STOCKS
Dow and DAX remain stable and seem to lack fresh follow-through rise from current levels. But on the Asian front, Nikkei, Sensex and Nifty are giving early signs of a reversal that we have been cautioning for some time. A sideways consolidation is possible on the Dow and DAX before a sharp fall is seen. Asians on the other hand have immediate supports which need to hold in order to avoid a sharp fall from here itself. 12750 on the Nifty and 43000 on the Sensex are important levels to watch. Shanghai can move up within its sideways range in the near-term. Overall, the caution that we have been mentioning is working out well as the case for a correction in equities is strengthening as seen from the charts.
Dow (29483.23, +44.81, +0.15%) remains stable. As mentioned yesterday, 28800-30000 can be a possible range for the next few days. A strong fall below 28800 from here will drag the Dow to 28000 straight away without seeing an extended rise to 30800-31000.
DAX (13086.16, −115.73, -0.88%) is still stuck inside the narrow 13000-13300 range. The near-term outlook continues to remain mixed. However, on the bigger picture we retain our view of seeing a fall to 12400 in the coming weeks. But whether this fall will happen from here itself or after a rise to 13400-13500 and 13850 remains unclear.
Nikkei (25446.61, −187.73, -0.73%) has broken below 25500 and needs to see if it sustains lower. A strong close below 25500 today will be bearish and the fall to 24500-24000 that we have been expecting can be seen thereafter. That will also negate the chances of seeing 26500-27500 on the upside.
Shanghai (3365.68, +2.60, +0.08%) has risen above 3350 and can move up towards 3400-3450 (the upper end of the range) if it sustains above 3350. The broader 3180-3450 range continues to remain intact.
Sensex (43599.96, −580.09, -1.31%) and Nifty (12771.70, −166.55, -1.29%) are giving early signs of a reversal as they are turning down from their crucial resistance levels of 44000-44500 and 13000 respectively. A break below 43000 on the Sensex and 12750 on the Nifty will confirm the reversal. Such a break will then accelerate the corrective fall to 42000 (Sensex) and 12500-12250 (Nifty) that we had been cautioning for some time now.
COMMODITIES
Crude pries are likely to remain ranged while Copper could attempt to rise above 3.25 and head towards 3.30/35 in the medium term. For the near term Copper also looks ranged before a sharp rise looks possible. Gold may test support at 1840 before attempting a bounce from there while Silver trades just above important support at 24 which needs to hold to keep the 24-26 range intact. Failure to bounce from 24 could drag it down towards 22-21. Watch price action near 24 just now.
Brent (44.24) and Nymex WTI (41.88) are stable below respective resistances of 45 and 43. A break above these are required to head towards upper resistances of 47.50 and 45 respectively. While the resistances hold, upside could be limited just now. View is to see some more of ranged sessions for now.
Gold (1862.600) tested a low of 1859 within the current session before again rising from there. There could be scope for a test of lower support at 1840 before a sharp bounce is seen again towards 1890-1900. View is ranged while above 1840-1860.
Silver (24.11) has come down to test immediate support at 24. If it holds we may expect the range of 24-26 to hold for the near term; else a fall below 24 could trigger a sharp fall towards 22-21 soon. Watch price action at 24 just now.
Copper (3.2060) is slightly up today but has room for a rise towards 3.30/35 eventually on the weekly charts. As mentioned yesterday, we expect the downside to be limited to 3.15/10 in the near term. For the next 2-3 weeks we may expect a broad range of 3.35-3.10 to hold well.
FOREX
Dollar Index and Euro look stable within 92-93 and 1.18-1.19 respectively following which USDJPY may also trade within 103.50-104.50 just now. EURJPY has bounced back a bit but we may not negate a fall to 122-121.50 on the downside. Aussie looks bearish while Pound has scope to test resistance at 1.34 before falling off from there. USDCNY could test 6.60 while USDINR may remain ranged within 74.50-74.00.
Dollar Index (92.304) has dipped slightly but needs to show a decisive movement either below 92 or above 93 to get some clarity on further direction. We wait to see price action within 92-93 for now.
Euro (1.1876) is rising back towards 1.19 after a brief test of 1.1816 on the downside. While the Dollar Index trades within 92-93, we may expect Euro also to be ranged within 1.18-1.19 before deciding on further direction.
EURJPY (123.29) may attempt to test 124 on the upside just now but we may not negate a fall to 122-121.50 in the medium term as there could still be some chances of a fall after the current corrective bounce.
Dollar-Yen (103.81) is stable just now and could trade in the broad 103.50-104.50 region before moving on either side.
Aussie (0.7283) has been stable near levels seen yesterday. We may expect a fall to 0.72 in the near term before bouncing back from there. Failure to bounce from 0.72 could drag it lower towards 0.71-0.70 in the longer run.
Pound (1.3263) has scope to test 1.34 on the upside before sharply falling off from there. View is bullish for the very near term towards 1.34.
USDCNY (6.5759) has risen and could test 6.60 in the next few sessions but failure to sustain above 6.60 could still have some scope of pushing the pair down to 6.55/50. Watch price action near 6.60 in the near term.
USDINR (74.27) did rise yesterday from 74.10 but limited its rise to 74.3250. We may continue to look for a broad 50p range of 74.0-74.50 to hold for the next 1-2 sessions while the pair may attempt to fall back towards 74.10-74.00 from 74.40/50 region. View is ranged.
INTEREST RATES
The US Treasury yields have declined across tenors and are strengthening the case of a turn-around that we have been cautioning for some time. A break below the immediate supports in the coming days will confirm the same and drag them further lower. The German yields have dipped further and are keeping our bearish view intact. The 10Yr GoI can consolidate sideways in a narrow range before resuming the fall.
The US 2Yr (0.16%), 5Yr (0.37%), 10Yr (0.82%) and 30Yr (1.53%) Treasury yields have dipped further. The turn-around from the resistances is getting confirmed and our bearish view remains intact. The 30Yr is coming down towards 1.50% as expected. A break below 1.50% will be bearish to see 1.43%-1.40% initially and then 1.25% eventually over the medium-term. For the 10Yr 0.78% is an immediate support and a break below it will pave way for a further fall to 0.60%.
The German 2Yr (-0.75%), 5Yr (-0.75%), 10Yr (-0.57%) and the 30Yr (-0.18%) yields are inching lower gradually to retest the -0.60% (10Yr) and -0.20% (30Yr) levels. The view is bearish and a break below -0.60% (10Yr) and -0.20% (30Yr) can take the yields further lower to -0.70% (10Yr) and -0.35%/-0.40% (30Yr). Thereafter a fresh bounce is possible.
The 10Yr GoI (5.8766%)remains stable and could oscillate between 5.85% and 5.90% for some time. The broader bias remains bearish and we retain our view of seeing 5.80% on the downside eventually in the coming days. A break below 5.85% can trigger this fall. The upside is likely to be capped at 5.90%.
