STOCKS
Dow has declined below 30000 and seems to be coming under pressure. A fall below 29500 from here can trigger the much awaited correction. DAX on the other hand has bounced from its intermediate support and can consolidate in a wide range for now before a deeper fall is seen. Nikkei is stuck in a narrow range and has limited upside from here. Shanghai can fall within its 3180-3450 range. Sensex and Nifty have closed higher but will have limited room left on the upside from here. We continue to remain cautious and our approach will be from the sell side of the market on equities.
Dow (29861.55, −184.82, -0.62%) has come-off sharply from the high of 30325.79 and closed below 30000 yesterday. A further fall below 29500 will be an initial sign of a reversal. It will also reduce the chances of seeing 30800-31000 on the upside. An eventual break below 29000 will then confirm the same and open doors for our long awaited corrective fall to 28000 and even lower. The price action in the coming days will need a close watch.
DAX (13223.16, +108.86, +0.83%) has risen back sharply thereby easing the danger of a further sharp fall. The support at 13000 is holding for now. 13000-13400/500 can be a possible range for now. But eventually we see high chances for DAX to break 13000 and fall to 12400 in the coming weeks.
Nikkei (26665.85, −66.59, -0.25%) continues to remain stuck inside the narrow 26500-27000 range. The broader view remains the same. 27500 will be a cap on the upside from here. We expect Nikkei to see a sharp corrective fall to 25500-24500 and even lower going forward. A strong close below 26500 can trigger this fall.
Shanghai (3356.47, −12.65, -0.38%) remains lower and oscillates around 3350. We expect the upside to be capped at 3400 from here and Shanghai can fall to 3300-3250 in the coming days. Broadly, the 3180-3450 range is intact and the index is coming down within this range now.
Sensex (46253.46, +154.45, +0.34%) and Nifty (13558.15, +44.30, +0.33%) remains higher. As mentioned yesterday, there is room left on these indices to test 46500 (Sensex) and 13600-13700 (Nifty) before the expected correction comes into play. From a broader picture we expect a sharp corrective fall to 44500-44000 and 42000 on the Sensex and 13000 and 12800-12500 on the Nifty going forward.
COMMODITIES
Gold and Copper has fallen and could test 1820 and 3.45 respectively in the near term. Silver holds above immediate support at 24 and could rise towards 25 gradually. Crude prices look ranged for now and could test $52-53 (brent) and $48-50 (WTI) soon.
Brent (50.06) and Nymex WTI (46.80) look stable just now and could be ranged for a few sessions before moving up further. We keep our view intact to see a possible rise towards $52-53 and $48-50 respectively in the medium term.
Gold (1835.80) and Silver (24.12) trade lower. Gold has broken below 1840 and could be headed towards 1820 now while Silver looks stable above 24 and could move up towards 25 eventually. Gold may bounce back from 1820 in the near term.
Copper (3.5085) is holding well below the resistance near 3.6245 mentioned yesterday and while that holds, we may expect a dip to 3.45 before a bounce is seen again in the medium term. The current fall is a corrective one and could be short lived.
FOREX
Dollar Index looks weak while Euro may rise from current levels. EURJPY may test 127 on the upside. Dollar Yen may still have scope to fall towards 103.50 or lower if Dollar index trades lower in the near term. Pound and Aussie looks ranged just now. USDCNY may move up towards 6.58 if it sustains abive 6.55 just now. Watch price action near 73.50 on USDINR. A broad range of 73.80-73.45 can hold for now.
Dollar Index (90.62) had dipped slightly and could be headed towards 90.50-90.40 over the very near term. View is bearish just now.
Euro (1.2158) needs to break above 1.2177 in order to move up sharply towards 1.22 or higher in the longer run. Watch price action near 1.2177 in the next few sessions.
EURJPY (126.55) has risen and is headed to test 126.80 again on the upside a break above which is needed to move up towards 127 or higher. Immediate view is bullish within a broad range.
Dollar-Yen (104.05) looks stable but we keep intact a possible fall to 103.50-103.00 in the near term. Upside could be limited to 104.50 in the next few sessions.
Aussie (0.7534) is ranged just now within 0.7580-0.7515 region and may continue to trade sideways for a few more sessions before breaking on either side.
Pound (1.3342) has moved up and looks likely to test 1.3425 on the upside. A break above 1.3425 is needed to take it further up in the longer run. For now watch price action near 1.3425 in the next few sessions.
USDCNY (6.5515) has bounced back well and has been rising since the past one week. A sustained rise above 6.55 will eventually take it towards 6.58. Immediate upward corrective view may remain intact for some more time.
USDINR (73.58) attempted to break below 73.50 yesterday but bounced back to close higher. Watch price action today to see if the rise from 73.50 sustains, we may become bullish for the near term. Overall broad range of 73.45-73.80 is likely to hold for the near term.
INTEREST RATES
The US Treasury yields remain lower and stable. Near-term supports are coming up that can be tested now. Whether the yields bounce-back from there or not will need a close watch. The US Federal Reserve meeting outcome is due tomorrow. The German yields have bounced but have immediate resistances that can cap the upside. The outlook is bearish and the yields can reverse lower again. The 10Yr GoI has come-off from near a key resistance yesterday and can fall-back in the coming days while it remains below that resistance.
The US 2Yr (0.12%), 5Yr (0.36%), 10Yr (0.89%) and the 30Yr (1.63%) remains lower and stable. Our view remains the same. The 10Yr can fall to 0.80% and the 30Yr can test 1.60%-1.58% in the near-term and has to be seen if the yields can bounce from there or not. While below 1% (10Yr) and 1.75% (30Yr) the long-term downtrend is intact. A further fall below 0.80% (10Yr) and 1.60%-1.58% (30Yr) will confirm the resumption of this long-term downtrend and can drag the yields further lower.
German 2Yr (-0.78%), 5Yr (-0.80%), 10Yr (-0.62%) and the 30Yr (-0.22%) yields have bounced slightly across tenors. But immediate resistances are at -0.20%/-0.18% (30Yr) and -0.60%/-0.58% (10Yr) that can cap the upside. While below these resistances our bearish view of seeing a fall to -0.35%/-0.40% (30Yr) and -0.70% (10Yr) will remain intact. Thereafter the yields can see a fresh bounce.
The 10Yr GoI (5.9463%) rose to test 5.97% and has come-off from the high of 5.9714% yesterday. As mentioned yesterday 5.98% will be a good resistance now. While that holds, a fall-back to 5.92%-5.90% (revised lower from 5.94%-5.92% mentioned yesterday) is possible in the coming days.
