STOCKS
Dow has come-off below 28000 after the US President Donald Trump’s decision to call-off the stimulus negotiation talk. Inability to bounce-back above 28000 today will bring back the danger of seeing a fall to 27000-26500 again. DAX sustains above 12800 and could up to 13000-13200 and then can reverse lower again. Nikkei retains its 23000-23500 range. Sensex and Nifty have room to test their crucial resistances at 39700-40000 and 11700 respectively in the coming days. The price action at these resistances will need a close watch to see if the current rally extends or the indices reverse lower again.
Dow (27772.76, −375.88, -1.34%) has come-off below 28000 again and keeps alive the danger of seeing a fall to 27000. A strong rise past 28000 will necessarily be needed to be seen today in order to see the rise to 28500-29000 that we had mentioned yesterday. We will have to wait and watch the price action for the next few days to get a clear cue on whether the Dow will go up to 29000 or fall to 27000-26500 from here.
DAX (12906.02, +77.71, +0.61%) sustains above 12800 and keeps intact the chances of testing 13000-13200 on the upside. However the upside is likely to be capped at 13200 as the index seems to lack momentum. As such we can expect the DAX to reverse lower anywhere from the 13000-13200 region.
Nikkei (23425.91, +113.77, +0.49%) is holding below 23500. The 23000-23500 range remains intact. As we have been mentioning for some time, a breakout on either side of 23000-23500 will decide whether the Nikkei will go up to 23700-24000 or fall to 22500.
Shanghai (3218.05) is closed till Thursday (08-Oct-20) this week on account of public holidays.
Nifty (11662.40, +159.05, +1.38%)has risen and is poised near the crucial resistance level of 11700. The price action today will need a close watch. As mentioned yesterday, a strong and sustained rise past 11700 will be needed to take the index up to 12000 levels again. Inability to breach 11700 can trigger a fall to 11500-11400 again.
Sensex (39574.57, +600.87, +1.54%) is heading towards 39700-39800 in line with our expectation. As mentioned yesterday, 39700-40000 is a crucial resistance zone. A strong break above 40000 is necessarily needed to keep the current uptrend intact and also to avoid a fall-back to 39000-38000.
COMMODITIES
Commodity prices have come down and trade lower, indicating an extension of the fall for a few more sessions. Crude has crucial resistance which if holds could produce a fall in the near term. Gold trades below 1920 and looks bearish for a fall towards 1860-1840 along with Silver that could test 23. Copper may fall towards initial support at 2.90 which if breaks could lead to a further decline towards 2.80. Overall view looks bearish for the above mentioned commodities.
Brent (41.91) and Nymex WTI (39.82) have both risen from levels seen yesterday but have dipped slightly from its intra-day high of 42.04 and 39.82 respectively. WTI has immediate trend resistance on the daily candles at 40 which if holds could push price down to 37.50 in the near term. Similar resistance is seen on the Brent at 42.50 which if holds could prevent further rise and bring it down towards 39.30-37.50 eventually. Watch price action near respective resistances to see if it manages to break higher or declines from here. Price movement in the next 1-2 sessions could be crucial.
Gold (1883.90) and Silver (23.53) have dipped from levels seen yesterday and in line with our expectation of a fall to 1880-1860 and 23.50 mentioned yesterday. View is bearish for Gold towards 1860-1840 in the near term. Silver may also fall towards 23 or slightly lower in the next few sessions.
Copper (2.9390) has dipped to test initial support at 2.90 a break below which could trigger a sharper fall towards 2.80 in the near term. Thereafter, we may expect a bounce back towards 3.0-3.05 in the medium term.
FOREX
Dollar Index bounced back from 93.34 and dragged down Euro, EURJPY, Aussie, Pound and Rupee. We may expect the dip in the above mentioned currencies to hold for a few more sessions before a recovery is seen. On the Dollar Index, we expect are-test of 94.0-94.15 soon.
Dollar Index (93.86) rose from 93.34 instead of moving lower towards 93.0-92.70 as mentioned yesterday. A re-test of 94.0-94.15 could be on the cards for the near term.
Euro (1.1728) has fallen from 1.1812 and looks bearish for a further decline towards 1.1680 for the near term. While Dollar trades higher, downward pressure on Euro remains intact.
EURJPY (123.92) has fallen from resistance near 124.70/75 and while that holds, we may expect a dip towards 123-122.39 in the near term.
Dollar-Yen (105.65) is stable. We continue to look for the 105-106 range to hold in the near term.
Aussie (0.7118) dipped from 0.72 instead of breaking higher. We may expect the range of 0.70-0.72 to hold for the near term.
Pound (1.2882) has fallen sharply unable to break above 1.30. Immediate support is now visible near 1.2717 from where a bounce back is possible. Immediate view is bearish for a test of 1.2717.
USDINR (73.4550) has crucial resistance at 73.50 which if breaks could take it higher towards 73.75 or upwards contrary to our expectation of a fall towards 73.00-72.90 that we have been mentioning for the last few sessions. Yesterday, the RBI bought Dollars at 73.15 preventing further appreciation of the Rupee which is a cause of concern to see if the pair manages to fall back towards 73.10/00 today or break above 73.50 to re-test 73.75/90. We would wait to decide on further direction while charts have room for a fall to 72.50-72.00. The rise in Dollar Index and respective decline in Euro could be in favor of a negative Rupee.
INTEREST RATES
The US President Donald Trump calling off the stimulus negotiation talks has dragged the Treasury yields lower from levels seen yesterday. However, we still see chances of a near-term rise in the far-end yields (10Yr and 30Yr) before the long-term downtrend resumes. The German Yields can trade stable in the near-term and then can resume its downtrend eventually. The 10Yr GoI sustains well above 6% and is bullish to test 6.08%-6.10% now.
The US 2Yr (0.15%) and the 5Yr (0.31%) Treasury yields remain stable while the 10Yr (0.74%) and the 30Yr (1.54%) have come-off slightly. Our view remains the same. The 30Yr can test 1.60% and even 1.72% (if it manages to breach 1.60% decisively) in the short-term and then can resume the long-term downtrend. The 10Yr can test 0.80%/-0.90% if it manages to see a sustained break above 0.74% and then can reverse lower.
The German 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.51%) and the 30Yr (-0.09%) yields can remain stable in the near-term within their downtrend. The broader bearish view remains intact and we expect the 10Yr to fall to -0.60% and the 30Yr to -0.20% eventually in the coming weeks.
The 10Yr GoI (6.0264%)sustains well above 6% and has moved up further. While above 6%, the outlook is bullish to see a test of 6.08%-6.10% on the upside in the coming days.
