STOCKS
The plunge in the WTI Crude Oil prices yesterday is weighing on the equities. The global indices have declined yesterday. However, the indices have key near-term support which is likely to hold and keep the near-term bullish view intact. Dow has support near 23000 and DAX has at 10450-10400. Nikkei has dipped but is likely bounce from the 19200-19000 support zone. Shanghai has room to dip further towards 2800 before bouncing back. Sensex and Nifty can dip today following the other markets.
Dow (23650.44, −592.05, -2.44%) has come-off below 24000 again but might find support near 23000. While above 23000 the chances are still alive for the Dow to test 24500-25000 on the upside in the near-term and then reverse lower again. Only a break below 23000 will negate the chances of the above mentioned rise and in turn will drag the index lower from here itself.
DAX (10675.90, +50.12, +0.47%) has bounced-back well from the low of 10444 yesterday. Our bullish bias to see a break above 10700 and a rise to 11000-11300 remains intact. As mentioned yesterday, 11000-11300 is a strong resistance from where a fresh leg of fall targeting 10000 on the downside is possible. The price action in the 11000-11300 region will need a close watch.
Nikkei (19358.77, −310.35, -1.58%) has come-off below 19500 again but is likely find support in the 19200-19000 region and bounce-back again towards 20000. While above 19000, the bias is bullish to see a test of 20300-20500 in the near-term. The chances of the upside extending beyond 20500 towards 21500 will have to be seen.
Shanghai (2822.65, −29.91, -1.05%) has failed to breach 2850 and has dipped below 2825. A test of 2800 is possible while it sustains below 2825. A sideways consolidation between 2800 and 2850 looks a possibility before our preferred rise to 2870-2880 and 2900 happens.
Nifty (9261.85, -4.90, -0.05%) has come-off after testing 9400 yesterday. A break below 9200 today can drag it to 9000 and will reduce the chances of seeing 9600-9700 on the upside that we had indicated yesterday. Also, a strong rise past 9400 is needed to move further higher.
Similarly, Sensex (31648, +59.28, +0.19%) will need a sustained break above 32000 in order to rise to 33000-34000. While below 32000, a dip to 31000 and even 30000 looks likely in the near-term.
COMMODITIES
WTI May futures ($1.67, expires today) faced major sell off yesterday, falling to negative levels as buyers faced lack of storage capacity for physical deliveries. However, the June futures remain unaffected and continue to trade above $20. June futures for both Brent and WTI are likely to have limited scope on the downside and could remain stable near current levels. Gold looks bullish for the very near term but could soon face selling pressure that may take it down sharply towards 1640. Silver looks bearish. Copper is also likely to trade lower.
Brent (25.70, June futures) has fallen and could test $25-23 in the near term before bouncing back again towards $30. Nymex WTI (21.54, June futures) has risen slightly but could have scope for testing $19-17 before rising higher.
Gold (1704.10) is stable and has moved up slightly. As mentioned yesterday, Gold has room to fall towards 1640 before bouncing back from there. A corrective upmove from current levels could take Gold higher to 1720/25 levels but that could be temporary as medium term bearishness could remain intact while below 1760/80.
Silver (15.44) is slightly up. Immediate resistance is seen near 16 on the daily candles and while that holds, Silver looks bearish for a decline towards 14.5-14.0 in the medium term. View is bearish while below 16.
Resistance near 2.35/40 has held well on Copper (2.2705). A test of 2.25-2.20 is on the cards for the near term. A bounce from 2.20 could be expected taking price back towards 2.30.
FOREX
Dollar Index could move up that could trigger a dip in Euro. USDJPY could move higher too if the Dollar Index rises. Aussie, Yuan and Pound look bearish. USDINR could remain stable within a near term broad range.
Dollar Index (100.19) has risen and could rise towards 101 if the rising momentum continues to hold. We may expect a test of 101 before again coming off towards 99 from there. Only a break on either side of 99-101 range may trigger further direction for the medium term.
Euro (1.0832) has resistance near 1.09 which if holds could take Euro down towards 1.0750 in the near term.
Dollar-Yen (107.56) is trading just above support at 107.50 which needs to produce a sharp bounce to take the pair higher from current levels. Failure to bounce from here could make the pair vulnerable to a fall towards 107 or lower. Preference is to see a bounce from here.
EURJPY (116.59) has dipped but is likely to remain above 116 just now. A dip below 116 could be crucial and could trigger a near term fall towards 114 (less likely for now while above 116).
Aussie (0.6303) has immediate resistance near 0.65 which seems to be holding well for now. A fall towards 0.62 could be on the cards.
Pound (1.2399) has been trying to break below 1.24 since the last 3- sessions. A fall from here could take Pound towards 1.22-1.20 in the near term. Only an immediate bounce above 1.25/26 could negate a fall towards 1.20.
USDCNY (7.0880) has risen slightly and could move higher towards 7.10/11 before coming off from there. A weaker Yuan could be negative for USDINR and other EM currencies.
USDINR (76.5450) was stable near 76.50 yesterday trading within the 76.40-76.70 region. We may expect a broad range of 76.30-76.80 (revised from 76.70 mentioned yesterday) to hold for the next 1-2 sessions. We would be cautious for a break on the upside as that may trigger a rise towards 77.0-77.5.
INTEREST RATES
The US Treasury yields continue to trade lower and have room to fall further. The bearish outlook is intact. The German yields have bounced across tenors. But they have key resistances ahead which can cap the upside and drag them lower again. The 10Yr GoI has declined further in line with our expectation. The bearish outlook is intact and the 10Yr GoI can fall further.
The US 2Yr (0.20%) and 5Yr (0.35%) Treasury yields remain lower and stable while those at the far-end, the 10Yr (0.61%) and 30Yr (1.22%) have further in line with our expectation. The 10Yr has come-down towards 0.60%-0.58% as expected and can extend the fall to 0.40% on a break below 0.58%. Similarly, the 30Yr can extend the current fall to 1.1% on a break below 1.2%.
The German 2Yr (-0.70%), 5Yr (-0.60%), 10Yr (-0.45%) and 30Yr (-0.04%) yields have bounced across tenors yesterday. However, the broader bearish view remains intact. The 10Yr can face resistance at -0.40%. While below -0.40%, a fall to -0.55% and -0.60% is still possible. The 30Yr on the other hand is vulnerable to test -0.20% on the downside while it remains below 0%.
As expected the 10Yr GoI (6.2092%) has extended the fall towards 6.20% yesterday. The bearish outlook is intact. While below 6.30%, a test of 6.10% and even 6%-5.95% can be seen now.
