STOCKS
Equities continue to show lack of momentum which strengthen our cautious stance of witnessing a sharp correction. A sideways consolidation is also a possibility for some time before the correction happens. Dow is holding well below 30000 itself and can trade between 28800-30000 for some time rather than seeing an extended rise to 30800-31000. DAX is stuck in a narrow range of 13000-13300 for now. Resistances are at 13400-13500 and 13850. Nikkei has to sustain above 25500 in order to avoid a fall straight away from here itself. Sensex and Nifty are at their crucial resistance zones and have limited upside from here. We can expect them to reverse lower in the coming days. Shanghai continues to trade mixed within its 3180-3450 range.
Dow (29438.42, −344.93, -1.16%) is struggling to break above 30000. While below 30000, a dip to 29000-28800 is possible in the near-term and also can look for a range of 28800-30000 for some time. From a bigger picture we retain our cautious stance as we see strong resistances at 30000 and 30800-31000 that can cap the upside and trigger a corrective fall to 28000 and even lower going forward.
DAX (13201.89, +68.42, +0.52%) continues to oscillate in a narrow range of 13000-13300 and keeps the near-term outlook mixed. Our view of seeing a corrective fall to 12400 remains intact. But whether this fall will happen from here itself or after seeing one more rise to test the important resistances at 13400-13500 and 13850 is not very clear at the moment.
Nikkei (25575.10, −153.04, -0.59%) has dipped to test 25500. We expect a fall to 24500-24000 in the coming days. Whether the index manages to sustain above 25500 now or not will determine whether the fall to 24500-24000 will happen from here itself or after one more rise to 26500-27500.
Shanghai (3353.73, +6.43, +0.19%) remains stable around 3350. The view remains mixed. We repeat that there are equal chances to either a rise to 3400-3450 or a fall to 3250-3200 from current levels. Overall the 3180-3450 range is intact and the index can move either way within this range now.
Nifty (12938.25, +64.05, +0.50%) has risen and closed above 12900. The chances for an extended rise to 13100-13200 mentioned in the Evening Comments stands reduced for now as the Dow is holding below 30000. As such, Nifty can remain below 13000 itself for now. 12800/750-13000 can be a range for the near-term. We retain our view of seeing a sharp corrective fall to 12500-12250 in the coming days. A break below 12750 will be a trigger this fall.
Sensex (44180.05, +227.34, +0.52%) has entered into its crucial 44000-44500 resistance zone that we had been mentioning over the last few days. The upside is likely to be capped at 44500. As we have been cautioning for some time, Sensex is likely to see a sharp reversal towards 42000 from this 44000-44500 resistance zone.
COMMODITIES
Crude has moved up slightly but need to break above immediate resistances to continue to keep the bullish momentum intact. Failure to break above the mentioned resistances could pull back prices down again keeping the broad range of 45-40 (Brent) and 38-43 (WTI) intact. Gold and Silver could test supports near 1860-1840 and 24 in the near term. Copper could be ranged within 3.25-3.10 for now but could eventually move up to target 3.30/35 on the upside.
Brent (44.28) and Nymex WTI (41.84) have risen slightly and could test immediate resistances near 45 and 43 respectively from where a rejection if seen would keep prices stable for the near term within a broad range of 45-40 for Brent and 38-43 for WTI. A break above the immediate resistances could however lead to a rise towards 47.50 (brent) and 45 (WTI) in the medium term. Watch price action near immediate resistances mentioned above.
Gold (1869.90) and Silver (24.38) have dipped further from levels seen yesterday. Above 24, we may expect Silver to remain ranged within 24-25 for the near term while Gold is likely to remain ranged within 1860-1900 just now. On Gold there could be scope of testing 1840 on a break below 1860 while chances of such a break below 24 on Silver looks less likely. For the very near term, both Gold and Silver could be ranged with some chances of falling towards support levels of 1860-1840 and 24 respectively.
