STOCKS
Asian indices are getting a breather on early trades today after having sold-off strongly towards the end of last week. Nikkei has bounced from 29000 and Shanghai is holding above 3500 and is attempting to bounce. The Dow Futures (31156, +242, +0.78%) is also trading higher. This can provide some relief for the Nifty and Sensex today. However, the overall picture still remains weak and the bounce seen today could be short lived. 31500-31650 on the Dow, 30000 on Nikkei, 3575 on Shanghai and 13800-14000 on DAX are important levels that can restrict the bounce. On the domestic front, 50000-50500 on Sensex and 15000 on Nifty are key resistances ahead. While below these levels, there is room to see further fall in equities in the coming days.
Dow (30932.37, −469.64, -1.5%) extended the fall on Friday and has closed below 31000. The Dow Futures (31156, +242, +0.78%) has recovered on early trades today but needs to see if it holds on to its gains. 31500-31650 will be an important near-term resistance. While below 31650, a further fall to 30300-30000 is possible and the uptrend will be under threat for a reversal that we have been expecting for a long time. 30000 will be a crucial level to watch and a break below it will confirm the trend reversal.
DAX (13786.29, −93.04, -0.67%) has declined below 13800 as expected. Though it has bounced from the low of 13673.07, the outlook remains weak. Our view of seeing a fall to 13400-13200 remains intact. A break below 13600 can accelerate the fall.. Any bounce above 13800 from here can face resistances at 14000 and 14200.
Nikkei (29621.26, +655.25, +2.26%) tested 29000 on Friday but has recovered sharply today. However, it will have to rise past 30000 decisively in order to negate the bearish view of seeing 28000 on the downside. While below 30000, we retain our bearish view. As mentioned on Friday, the price action near 28000 will need a close watch.
Shanghai (3523.46, +14.38, +0.41%) is managing to hold above 3500. As mentioned on Friday, it will have to be seen if Shanghai can rise past 3575 from here. Such a rise will negate the chances of seeing 3450-3400 on the downside and in turn will pave way for a revisit of 3700 levels again.
Sensex (49099.99, −1939.32, -3.8%) fell sharply below 51000 on Friday as expected and keeps our bearish view intact of testing 48500-48000 on the downside. Any intermediate bounce can find resistance in the 50000-50500 region.
The fall to 14600 has happened much faster than we had expected on Nifty (14529.15, −568.20, -3.76%) . Indeed the index has closed below 14600 on Friday. There is room on the downside to test 14250-14200 in the coming days from where a bounce is possible. 15000 will be an important resistance now that can cap the upside in case of any immediate corrective bounce.
COMMODITIES
Most commodities have recovered a bit from the lows seen on Friday. Crude prices have moved up and could continue so towards near term resistances while Gold and Silver have also moved up decently. Copper is also up from Friday’s low of 4.0765 and could now move up slowly towards 4.20-4.30 again.
Brent (65.58) and WTI (62.59) have both risen well after some stable movement seen last week. A test of $68-70 on Brent and $65-67 on WTI looks likely on the charts from where a deeper decline looks possible. Watch price action near immediate resistance levels. View is bullish for the very near term.
Gold (1743.60) tested 1714 last week from where a decent bounce has been seen. While the rise continues, we may expect prices to test 1780 on the upside in the very near term. View is bullish while above 1700.
Silver (26.95) fell to test 26.16 last week, just levels above crucial support at 26 before bouncing from there. A gradual rise to 28-29 looks possible for the near term.
Copper (4.1685) has fallen sharply and looks like it has formed a near term top at 4.40. A test of earlier resistance turned support at 4.00 may hold for now and produce a rise again towards 4.20/30.
FOREX
Dollar Index has risen to test 91 on the upside which needs to break to take it higher towards 92. Euro needs to rise above 1.21 to sustain the upmove, else a fall back to 1.20 looks possible. Aussie and Pound look weak just now but could attempt to bounce higher towards 0.78 and 1.41/42 respectively. EURJPY is holding below 130 and while it sustains view is bearish to sideways ranged. USDCNY is ranged within the broad 6.44-6.48/50 zone. USDINR needs to hold below 73.50 on the OTC else a test of 74 looks likely.
Dollar Index (90.81) has risen and could again test 91which needs to produce a rejection for index to come down towards 90 or lower again. Any break above 91 would initiate bullish momentum that could take the index higher towards 91.50-92. Watch price action near 91.
Euro (1.2083) trades lower and unless a sustained rise back above 1.21 is seen, it would be difficult to negate a fall to 1.20 just now. A sharp rise from current levels is needed to bring in bullish sentiment for the Euro. For now, a view of possible test of 1.20 on the downside remains intact.
EURJPY (128.92) is holding well below 130 and only a break above 130 can trigger any fresh bullish view. While below 130, view is negative to see the cross fall towards 128-127.
Dollar-Yen (106.65) continues to move up and may test 107 on the upside which is a near term resistance. A break above 107 is necessary for the pair to head higher towards 108-109. Else a fall from 107 could be possible. Watch price action near 107.
Aussie (0.7760) is trying to bounce from 0.77 and needs to see a rise above 0.78 to keep the upmove sustained. Failure to rise above 0.78 in the next few sessions would drag it lower towards 0.76. Watch price action near current levels.
Pound (1.399) has bounced well from the last week’s low of 1.3923. While the rise holds, Pound may re-test 1.41/42 in the coming sessions.
USDCNY (6.4626) is likely to remain stuck in the 6.44-6.48/50 region for the medium term. View is ranged for now.
USDINR (73.47) opened with a sharp gap up at 73.0425 and continued to move up to test 73.50. On the NDF, the pair traded higher to test 74.05 before coming off from there to 73.91. Note that on the onshore markets there could be some recovery dip in the pair towards 73.20 or lower today. Failure to hold below 73.50 on the OTC may take it higher to test 74 before a sharp fall is seen. Look for a corrective dip today.
INTEREST RATES
The US Treasury yields have come-off sharply but have strong resistance-turned-supports ahead that can limit the downside. While these supports hold, a fresh rise in the coming days cannot be ruled out. The German Yields have also dipped across tenors. But similar they also have strong supports ahead similar to the US yields from where they can move up again. Overall both the US and German yields seem to be on a corrective dip within their current uptrend they still have room to move up again. The 10Yr GoI has risen sharply on Friday indicating the resumption of its upmove. The yield can move up further this week.
The US 2Yr (0.12%), 5Yr (0.70%), 10Yr (1.41%), 30Yr (2.17%)have come-off sharply across tenors on Friday and are trading lower in the early Asian session as well. There is room on the downside to test 1.33%-1.30% on the 10Yr and 2.10% on the 30Yr. But the yields will have to fall below the above mentioned levels in order to become bearish. While above 1.30% (10Yr) and 2.10% (30Y) the current uptrend will continue to remain intact and the chances of seeing 1.55%-1.60% (10Yr) and 2.50% (30Yr) will continue to remain intact.
The German 2Yr (-0.67%), 5Yr (-0.57%), 10Yr (-0.26%) and 30Yr (0.19%) have come-off on Friday. However strong resistance-turned-supports are at -0.35%/-0.40% on the 10Yr and 0.15% on the 30Yr. While above these supports, the outlook will continue to remain bullish to test -0.20% / -0.15% (10Yr) and .35% (30Yr) after which a strong reversal is possible.
The 10Yr GoI (6.2283%) has risen past 6.20% confirming the resumption of the upmove. A further rise to 6.28%-6.30% is possible while the yield sustains above 6.20%. On the charts 6.30% and 6.40% are important resistances that will need a close watch to see for a reversal.
