STOCKS
The rally in equities seems to lose steam as the surge in corona virus spread seems to overshadow now the positive developments on the vaccine front. As such, the turn-around that we have been cautioning may happen much ahead of the actual resistances that we have been mentioning. We will have to wait and watch for a few more sessions to get a confirmation. Dow can see a sharp fall if it breaks below 28850 from here. DAX is getting resistance at 13200 itself and looks weak while it remains below this level. Nikkei is turning down as expected after testing the 25500-25650 resistance zone. Shanghai has turned down and can fall within its 3180-3450 range as against our expectation to see a rise towards the upper end of the range. Sensex and Nifty have paused as they have come closer to their crucial resistances. With little room left on the upside, we can expect a corrective fall to happen soon.
Dow (29080.17, −317.46, -1.08%) has declined sharply yesterday as the rally seems to lose steam. 28850 is an important near-term support to watch. A break below it will trigger the sharp corrective fall that we had been cautioning over the last few days. Dow will have to necessarily sustain above 28850 in order to keep alive the chances of testing 30000/30800-31000 before a correction comes into play.
DAX (13052.95, −163.23, -1.24%) seems to have turned around from 13200, well ahead of the first resistance zone of 13400-13500 that we had mentioned earlier. While below 13200 the corrective fall to 12800 and even lower that we had been mentioning can happen from here itself. A strong rise past 13200 is needed to see 13400-13500 and 13850 levels on the upside.
The 25500-25650 resistance zone on Nikkei (25273.02, −247.86, -0.97%) has held well as expected and the index is reversing lower. While below 25500, a corrective fall to 24500 and 24000 that we have been mentioning can happen now.
Shanghai (3304.11, −34.57, -1.04%) has declined sharply below 3350. This has reduced the chances of seeing a rise to 3400-3450 that we were expecting. Instead, the index may now move down towards 3250-3200. The broader 3180-3450 range remains intact and the index may now move down towards the lower end of this range as against our expectation to move higher.
The rally in the Nifty (12690.80, -58.35, -0.46%) and Sensex (43357.19, −236.48, -0.54%) paused yesterday as they have come closer to their crucial resistances. We reiterate that 12800-12850 (Nifty) and 44000-44500 (Sensex) will be the cap on the upside and a corrective fall to 12500-12250 (Nifty) and 42000-41000 (Sensex) can be seen on profit booking in the coming weeks.
COMMODITIES
The EIA reported an inventory build of 4.3mln barrels for the week ended 6th Nov against the API release of 5.147mln barrels draw mentioned yesterday. Crude pries have sharply reversed following the release and have dipped lower as cautioned. We may expect ranged trade within 45-40 on Brent and 42.50-38 on WTI for the near term now. Gold and Silver looks ranged just now while above 1840-1860 and 24 respectively. Copper may bounce from 3.10-3.05 back towards 3.20/25 in the longer run. For now watch for a possible bounce from 3.10 itself.
Brent (42.89) and Nymex WTI (40.45) have fallen and trades lower today. As mentioned in yesterday’s edition, Brent and WTI could not break above 45 and 42.5 respectively indicating a sustained dip in the near term. We would now look for a ranged movement within 45-40 on Brent and 42.50-38 on WTI.
Gold (1877.90) and Silver (24.32) have paused near current levels not able to move on either direction just now. We look for a stale Gold with possibility of a fall towards 1860-1840 while Silver could be ranged above 24 for sometime.
Copper (3.13) looks stable just now. We may expect a test of 3.10 before a bounce is seen towards 3.20/25 in the medium term. Failure to hold above 3.10 could drag it lower towards support at 3.05.
FOREX
Dollar Index trades higher and needs to break above 93 to keep pressure on other currencies intact. Aussie, Pound, EURJPY, Euro all look bearish for now and could decline from current levels. USDCNY may rise to 6.65 but USDINR has important resistance at 74.80/85 which needs to hold for the day to see a possible correction to 74.50/40 before heading towards 75 in the medium term. For the day we may expect a range of 74.85-74.40.
Dollar Index (92.96) is up towards 93 and a break on the upside is needed to take it further up towards 93.50-94.00 in the coming week. Failure to break above 93 just now could drag it down towards 92 again in the near term. On the charts, a break above 93 looks likely.
Euro (1.1801) has bounced well from 1.1745 in the last 2-sessions but we cannot negate a dip again towards 1.1745-1.1700 while Dollar Index trades higher. For now, we may look at a ranged movement within 1.19-1.17 on the Euro to sustain for the next 1-2 weeks.
EURJPY (123.82) could test 123.50 before bouncing back from there towards 124-125 again in the medium term. Watch price action near 123 in the early sessions of next week.
Dollar-Yen (104.83) tested 105.65 on the upside before falling off sharply from there. We may expect a test of 104.12-104.00 before again bouncing back higher.
Aussie (0.7226) declined on a stronger Dollar contrary to our expectation of a rise to 0.74. Overall broad range of 0.70-0.7350 could hold for now within which a fall to 0.7150 may be seen initially.
Pound (1.3113) may see some interim corrective bounces but could be headed towards 1.31-1.3050 in the near term. View is bearish while below 1.3250.
USDCNY (6.6217) has risen slightly. We may expect a test of 6.65 on the upside before a possible corrective dip is seen again.
USDINR (74.63) has crucial resistance in the 74.80/85 region which if holds could push the pair down to 74.50/40. Failure to sustain below 74.80/85 could go contrary to our immediate view and take the pair higher towards 75.00. But we expect 74.80/85 to hold for the day.
INTEREST RATES
The resistances on the US Treasury yields that we have been mentioning are holding well and the expected turn-around is happening in line with our expectation. A further fall from here will confirm the resumption of the broader downtrend and will drag the Treasury yields lower in the coming weeks. The German yields have dipped sharply across tenors. The reversal in the current corrective rise happening much ahead of the levels we had anticipated and a fresh fall can happen from here itself. The 10Yr GoI remains mixed and stable.
The US 2Yr (0.17%), 5Yr (0.39), 10Yr (0.88%) and 30Yr (1.64%) Treasury yields have come-off sharply especially at the far-end. 1% on the 10Yr and 1.75% on the 30Yr has capped the upside as expected and the turn-around is happening in line with ur expectation. The 10Yr can test 0.80% now. A break below 0.80% can drag it to 0.60% in the coming weeks. The 30Yr can test 1.60% and a break below 1.60% can drag it to 1.50%.
The German 2Yr (-0.73%), 5Yr (-0.73%), 10Yr (-0.54%) and the 30Yr (-0.12%) have reversed lower across tenors. The yields seem to lack momentum to extend the corrective rise. A further fall in the next few sessions will see the broader downtrend resuming from here itself to revisit -0.60% (10Yr) and -0.20% (30Yr) initially and then to -0.70% (10Yr) and -0.35%/-0.40% (30Yr) eventually. In that case the earlier view of seeing -0.40% (10Yr) and 0.05% (30Yr) on the upside that we had been expecting will get negated.
The 10Yr GoI (5.9039%) continues to trade stable above 5.90%. Our view remains the same. The near-term outlook is mixed. While above 5.90%, a rise to test 5.95% is still possible before a reversal happens. However, if a break below 5.90% happens just now, the yield can fall to 5.85%-5.80% straight away from here itself.