Copper (3.1955) is stable just now. Yesterday the price attempted to rise above 3.20 but could not sustain at higher levels. While immediate resistance at 3.25 could keep prices stable within 3.10-3.25 for sometime, there is scope for a rise towards 3.30/35 on the weekly charts that could materialize in the next 1-2 weeks. Downside could be limited to 3.10 just now.
FOREX
Dollar Index trades slightly higher today but needs to break above 93 to indicate a near term upmove. Euro has sustained below resistance at 1.19 and could fall towards 1.18 if the Dollar continues to move up from current levels. EURJPY looks bearish towards 122.0-121.50. Aussie and Pound may test resistances of 0.74 and 1.34 before falling from there. USDCNY may rise towards 6.58-6.60 but unless a rise above that is seen, a fall towards 6.50 cannot be negated. USDINR may rise from support at 74 today (more likely) else extend to 73.80 before the expected bounce is seen.
Dollar Index (92.47) has bounced slightly from 92 but has not been able to signal a sharp reversal yet. A re-test of 92 or been 91.75 could be on the cards. Watch price action closely just now.
Euro (1.1845) is falling from immediate resistance near 1.19 which could now push the price down towards 1.18 or even lower in the near term. View is bearish while below 1.19.
EURJPY (122.93) looks bearish for the near term and has scope for a fall towards 122.0-121.50 in the near term.
Dollar-Yen (103.78) has fallen breaking below our mentioned support near 104. While below 104, the pair may test 103 before a bounce is seen from there.
Aussie (0.7293) has risen and could test 0.73-0.74 on the upside before again falling off from there back towards 0.72/0.71.
Pound (1.3233) has dipped slightly today but could be limited to 1.34 on the upside which is a near term resistance. A gradual test of 1.34 looks possible in the near term before a fall from there is seen towards 1.30 in the longer run.
USDCNY (6.5631) has bounced a bit but needs to break and sustain above 6.60 to move up further and negate a fall towards 6.55/50. Failure to break below 6.60 could keep possibilities of a downside test of 6.50 intact.
USDINR (74.20) did fall below 74.40 to test 74.09 exactly in line with our expectation. 74.00 is an immediate support which if holds could produce a bounce towards 74.40/50 again on the upside today. We would also keep a watch to see if the RBI comes in to buy near 74 that could limit further downside just now. In absence of RBI and break below immediate support at 74, we may expect an extension to 73.80 before a bounce is seen again from there. Watch price action near 74 today.
INTEREST RATES
The US Treasury yields remain stable and continue to show lack of momentum. With key resistances ahead, we retain our view of seeing a reversal in the Treasury yields and a see fresh fall in the coming days. The German yields remain lower and keep the bearish view intact. The 10Yr GoI can revisit 5.90% before resuming the fall to 5.80%.
The US 2Yr (0.17%) and 10Yr (0.85%) Treasury yields remain stable while the 5Yr (0.39) and 30Yr (1.58%) have dipped slightly. We retain our view of seeing a break below 0.80% (10Yr) and a fall to 0.70%. Similarly, the 30Yr can test 1.50%. Any rise from current levels will be short-lived and also be capped at 0.90%/1% (10Yr) and 1.70%/1.75% (30Yr).
The German 2Yr (-0.74%), 5Yr (-0.74%), 10Yr (-0.56%) and the 30Yr (-0.15%) remain lower and stable. We expect the overall downtrend to resume and the yields can now revisit -0.60% (10Yr) and -0.20% (30Yr) levels initially. Thereafter an eventual break below -0.60% (10Yr) and -0.20% (30Yr) can drag them to -0.70% (10Yr) and -0.35%/-0.40% (30Yr).
The dip to 5.85% on the 10Yr GoI (5.8796%)has happened in line with our expectation and the yield has bounce-back from the low of 5.8533% yesterday. An intermediate rise to 5.90% is possible in the near-term. However, a break above 5.90% could be difficult. While below 5.90%, the broader view remains bearish to see a test of 5.80% on the downside.
