STOCKS
Equities remain mixed as the concerns of the coronovirus continue to weigh on the market. DAX hovers near a key resistance. It is not gaining to breach this crucial hurdle which is needed to move further higher. Nikkei has tumbled within its sideways range and can move down to the lower end of its range. Sensex and Nifty has declined further and looks vulnerable to break their near-term supports and extend the fall for the rest of the week. Shanghai has risen further and looks relatively stronger in the lot. The US markets were closed yesterday on account of a public holiday.
Dow (29398.08) was closed yesterday.
Though DAX (13783.89, +39.68, +0.29%) hovers higher near 13800, it continues to lack momentum to breach this crucial hurdle. As mentioned yesterday, while this resistance holds, a sideways consolidation between 13600 and 13800 is possible in the near-term. A strong break above 13800 is needed to bring in fresh bullishness and take the index higher to 14000 and even higher levels.
Nikkei (23259.57, −263.67, -1.12%) has declined further sharply breaking below the key intermediate support level of 23600 yesterday. The 22800-24140 sideways range remains intact and a test of 23000-22800 (the lower end of the range) can be seen this week.
As mentioned yesterday, Shanghai (2978.65, −4.98, -0.17%) has risen to 2975 and continues to look strong. 2950 can be a good support now. While above this support a further rise to 3050 and even higher levels looks possible in the coming weeks.
As expected, Nifty (12045.80, -67.65, -0.56%) declined below 12100 and is likely to test 12000 in line with our expectation. A strong break below 12000 will be very bearish to see test of 11900-11800 again which in turn will completely negate the chances of seeing 12400-12500 on the upside.
Sensex (41055.69, -202.05, -0.49%) has dipped to test 41000 as expected. 40900 will be an important support to watch today. A break below it can drag Sensex lower to 40500 and 40200 in the coming days.
COMMODITIES
Although news of coronavirus have reduced but caution still prevails. While commodity prices see some recovery, it may take some time for an immediate trend reversal. Silver and Copper looks bullish while we would watch near term resistance on Gold.
Brent (57.11) and Nymex WTI (52.02) have dipped from levels seen yesterday but look overall bullish for the near term for a test of 58 and 54 respectively on the upside from where a dip could be expected.
Gold (1589.20) trades higher and could re-test 1600 on the upside. But it would be important to see if the price reverses from there or rises above 1600 in the next few sessions. Note immediate resistance on the daily candles near 1596.
Silver (17.85) is rising from near term support levels of 17.50 and is likely to move up targeting 18.25-18.50 in the near term.
Copper (2.6160) is stable just now but has scope for a rise towards 2.65 in the near term.
FOREX
Dollar strength continues while Euro trades above 1.089. Dollar-Yen is stable amidst a stronger Dollar and looks bearish with upside limited to 110.50. EURJPY has fallen as expected and looks further bearish for the near term. Pound, Rupee and Aussie could be stable for the near term.
US Dollar Index (99.19) is likely to move higher towards 99.50/60 while it sustains above 99 in the near term. As mentioned earlier, we may see a reversal from anywhere in the 99-100 zone which could form a near term top.
Euro (1.083) has scope for a fall towards 1.08. Only if Dollar Index moves higher to test 100, we may look for a break below 1.08 in the near term. Overall markets await a bounce from 1.08 or lower in Euro. Watch price action near 1.08.
Dollar-Yen (109.67) is stable, unable to decide on which direction to take from here. On the charts there is limited room for upside towards 110.50 while the broader direction points to a fall towards 108.00 in the coming sessions.
EURJPY (118.80) has been falling as expected and unless an immediate reversal is seen, it looks bearish for a fall towards 118-117 in the medium term.
Pound (1.2999) is trading around the 1.30 level but while above 1.28, there is scope for bullish possibilities towards 1.32+ levels in the near term.
Aussie (0.6687) has dipped again and not been able to rise above 0.6750. This could be a concern in the near term. While we may expect some sideways trade within 0.6650-0.6750 region, a fall below 0.6650 could be vulnerable for a further fall in the near to medium term. Watch price action within the mentioned range.
USDCNY (6.9946) has risen back to levels above 6.99 but the upside is likely to be capped near 7.00-7.02 for now.
USDINR (71.2950) tested 71.50 yesterday before coming down from there. While below 71.50, there is scope for a range trade between 71.50-71.16 with possible dip towards 71.10/00 in the near term.
INTEREST RATES
The US Treasury yields have come down on early trades today and is keeping our bearish view intact. The German yields remain mixed and need a close watch to see if they are sustaining above their near-term supports. The 10Yr GoI has bounced from a key support yesterday but has to breach a key near-term resistance in order to move further higher in the near-term.
The US 2Yr (1.41%), 5Yr (1.39%), 10Yr (1.55%) and 30Yr (2.0%) Treasury yields have come-off across tenors. The broader negative view remains intact. As mentioned yesterday, the 10Yr can test 1.50% and the 30Yr can break 2% and fall to 1.95%-1.90% in the coming days.
The German 2Yr (-0.66%), 5Yr (-0.62%), 10Yr (-0.40%) and 30Yr (0.11%) yields remain lower and stable. . The near-term outlook is mixed. Our view remains the same. The 10Yr needs to sustain above -0.40% in order to avoid a fall to -0.45% and -0.50%. The 30Yr on the other hand can test 0.03% and even 0% in the near-term while it remains below the 0.15%-0.17% resistance zone.
The 10Yr GoI (6.3895%) has bounced after testing 6.35% yesterday. It has to breach 6.40% now to get a breather and move further higher to 6.45%-6.48%. Inability to breach 6.40% can drag it lower to 6.35% again and will keep the 10Yr GoI vulnerable to test 6.30% and 6.28% on the downside.
