STOCKS
Some recovery seen in the Dow and DAX following the sharp fall on Wednesday. However, they will have to see a strong follow-through rise from here and also breach 31000 (Dow) and 13800 (DAX) in order to ease the downside pressure. Nikkei and Shanghai remain stable today. Nikkei is holding above its support but has to rise past 28500 from here to avoid breaking below the support. Shanghai looks weak to fall further. Sensex and Nifty have declined further and can witness some recovery following the bounce in the Dow overnight. But that could be short-lived and the indices are expected to fall-back again.
Dow (30603.36, +300.19, +0.99%) had recovered yesterday. But the sharp pull-back from near 31000 is important to be watched. A strong rise past 31000 will be needed to ease the danger of breaking below 30000 and witnessing a fall to 29000 or lower that was mentioned yesterday. We will have to wait and watch the price action for the next few days. While below 31000, our bias continues to remain bearish.
DAX (13665.93, +45.47, +0.33%) has risen back sharply from the low of 13310.95 yesterday. But it will have to be seen if DAX manages to see a subsequent rise past 13800 from here which will reduce the danger of seeing an immediate break below 13200. As mentioned yesterday, 13200 will be an important support and a break below it can drag DAX to 13000 and 12800 going forward.
Nikkei (28134.04, −63.38, -0.22%) is managing to hold above 28000. However, as mentioned yesterday, a strong rise past 28500 is needed to regain the bullish momentum. While below 28500, we will be looking for a break below 28000 and a fall to 27000-26500 going forward.
Shanghai (3515.39, +10.21, +0.29%) remains lower and keeps the bearish view intact of testing 3475-3450 on the downside. As mentioned yesterday, the fall can extend up to 3400 – an important support from a medium-term perspective which will have to hold to keep the broader uptrend intact.
Sensex (46874.36, −535.57, -1.13%) and Nifty (13817.55, −149.95, -1.07%) have declined further and keeps intact our bearish view of testing 46000 and 13600 respectively. A bounce-back is possible today following the global markets, but the upside is likely to be capped and the broader picture will continue to remain weak. 49000 on Sensex and 14200 on Nifty are the important levels that have to be breached to bring back the bullishness.
COMMODITIES
Immediate trend supports seen on crude prices which if hold could take prices higher from current levels. Gold on the other hand looks bearish for a test of 1820 before moving up sharply from there. Silver has scope to test 27.0-27.30 on the upside from where a decline could drag it lower towards 24-23. Copper is holding above 3.55 just now but has scope for a test of 3.40 before a sharp rise from there is seen.
Brent (55.32) and Nymex WTI (52.38) are stable just now. There is immediate trend support near current levels from where a bounce is expected in the near term towards $58-60 on Brent and $55 on WTI respectively.
Gold (1844.60) has risen slightly but looks bearish for a test of 1820 on the downside before it can show any signs of reversal in the near term.
Silver (26.34) has risen above 26 breaking above the immediate range of 24-26. While it sustains above 26, it could target 27-27.30 on the upside before a possible decline is again seen from there. But failure to hold above 26 could again drag it down towards 24-23 in the medium term. Watch price action while above 24.
Copper (3.5720) seems to be holding above 3.55 just now but we may expect a test of support at 3.40 in the next few sessions before a bounce is seen towards 3.70 again.
FOREX
Dollar Index remains sideways ranged within 90-91 while Euro has moved up above 1.21. A further rise above 1.2150 is needed to take the currency higher in the medium term. Aussie may remain stable just now with a possible test of 0.77-0.78 before a fall from there in the medium term. USDCNY could trade within 6.50-5.44 with an eventual fall to 6.42. USDINR may test 72.90/85 before bouncing back from there.
Dollar Index (90.686) would find it difficult to break above 91 just now. While below 91, trade within 90-91 may remain intact for the near term. Only a break above 91 could trigger an immediate upmove.
Euro (1.2104) has risen above 1.21 but needs to break above 1.2150 in order to re-initiate an upward movement towards 1.22/23 again in the near term. While below 1.22/1.2150, we cannot rule out another possible dip to 1.20 in the medium term. Watch price action near 1.2150.
EURJPY (126.49) may test 127-128 on the upside before declining from there.
Dollar-Yen (104.49)has risen well but has trend resistance at current levels. If the upward momentum remains intact today, the pair could break on the upside leading to a possible rise towards 105 in the near term. Only an immediate reversal from here could take it back to 104 or lower.
Aussie (0.7655) has tested support on the 3-day candles at 0.7592 and while that holds, a brief bounce to 0.77-0.78 looks likely just now. Failure to hold above 0.7592 would make Aussie vulnerable to a fall towards 076/0.75 in the medium term.
Pound (1.3710) has support at 1.36 and while that holds the currency could remain within 1.36-1.3750/1.38 for the near term. Note that 1.3750-1.38 is an immediate resistance and while that holds, Pound could range in a narrow 1.36-1.38 for the near term.
USDCNY (6.4647) is likely to range within 6.44-6.50 in the near term. Only a break below 6.44 if seen would bring in a possible test of 6.42 on the downside.
USDINR (73.0450) has held well below immediate daily trend resistance at 73.1650, dipping back towards 73 from there. Note that important support is now seen at 73 and 72.90/85 and a sustained break below 72.90 would be needed again to bring back 72.75 or lower levels into the picture. A re-attempt to rise back to 73.1650 or higher could indicate otherwise. For today, we may expect trade within 72.85-73.10
INTEREST RATES
The US Treasury yields have inched up at the far-end but are unlikely to sustain higher. We retain our near-term bearish view to see a dip towards their near-term supports. The German yields remain lower and stable. With the immediate resistances holding well, the yields are likely to see a dip in the coming days. The 10Yr GoI can test the lower end of its 5.92%-5.98% range now. The broader bias is bearish to see the range breaking on the downside going forward.
The US 2Yr (0.12%) Treasury yield remains stable while the 5Yr (0.43%), 10Yr (1.02%) and 30Yr (1.78%)have inched higher. However, the view remains the same. We expect a test of 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) on the downside in the near-term. As mentioned yesterday, a strong break below 0.80% (10Yr) and 1.70% (30Yr) will drag the yields further lower and will completely negate the chances of revisiting 1.20%-1.25% (10Yr) and 1.95%-2% (30Yr) levels on the upside.
The German 2Yr (-0.75%), 5Yr (-0.75%), 10Yr (-0.54%) and 30Yr (-0.11%) yields remain stable. The near-term view is bearish to see a test of -0.60% (10Yr) and -0.20% (30Yr) on the downside now. Key resistances are at -0.50% (10Yr) and -0.10% (30Yr) which have to be broken in order to negate the above mentioned bearish view and to turn the outlook bullish for a rise to -0.40% and 0%-0.05%.
The 10Yr GoI (5.9340%)is heading down to test the lower end of its 5.92%-5.98% range. The bias continues to remain bearish to see break the range below 5.92% and fall to 5.90% and 5.88%-5.86% going forward.
