STOCKS
Equities remain higher. While the Dow still has room to test its resistances, DAX and Nikkei are testing their first level of resistances and will need a close watch to see if they extend the upside to test the second level of resistance or fall from here itself. Shanghai remains stable within its 3180-3450 range. Sensex and Nifty are coming closer to their crucial resistance. Broadly we retain our view of remaining cautious on the equity segment to see a sharp corrective fall rather than becoming more bullish from current levels.
Dow (29397.63, −23.29, -0.08%) remained stable yesterday. Our view remains the same. While above 29000 a rise to 30000 and even 30800-31000 is possible in the coming weeks. But as the Dow heads higher from here to 30000/31000 we will be turning cautious and approach the market from the sell side for a corrective fall to 29000 or even lower going forward.
The rally in DAX (13216.18, +53.07, +0.40%) seems to be slowing down as it comes near the first resistance level of 13400-13500. We reiterate that 13400-13500 and 13850 are important resistances that can cap the upside. We expect a corrective fall in DAX to 12800 or even lower from either of the above mentioned resistances.
Nikkei (25459.13, +109.53, +0.43%) has risen further and is testing the 25000-25650 resistance zone as expected. Inability to see a strong follow-through rise above 25650 from here can trigger a corrective fall to 24000 that we have been cautioning over the last few days.
Shanghai (3350.28, +8.08, +0.24%) remains mixed and stable at the middle of its 3180-3450 range. We expect the index to move up from here towards 3400-3450 (the upper end of the range) in the coming days.
Nifty (12749.15, +118.05, +0.93%) and Sensex (43593.67, +316.02, +0.73%) retains their momentum and are heading higher as expected towards their crucial resistances. 12800-12850 on the Nifty and 44000-44500 on the Sensex are important resistance that can halt the current rally. We will be cautious to see a sharp corrective fall to 12500-12250 (Nifty) and 42000-41000 (Sensex) on profit booking.
COMMODITIES
Crude prices surge higher as The American Petroleum Institute (API) reported a major draw in crude oil inventories of 5.147 million barrels for the week ending 6th November against analyst expectations of a draw of 913,000 barrels. A reconfirmation of such figures from EIA today would continue to keep the crude prices higher today also before a decline is seen in the early sessions of the coming week. Gold trades slightly lower as expected and could be headed towards 1860-1840 in the near term; 1840 being a crucial support on the daily charts. Silver is bullish while above 24. Copper could be broadly ranged within 3.05-3.25 but while above 3.10, view is bullish towards daily resistance at 3.25.
Brent (44.05) and Nymex WTI (41.73) both trade higher, extending the rise seen yesterday. Watch crucial immediate resistances near 45-47.50 on Brent and 43-45 on WTI which if hold could produce a rejection back to lower levels of 40 and 38 respectively. We keep a close watch on the price action near the mentioned resistances.
Gold (1868) has dipped further in line with our expectation and could be headed towards 1860-1840 in the near term before a bounce is seen from there. 1840 would be a crucial support on the daily charts.
Silver (24.35) trades slightly higher today maintaining well above the trend support near 24. While above 24, we stick to our bullish view for a possible rise towards 26-27 in the longer run. But before that the price is likely to remain ranged above 24 for some more time
Copper (3.1335) has dipped contrary to our expectation of seeing a rise towards 3.25. But while above 3.10, we keep our bullish view intact. Even if a break below 3.10 is seen, it could be limited to 3.05 on the downside, delaying a test of 3.25 by a week or so. Broadly 3.05-3.25 is an important range for the medium term.
FOREX
Dollar Index can rise in the coming days while it sustains above the immediate supports at 92.80 and 92.50. That can drag the Euro lower to 1.17-1.16. The EURJPY cross can also dip along with the Euro. The USDJPY seems to lose momentum and can see a fresh fall. Upside looks limited from current levels. Pound can also fall if it breaks below 1.32 from here. The USDCNY has scope for a corrective rise before resuming its overall downtrend. Dollar-Rupee can also rise to 74.50/60 and even 74.70/75 before reversing lower again.
