STOCKS
Dow and DAX remain stable and are indicating some chances of seeing a near-term corrective bounce this week. However, they will have to break above their immediate resistances in order to avoid a much deeper fall from here. Dow has resistance at 27200 and for DAX it is at 11800. Nikkei is managing to hold above 23000 and need to see if it can rise past 23500 from here. Shanghai is heading towards the lower end of its 3180-3450 range. Sensex and Nifty will also have to move up strongly above 11800 and 40200 respectively from here to negate the danger of a further fall.
Dow (26501.60, −157.51, -0.59%) fell on Friday but has recovered from the low of 26143.77. The bearish view of seeing 26000 on the downside remains intact. However, a corrective bounce to 27000-27200 cannot be ruled out before the fall to 26000 happens. As mentioned last week, the Dow has to sustain above 26000 necessarily and rise above 27500 in order to avoid a much deeper fall to 25000. We will have to wait and watch.
DAX (11556.48, −41.59, -0.36%) is managing to hold above 11400. A corrective rise to 11800 and even 12000 is possible on a strong rise past 11600. We will have to wait and watch. As mentioned last week a strong break below 11200 will increase the danger of the fall extending to 10500-10200.
Nikkei (23296.04, +318.91, +1.39%) tested 23000 on Friday and has bounced-back well from there. The crucial support at 23000 is holding well as of now. It will have to be seen if Nikkei can break above 23500 and avoid the fall to 22500-22000 that we had cautioned last week.
Shanghai (3222.15, −2.39, -0.07%) has reversed lower again and is keeping alive the chances of testing 3200-3180 on the downside. We expect Shanghai to reverse higher from the 3200-3180 support zone and keep the 3180-3450 sideways range intact.
Nifty (11642.40, -28.40, -0.24%) broke below 11600 on Friday but had bounced back from the low of 11543.45. A strong rise above 11800 from here will be needed to completely negate the chances of seeing 11500-11350 on the downside and also to keep the 11600-12100 range intact. We will have to wait and watch.
Sensex (39614.07, −135.78, -0.34%)on the other hand has bounced-back from the low of 39241.87 on Friday. A strong break above 40200 will be required to avoid the fall to 39000-38500 that we had mentioned last week.
COMMODITIES
Commodities trade lower and overall look bearish globally. Crude prices have fallen sharply and look further bearish for the near to medium term. While we watch interim supports at 36.40/30 and 33 on Brent and WTI respectively, our bearish targets of 34.86 (Brent) and 30 (WTI) is on the cards for the medium term.
Brent (36.84) and Nymex WTI (34.65) have fallen sharply in line with our expectation and seems to be under strong bearish influence just now. We may expect a fall towards 34.86 on Brent and 30 on WTI if the momentum sustains. Note interim support at 36.40/30 on Brent and 33 on WTI below current levels.
Gold (1883.20) has risen slightly but may hover around 1880 for sometime. View is biased to see a fall towards 1860-1840 in the near to medium term.
Silver (23.91) has moved up instead of falling towards 23 and lower contrary to our expectation. We would keep a close watch on price action near 24. A rejection from 24 would keep intact our bearish possibilities intact but a rise above 24, if seen and sustained would reverse our near term view.
Copper (3.0465) trades lower today and has scope of testing 3.00 before a possible rise is again see from there targeting 3.15/20. Immediate view is bearish
FOREX
Weakness in Euro could be negative for the Rupee today taking it higher towards 74.25-74.50/60. Dollar Index and Dollar Yen may move up towards 94.50 and 105 before a dip is seen from there again in the medium term. EURJPY, Aussie and USDCNY look weak just now and could continue to trade so for the near term.
Dollar Index (94.06) has just broken above 94 and while the rise sustains, the index could target 94.70 in the near term. Immediate view is bullish while above 94.
Euro (1.1640) has dipped well below 1.17 on a stronger Dollar and could come down to test immediate support at 1.16 in the near term. Immediate view is bearish towards 1.16 before a bounce from there is seen.
EURJPY (121.83) has fallen as expected and could see some more dip towards 120.50 in the next few sessions from where a bounce is expected. Immediate view is bearish.
Dollar-Yen (104.65) has immediate resistance near 105.0-105.30 which if holds could keep the pair lower for the near term. Watch for a possible test of mentioned resistances while the Dollar trades strong. Thereafter a fall in both the Dollar Index and Dollar Yen could be seen together.
Aussie (0.7017) is trading near important support at 0.70 and need to hold above this in order to move up towards 0.71 or higher again in the near term. Failure to sustain above 0.70 (looks more likely) could be bearish for Aussie towards 0.69/68 soon. Watch price action near 0.70 just now.
Pound (1.2934) has important support at 1.2875 below current levels which could hold and produce a bounce back towards 1.30 and higher soon. Failure to bounce from here immediately would make the Pound vulnerable to a sharper fall.
USDCNY (6.6865) trades sharply lower and may fall further towards 6.65. Immediate view is bearish.
USDINR (74.1050) already saw a sharp break above 74 and a higher closing on Thursday. The rise may extend upwards targeting 74.25 or even 74.50/60 in the near term before a fall from there is seen again. Overall view is bullish for the pair today.
INTEREST RATES
The US Treasury yields have risen further on Friday following the US Federal Reserve reducing the minimum loan size for small business. The Treasury yields have room to test their crucial resistances in the near-term and then can see a fresh fall. The US Federal Reserve meeting is due on Thursday this week. The German yields remain lower and keep our bearish view intact. We expect the yields to fall further. The 10Yr GoI has moved up as expected and is likely to extend the upmove in the coming days before resuming the overall downtrend.
The US 2Yr (0.15%) Treasury yield remains stable while the 5Yr (0.38%), 10Yr (0.86%) and the 30Yr (1.65%) have risen further especially sharply at the far-end. Our view of seeing 0.90% (10Yr) and 1.70% (30Yr) on the upside in the near-term remains intact. We will remain cautious to see a fresh fall on the yields thereafter.
The German 2Yr (-0.80%), 5Yr (-0.82%), 10Yr (-0.63%) and the 30Yr (-0.2%) yields remain lower but stable. While below -0.60% (10Yr) and -0.20% (30Yr) the bearish view will remain intact to see a fall to -0.70% (10Yr) and -0.40% (30Yr) in the coming days. Thereafter the yields can reverse higher.
As expected, the 10Yr GoI (5.8837%)has risen last week and is heading towards 5.90% as expected. As mentioned on Friday, in case of a break above 5.90%, we will have to allow for an extended rise to 5.93%-5.95% before getting a strong reversal to resume the overall downtrend.
