STOCKS
Strong sell-off in equities following the sharp fall in the US yields over the last couple of days. The indices have room to fall further to test their crucial supports. Dow has declined below 34500 and can test 34000-33500. DAX looks vulnerable to break 15400 and extend the fall to 15200-15000. Nikkei has broken below the crucial support level of 28000 and is now bearish to test 27000-26000. Shanghai can break the 35000-3625 range on the downside and fall to 3450-3400. Sensex and Nifty can test the lower end of their 52000-53000 and 15600-15900 range. A downside break of this range will then bring the broader 51000-53000 (Sensex) and 15400-15900 (Nifty) range into play.
Dow (34421.93, −259.86, -0.75%) recovered well after falling sharply from the low of 34154.59 but had closed below 34500. The chances of seeing an immediate break above 35000-35100 is getting reduced. While below 34500, a further fall to 34000 and even 33500 cannot be ruled out in the coming days.
DAX (15420.64, −272.07, -1.73%) has declined sharply below 15600 and looks vulnerable to break 15400 and fall to 15200. A break below 15200 can drag it to 15000 and even 14800 thereafter. The price action at 15200 will need a close watch in the coming sessions.
Nikkei (27473.21, −644.82, -2.29%) has tumbled below the crucial support level of 28000. A test of 27000 can be seen now and a break below it can see the fall extending to 26000 in the coming days. Nikkei will now have to bounce back above 28000 to ease the downside pressure.
Shanghai (3503.41, −22.10, -0.63%) broke below3500 and has bounced from the low of 3485. However, the bias is bearish to see a further fall towards 3450 and even 3400. As mentioned earlier, 3450 and 3400 are strong long-term supports from where a fresh rise is possible to keep the broader uptrend intact.
Sensex (52568.94, −485.82, -0.92%) and Nifty (15727.90, −151.75, -0.96%) have declined sharply and can test the lower end of their 52000-53000 and 15600-15900 range respectively. A downside break of this range will bring the broader 51000-53000 (Sensex) and 15400-15900 (Nifty) range into the picture and drag the indices further lower. The price action at 52000 (Sensex) and 15600 (Nifty) will need a close watch today.
COMMODITIES
Crude prices have risen slightly but look bearish to ranged while below crucial resistance levels. Gold trades above 1800 and could head towards 1820-1840 while Silver looks stable and could trade within 25.80-26.50-27.00 region for the medium term. Copper is ranged within 4.20-4.40 and may continue so for a few more sessions.
Brent (73.89) and WTI (72.81) have risen slightly after a sharp decline seen over the last 2-sessions. While below 74, Brent has lesser scope to bounce back towards $80 and instead we can expect a dip down towards $70-68 in the coming sessions.WTI on the other hand could also fall towards $71/70 in the near term.
Gold (1805.40) has risen above 1800 and is heading towards 1820.A strong rise above 1820 can take Gold eventually higher towards 1840 in the coming 1-2 weeks. View is bullish in the near term while above 1800. Watch price action near 1810-1820 in the near term. .
Silver (25.96) looks stable but continues to trade above 25.80. We may expect 25.80-26.50-27.00 region to hold for the near term.
Copper (4.2770) tested 4.2535 before rising a bit. We may expect near term range of 4.20-4.40 to hold for sometime before it breaks on either side of the range.
FOREX
Dollar Index has dipped a bit taking Euro higher but we need to see if the movement sustains. A range of 92-93 could hold for the Dollar Index while Euro can trade within 1.1770-1.1870. EURJPY tested 129.62 before bouncing higher and a revised trade range of 129-131 could hold for the near term. Pound and Aussie looks bearish for the near term. USDCNY may dip while below 6.49. USDINR may dip towards 74.50 or lower while upside could be capped at 75.0-75.10.
Dollar Index (92.46) fell sharply from 92.85 on Wednesday bu has bounced back from an intra-day low of 92.24 seen yesterday. We may expect some ranged movement between 93 and 92 before a break on either side is seen.
Euro (1.1835) has risen above 1.18 but needs to sustain a rise above 1.1850 to negate another dip towards 1.18-1.1780/70 again. We would wait and watch to see if Euro can remain sideways for sometime within 1.1770-1.1870 before seeing a breakout on either side of the range.
EURJPY (130.08) has bounced from 129.62 and while the momentum holds good, we may expect a test of 130.90-131 before another dip takes place towards 129.60-129.00
Dollar-Yen (109.92) has immediate support near 109.50 which if holds may produce a bounce back towards 110-111, else the fall could continue towards 108.50.
Aussie (0.7418) has dipped further and looks bearish towards 0.74-0.73 in the near term.
Pound (1.3774) looks bearish too and can test 1.3730. Whether it will fall further from there or not will have to be seen. A fall below 1.3730 can take it lower towards 1.37.
USDCNY (6.4849) may dip towards 6.45 as immediate resistance at 6.49 may hold for now. A break above 6.49 is needed for the pair to rise further in the longer run.
USDINR (74.71) came off sharply from 74.84 but while above 74.50, we may continue to look for a possible test of 75-75.10 before a decline is seen. On the downside, a fall below 74.50 is needed for the pair to fall towards 74.40.
INTEREST RATES
The US Treasury yields fell sharply to test their crucial supports in the US sessions yesterday. The price action in the coming days will need a close watch to see if the yields are bouncing back from their crucial supports at 1.9%-1.85% (30Yr) and 1.25%-1.2% (10Yr) and avoid a much deeper fall. The German yields remain under pressure and are bearish to see further fall from current levels. The 10Yr GoI has come down further and can test 6.1%. A range of 6.1%-6.2% is a possibility for some time.
The US 2Yr (0.20%), 5Yr (0.78%), 10Yr (1.31%) and 30Yr (1.93%) Treasury yields fell sharply in the US session yesterday and had bounced-back to the levels seen in the early Asian session yesterday. 1.25% on the 10Yr has been tested and is holding as of now. While above the 1.25%-1.2% support zone, a corrective bounce to 1.4%-1.5% is a possibility. Similarly, the 30Yr is just above its 1.9%-1.85% support zone and while this holds a corrective bounce to 2.1%-2.2% is possible in the coming weeks.
The German 2Yr (-0.69%), 5Yr (-0.61%), 10Yr (-0.31%), 30Yr (0.18%) yields remain lower and stable. Our bearish view remains intact. The 30Yr can test 0.10% on the downside. The 10Yr on the other hand has dipped below -0.30% as expected and can fall to -0.40%- and -0.45% going forward.
The 10Yr GoI (6.1365%)has declined further yesterday. A test of 6.1% is likely from where a bounce is possible. As mentioned yesterday, the 10Yr GoI can consolidate between 6.1% and 6.2% for some time. A breakout on either side of this range will then give a cue on whether the yield can move up to 6.3% or fall back to 6% again.