Dollar Index (92.96) has come-off from the high of 93.21 but can get immediate support at 92.80 and move up to 93.30-93.50 today. While above 92.50, the outlook is bullish to see a test of 94-94.50 on the upside.
Euro (1.1778) fell sharply breaking below 1.18. Though a bounce is happening from the low of 1.1745, it can face resistance in the 1.1800-1.1825 region. While below 1.1825, the view is bearish to see a fall to 1.17 and even 1.16 in the coming days. Broadly 1.16-1.19 (revised from 1.17-1.19 mentioned yesterday) is the range that is in play and the Euro is coming down within this range now.
EURJPY (124.31) is coming down, at a slow pace though, over the last few days in line with our expectation. There is room to test 123.50 and 123 in the near-term. Intra-day resistances are at 124.30 and 124.50. A strong rise past 125 will be needed to become bullish. Else the 122-125 range is likely to remain intact and the Cross can come down within this range.
Dollar-Yen (105.29) seems to be struggling to see a sustained break above 105.50. This keeps it vulnerable to break 105 and fall to 104.50-104 in the coming days. The sharp rise from the low of 103.11 seems to be losing steam.
Aussie (0.7278) failed to sustain the break above 0.73 yesterday. The immediate outlook is mixed and the pair has equal chances to see either a rise to 0.74 or a fall to 0.72 from current levels.
Pound (1.3216) has come-off sharply from the high of 1.3313. A break below 1.32 from here will be bearish to see a further fall to 1.31 and even lower levels. Such a fall will negate the chances of seeing 1.34 on the upside mentioned yesterday. We will have to watch 1.32 closely today.
USDCNY (6.6179) is managing to sustain above 6.60 and can see a corrective rise to 6.68 on a strong break above 6.64. However, the broader downtrend can resume thereafter and target 6.45/40 on the downside over the next few weeks.
USDINR (74.3850) has risen breaking the 73.80-74.25 range on the upside. While this break sustains a further rise to 74.50/60 and even 74.70/75 is possible in the coming days before we see a reversal. The pair is quoting at 74.48 on the NDF now.
INTEREST RATES
The US Treasury yields remain higher and stable. We reiterate that key resistances are ahead that will need a close watch. We expect them to hold and trigger a sharp reversal to keep the long-term downtrend intact. The German yields can test their near-term resistances in the coming days and then can reverse lower to keep the broader downtrend intact. The 10Yr GoI looks mixed and vulnerable to fall from current levels itself without seeing a further rise that we had been expecting.
The US 2Yr (0.18%), 5Yr (0.43), 10Yr (0.95%) and 30Yr (1.72%) Treasury yields continue to trade higher but stable. We retain our view that 1% on the 10Yr and 1.75% on the 30Yr are crucial resistances. We expect them to hold and trigger a reversal and keep the long-term downtrend intact. However, we will be watching closely to see if the 10Yr can break above 1% or not which is very important as it would turn-around the broader market outlook completely.
The German 2Yr (-0.73%) and 5Yr (-0.71%) yields remain stable while the 10Yr (-0.51%) and the 30Yr (-0.08%) have dipped slightly. The current corrective rise can extend up to -0.40% (10Yr) and 0.05% (30Yr). Thereafter a reversal is possible that can keep the downtrend intact. However, as mentioned yesterday, price action in the coming days will need a close watch to see if the yields can break above -0.40% (10Yr) and 0.05% (30Yr) to negate the bearish view and in turn become bullish to see further rise.
The 10Yr GoI (5.9038%)is holding above 5.90% but seems to lack strength. This keeps the immediate outlook mixed. A test of 5.95% is still possible before a fall-back is seen. But if the 10Yr GoI breaks below 5.90% just now the fall to 5.85%-5.80% that we are expecting can happen from here itself without seeing 5.95% on the upside.
