term before resuming the downtrend.
The US 2Yr (1.39%), 5Yr (1.39%), 10Yr (1.57%) and 30Yr (2.04%) Treasury yields continue to trade lower. . The chances of seeing a rise that we had been expecting last week is getting reduced. As mentioned yesterday, the 30Yr can test 2% and the 10Yr can dip to 1.50%. A break below these levels, 2% on the 30Yr and 1.50% on the 10Yr will completely negated the chances of seeing any further rise. Such a break will drag the 30Yr to 1.90%-1.85% and the 10Yr to 1.30%-1.25% in the coming weeks.
The German 2Yr (-0.65%), 5Yr (-0.62%), 10Yr (-0.41%) and 30Yr (0.11%) yields have dipped further across tenors yesterday. . The 10Yr has dipped below -0.40% and can test -0.50% and even -0.60% while it remains below -0.40%. The 30Yr on the other hand is heading towards its crucial support level of 0.07% which will need a close watch.
The 10Yr GoI (6.4428%) sustains above 6.40% and can consolidate between 6.40% and 6.50% in the near-term. However, the broader picture is bearish and we expect the 10Yr GoI to break below 6.40% and fall to 6.37% and 6.35% eventually.
