STOCKS
Asians are trading sharply lower. Nikkei has tumbled below 29000 contrary to our expectation of rising to 30500. It can test 28500-28000 on the downside while below 28000. Shanghai is heading down towards the lower end of its 3350-3500 range as expected. Sensex and Nifty may hold below 50500 and 15000-15100 respectively and can reverse lower today on the back of the sell-off in the Asian equities. Dow has failed to sustain the break above 35000 and has come-off sharply. A dip to 34000 is possible while below 35000. DAX will have to sustain above 15200 to keep alive the chances of seeing 15700-15800 on the upside before reversing lower.
Dow (34742.82, −34.94, -0.10%) rose to 35000 as expected but had come-off sharply from the high of 35091.56. While below 35000, a dip to 34000 is possible in the near-term. 34000 and 33500 are important supports which will have to be broken to turn the outlook bearish. While above these supports, the bullish view of seeing 3550 and even 36000 will remain intact.
DAX (15400.41, +0.76, 0%) remained stable and higher yesterday. The near-term view is bullish to see a test of 15700-15800 on the upside. Thereafter a reversal is possible. 15250-15200 can be a good support zone now.
Nikkei (28713.52, −804.82, -2.73%) has tumbled below 29000 contrary to our expectation of seeing a rise to 30500. Crucial support is at 28500 which will have to hold to keep the 28500-30500 range intact. Nikkei has to sustain above 28000 to keep the broader uptrend intact. A fall below 28000 will indicate a trend reversal and drag Nikkei lower to 27000-26000 going forward.
Shanghai (3395.92, −32.07, -0.94%) has declined below 3400 and keeps intact our view of seeing a fall to 3350 – the lower end of its current 3350-3500 range. Crucial support is in the 3350-3325 region and the price action here will need a close watch. Inability to bounce-back from this support zone can keep Shanghai vulnerable to see a deeper fall to 3250-3200 over the medium-term.
Nifty (14942.35, +119.20, +0.80%) and Sensex (49502.41, +295.94,+0.60%) are heading higher in line with our expectation towards 15000-15100 and 50000-50500 respectively. Failure to rise past 15100 (Nifty) and 50500 (Sensex) can drag the indices to 14600-14400 (Nifty) and 48500-48000 (Sensex) going forward. The price action in the coming days will need a close watch.
COMMODITIES
Overall commodity prices have dipped today except for Gold which seems to maintain trade at higher levels. Crude prices trade lower today while holding below immediate resistance levels. Silver and Copper have dipped too but could soon bounce back to higher levels while above initial support near 27 and 4.60 respectively.
Brent (67.83) and WTI (64.47) have dipped from 69.2 and 65.75 respectively seen yesterday. This is in line with resistances of $70 and $67 holding for now but note that the dip may not last long as repeated attempts to break the resistance may pave way for further upmove in the coming weeks. We would continue to look at important near term resistance levels to see if they manage to hold or pave way for further upside.
Gold (1837.30) continues to trade higher today despite weakness seen in other commodity prices. Gold is likely to hold on and rise towards 1860 while above 1820/30. Near term view is sideways to bullish.
Silver (27.41) has dipped slightly. A test of immediate support near 27 is possible before the price again moves up targeting 28-29 in the longer run.
Copper (4.7315) has dipped as expected yesterday and could have scope to fall to 4.60 or even to 4.40 before a rally towards 4.95/5.00 is seen in the longer run.
FOREX
Dollar Index looks stable while Euro has fallen a bit. While above 1.21, Euro still has scope for a rise to 1.22. EURJPY may rise towards 135 while above 132. Dollar Yen may keep the range of 108-110 intact while above 108. Aussie and Pound look bullish for a rise to 0.79 and 1.42 respectively. USDCNY may rise from 6.42/40 which is a crucial long term support. USDINR may test 73.25/00 while below immediate resistance near 73.60.
Dollar Index (90.2320) hcontinues to trade lower and could test support near 90. This is crucial and if the index does not manage to rise from 90, it can fall to 89 in the near term. Watch price action near 90 just now.
Euro (1.2143) has dipped slightly from levels seen yesterday but a possible rise towards 1.22-1.2240 in the near term cannot be negated. Note that 1.22-1.2240 is a crucial resistance zone which if holds could make Euro bearish for the medium term; else a sharp break above 1.2240 would be needed for further upmove which may come in only if the Dollar Index breaks below 90.
EURJPY (132.23) has remains stable at higher levels and while above 132, there is scope for a further rise to 135 in the medium term. View is bullish while above 132.
Dollar-Yen (108.87) is stable near levels seen yesterday. While above 108, we may expect ranged movement within 108-110.
Aussie (0.7842) is stable and could rise towards resistance near 0.80-0.79. A broad sideways range of 0.76-0.80 may hold on for the next few weeks.
Pound (1.4127) has risen well and could test 1.42 on the upside. Near term looks bullish while above 1.40.
USDCNY (6.4219) has fallen further and could re-test crucial long term support near 6.42/40. Unless it sustains and bounces back from 6.40/42 it could be vulnerable to break the support coming from Apr’13 near 6.40. That if happens will be very crucial. Watch price action near 6.40/42 for a bounce.
USDINR (73.36) closed lower after testing 73.4825 yesterday but did not fall to our expected levels of 73.25/00. While our view remains bearish for testing our expected levels, we may look for the pair to trade lower today too. Maximum upside of 73.50/60 is possible within the current move.
INTEREST RATES
The US Treasury yields sustain higher. It will have to be seen if it can gain momentum and move up from here to negate the danger of falling below their crucial supports. The German yields continue to hover near their crucial resistances. Inability to break the resistances can trigger a fall in the coming weeks. The 10Yr GoI keeps alive the chances of seeing a corrective fall in the near-term before resuming its overall downtrend.
The US 2Yr (0.15%), 5Yr (0.77%), 10Yr (1.59%) and 30Yr (2.31%) Treasury yields sustain higher and stable. A further rise from here will reduce the danger of the yields falling below 1.45% (10Yr) and 2.15% (30Yr). A strong rise past 1.7% (10Yr) and 2.4% (30Yr) will completely negate it and will bring back the bullish momentum to see 1.8% (10Yr) and 2.5% (30Yr) on the upside.
The German 2Yr (-0.70%), 5Yr (-0.59), 10Yr (-0.21%) and the 30Yr (0.35%) yields continue to hover near their crucial resistances. -0.20% (10Yr) and 0.35% (30Yr) are the important resistances that will have to be broken to move up further from here and avoid a fall back to -0.45% (10Yr) and 0.20% (30Yr).
The 10Yr GoI (6.0135%) sustains above 6% and remains stable. This keeps alive the chances of seeing a corrective rise to 6.04%-6.06% and even 6.10% first. Thereafter the overall downtrend can resume targeting 5.9% on the downside.
