STOCKS
DAX, Nikkei and Shanghai have bounced-back yesterday thereby easing the danger of falling below their crucial supports. The expected correction seems to be getting delayed again. A sideways consolidation looks like a possibility in the near-term. We will have to wait and watch the price action. Dow was closed yesterday and needs to see if it can recover Friday’s fall. Sensex and Nifty extended the fall yesterday and are coming closer to their crucial supports which if broken can trigger a much deeper fall from here. Overall, mixed signals are coming out from the equity segment and we continue to remain cautious to see a sharp correction going forward.
Dow (30814.26) was closed yesterday on account of a public holiday.
DAX (13848.35, +60.62, +0.44%) is managing to hold above 13600 and has risen back well yesterday. The index could consolidate between 13600 and 14000/14100 for some time within the current uptrend. A strong rise past 14100 will be needed to see the extended rise to 14500. While below 14100, the chances are high for the DAX to break 13600 and reverse the trend to see 13200 initially and further lower eventually on the downside.
Nikkei (28588.74, +346.53, +1.23%) has bounced-back sharply thereby easing the danger of falling below 28000. View remains the same. While above 28000, the chances of seeing 29600 on the upside will still remain alive. A strong break below 28000 is needed to confirm a top in place and drag the index to 27000-26500.
Shanghai (3586.40, −9.82, -0.27%) hovers around 3600. As mentioned yesterday it will have to be seen if it can rise past 3600 again or not. A strong break/close above 3600 is needed to strengthen the bullish momentum. While below 3600, Shanghai can oscillate in a sideways range of 3525-3600 with a bearish bias to break below 3525 and fall to 3450 going forward.
Nifty (14281.30, −152.40, -1.06%) has declined sharply breaking below the key level of 14000. Immediate support is at 14200 which if broken can trigger a much deeper fall to 14000-13800 and will also confirm that a top is in place. If Nifty manages to sustain above 14200, a sideways consolidation between 14200 and 14600 is possible for a few sessions.
Sensex (48564.27, −470.40, -0.96%) has declined below 49000 and now has an important support in the 48300-48000 region. A break below 48000 will confirm the reversal and drag it to 46000. The price action around 48000 will need a close watch.
COMMODITIES
Crude prices may bounce from current levels as they are trading lose to support levels and may aim to test 58 (Brent) and 55 (WTI). Gold may remain in a sideways trade below 1860 for near term but eventually looks bearish for a fall towards 1820-1760. Silver could trade within 26-24 just now. Copper is bullish towards 3.75/80 while above 3.55.
Brent (54.94) and Nymex WTI (52.31) are trading well above supports levels of 54 and 51 respectively and while they hold, a rise from current levels look possible. Brent could target to test 58 again while WTI may rise towards 55. Immediate view is to see some range-bound movement.
Gold (1839.00) is holding below immediate resistance at 1860 and while that holds the price may remain stable within 1860-1820 region for sometime before eventually falling lower towards 1800 or even 1760 on the downside. While below 1860, view is bearish for the medium term.
Silver (25.25) holds well above support near 24 and while that holds, the price could spend some time in the 24-26 region. Only a break below 24 again, if seen would indicate some bearish signals.
Copper (3.6190) is holding above support at 3.55 and while that holds there is scope for a rise towards 3.75/80 in the medium term. View is bullish while above 3.55.
FOREX
Dollar Index has dipped a bit while has bounced from 1.2053 and could now move up slowly. EURJPY may test 126-126.50 while Aussie and Pound look bullish for a possible rise to 0.78-0.80 and 1.37 on the upside. USDCNY remains stable while Dollar Yen could test 104.20 before dipping lower. Dollar Rupee could move down towards 73.15/10. Downside of 72.90/75 is negated for now.
Dollar Index (90.683) has come off from an intra-day high of 90.95 seen yesterday. If 91.00-91.50 region hold for the near term, we may expect Dollar Index to dip from here towards 90 again in the medium term.
Euro (1.2093) bounced from 1.2053 and while that holds, we may expect a rise back to 1.2150 on the upside.
EURJPY (125.86) has risen well from 125 and while that holds, we may expect a test of 126.50 before any dip is seen again.
Dollar-Yen (104.04) has risen yet again despite weakness in the Dollar index. While below 104.20, there is scope for the pair to fall again towards 103.60 or lower in the near term.
Aussie (0.7711) may attempt to rise back while above support at 0.76.
Pound (1.3602) is holding above 1.35 and could be ranged within 1.37-1.35 for the near term. Within the given range, a rise to 1.37 looks likely.
USDCNY (6.4847) may remain within 6.45-6.50 region for the near term. Immediate view is ranged.
USDINR (73.28) tested 73.30 yesterday and while immediate resistance near 73.30/35 holds we may expect a dip to 73.15/10 again during the day. Overall broad range of 73.0-73.50 is holding well within which 73.30/35 is and interim resistance.
INTEREST RATES
The US Treasury yields have bounced in the early Asian trades today. A further rise from here can take them to retest the crucial long-term resistances which in turn could delay the turn-around mentioned yesterday. The German Yields are likely to remain under pressure as the key immediate resistance can cap the upside and keep the bearish view intact. The 10Yr GoI needs to sustain above 5.94% in order to keep alive the bullish view of seeing 6%-6.02%.
The US 2Yr (0.14%), 5Yr (0.47%), 10Yr (1.11%) and the 30Yr (1.86%)have moved up in the early Asian session today. While this bounce sustains, the fall to 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) could get delayed. However, from the bigger picture, 1.20%-1.25% (10Yr) and 1.90%-1.95% (30Yr) will be a cap on the upside and the yields are likely to reverse lower to keep the broader downtrend intact.
The German 2Yr (-0.72%), 5Yr (-0.73%), 10Yr (-0.53%) and the 30Yr (-0.12%) have inched slightly up. Immediate resistances are at -0.50% (10Yr) and -0.10 (30Yr) which we expect the hold. While below these resistances, our bearish view is intact to see -0.60% (10Yr) and -0.20% (30Yr) on the downside. Also, as mentioned yesterday, the fall can extend even up to -0.30% (10Yr), -0.70% (30Yr) over the medium-term.
The 10Yr GoI (5.9585%)rose to 5.9880% but has come-off sharply from there. 5.94% is a key support to watch now. A break below it will negate the bullish view of seeing 6%-6.02% mentioned yesterday. Such a fall will turn the outlook bearish and a fall to 5.90%-5.88% can be seen again.
