STOCKS
The bounce-back move in the Dow, Sensex and Nifty seems to lose steam. The resistances on these indices mentioned yesterday are holding well for as expected. While below the resistances at 28000 (Dow), 11350 (Nifty), 39000 (Sensex) the Dow, Nifty and Sensex will continue to remain vulnerable to fall again. DAX will have to sustain above 12800 to keep the chances of seeing a further corrective rise. Nikkei is hovering at the upper end of its range and will have to be seen if it gets a strong follow-through rise from here. Shanghai remains stable and could attempt to move up within its sideways range.
The Dow (27452.66, −131.40, -0.48%) failed to see a strong follow-through rise to sustain above 27500. The 27500-28000 resistance is holding well as expected. While below 28000, the view is negative to see a fall to 27000-26500 again. As mentioned yesterday, a strong break above 28000 is needed to negate the above mentioned fall.
DAX (12825.82, −45.05, -0.35%) sustains above 12800 but seems to lack momentum to move up strongly. Inability to sustain above 12800 can drag it to 12400 again and will keep intact the bearish view of seeing 12000 on the downside. While above 12800, a test of 13000 and even 13200 is possible. But only a strong rise past 13200 will turn the outlook bearish and negate the chances of the fall to 12000 completely.
Nikkei (23509.77, −29.33, -0.12%) continues to hover at the upper end of its 23000-23500 range. A strong rise past 23700 from here is needed to strengthen the case to test 24000 on the upside. We will have to wait and watch. However, as we have been mentioning for some time 24000-24500 is a strong resistance zone that can cap the upside and a sharp corrective fall is possible from there.
Shanghai (3242.94, +18.58, +0.58%) is stuck in between 3200 and 3250. Our view mentioned yesterday remains intact. A strong break above 3250 and a subsequent rise past 3300 will reduce the danger of seeing the extended fall to 3160-3150 that we had cautioned earlier. For now the 3180-3450 range remains intact and the index is attempting to move up within this range.
The 11250-11350 resistance zone on the Nifty (11222.40, -5.15, -0.05%) mentioned yesterday is holding for now. We reiterate that a strong rise past 11350 is needed to become bullish for seeing 11800 levels again. While below 11350, the view is negative to revisit 11000-10800 levels in the coming days.
Sensex (37973.22, −8.41, -0.02%) has come-off from the high of 38235.94. The first resistance level of 38400 mentioned yesterday is holding well as of now. Sensex will have to sustain above 37300 in order to keep the chances alive of testing 38400 and 39000 on the upside. As mentioned yesterday only a strong break above 39000 will turn the outlook bullish. While below 39000 we will be looking for a fall to 36500-36000 in the coming weeks.
COMMODITIES
The American Petroleum Institute (API) reported on Tuesday a draw in crude oil inventories of 0.883 mln barrels for the week ended 25th September against analyst expectation of 2.325mln barrels. Crude prices are trading lower, especially the WTI which seems to be falling sharper than the Brent. But downside could be limited to respective supports. Gold could face rejection from immediate levels of 1900 or slightly higher from 1920 in the near term followed by a fall towards 1840 or lower in the medium term. Gold is bearish while below 1920-1900. Silver may range sideways but while below 24.50, we may expect a fall to 23. Copper is bullish while above 3.
Brent (41.24) and Nymex WTI (38.99) both trade slightly lower today but the fall in WTI seems to be sharper than that seen on the Brent. The decline could be limited to 39.32 (Brent) and 37.50-36.43 (WTI) before another bounce is seen.
Gold (1900.3) is trading at important level in the very near term from where if a rejection is seen, could take the prices down to 1840 or lower in coming 5-6 sessions. Above 1900, we may expect a test of earlier support turned resistance at 1920. Note both 1900 and 1920 are crucial from where a possible rejection could be seen. We would be cautious to see a dip soon.
Silver (24.18) did rise towards our expected 24.0-24.50 zone as mentioned yesterday but could face a short rejection from these levels that could take it down to 23. While below 24.50, view would be to see another dip.
Copper (3.0105) has managed to rise above 3.0 and while that sustains, we may expect a rise towards 3.05/10 in the near term. In the longer run, we keep our target of 3.15 intact. Watch price action while above 3.0
FOREX
Currencies look mixed. Dollar Index could rise to test 95.15 which could lead to a fall in Euro to 1.1680 and EURJPY to 123. Pound and Aussie could be ranged too for now within 1.26-1.30 and 0.72-0.70 respectively. USDCNY looks bearish for the near term. Dollar-Rupee may fall from 74 but trade within the broad range of 74.0-73.50.
Dollar Index (93.94) is trading higher today after a short pause seen yesterday. We maintain our upside target of 95.15 for the near term.
Euro (1.1731) bounced back sharply but while below 1.1778, we may expect a dip back towards 1.1680 or even lower as the Dollar Index heads towards 95.15.
EURJPY (123.86) may not see a rise above 124.0-124.40 in the near term and instead it could come off towards 123 again in the next 1-2 sessions.
Dollar-Yen (105.47) has risen slightly. A test of 105.75-106.00 on the upside looks possible for the next few sessions.
Aussie (0.7114) tested 0.7150 in line with our expectation of a rise to 0.7120 mentioned yesterday. But we may see a corrective dip from here towards 0.7080 in the near term.
Pound (1.2844) looks ranged within the broad 1.26-1.30 region and we may expect this range to hold for the near term.
USDCNY (6.8130) has dipped and holds well below 6.85 for now. A test of 6.80/78 looks possible in the near term.
USDINR (73.8575) could trade within the 74.0-73.50 region. While 74 could cap the upside for now, an initial fall to 73.75 could be seen before testing 73.50.
INTEREST RATES
The US Treasury yields continue to trade stable. The near-term view remains unclear on whether the yields can see one more rise before resuming their broader downtrend or will fall from here itself. We will have to wait and watch for a few days to get a clear cue. The German yields have dipped further and are keeping our bearish view intact. A further fall is likely in the coming days. The 10Yr GoI has dipped below 6.05% and will have to sustain above 6.02% to keep the chances alive of seeing 6.10% on the upside.
The US 2Yr (0.13%), 5Yr (0.26%), 10Yr (0.65%) and the 30Yr (1.43%) Treasury yields remain stable. The 10Yr could gradually dip to 0.60%. A break below 0.60% will be bearish to see 0.50% on the downside and will also negate the chances of any strong rise. 1.40% will be a crucial level to watch on the 30Yr which if broken will open doors for a fall to 1.30%-1.25%. While above 1.40%, there are chances for the 30Yr to see a rise to 1.50%-1.60% and then see a fresh fall.
The German 2Yr (-0.72%), 5Yr (-0.73%), 10Yr (-0.55%) and the 30Yr (-0.12%) yields have dipped further and are keeping our bearish view intact. The 10Yr is heading down towards -0.60% and the 30Yr to -0.20% in line with our expectation. A break below -0.60% on the 10Yr and -0.20% on the 30Yr will see the fall extending to -0.70% (10Yr) and -0.35% (30Yr) over the medium term.
The 10Yr GoI (6.0378%) has failed to sustain the break above 6.05% and has dipped yesterday. 6.02% will be an important immediate support to watch now. A break below it can drag the 10Yr GoI lower to 5.98% again and will also reduce the chances of seeing 6.10% on the upside that we had been expecting.
