STOCKS
Equities trade lower globally and may continue to remain in a downtrend for the near term. Dow and Dax could head towards 34750-34500 and 15400 respectively while Nikkei and Shanghai can test 27000-26000 and 3400-3350 respectively. Nifty and Sensex too could trade weaker in the near term and fall towards 16400/350 and 54500-54000 respectively.
Dow (34894.12, -66.57, -0.19%) has fallen sharply and could be headed towards 34750-34500 which is a near term support zone from where a bounce could be possible. The corrective dip is likely to be short lived.
DAX (15765.81, -200.16, -1.25%) has broken below our expected support at 15800. While below 15800, Dax is vulnerable to a fall to 15400 in the near term before pausing.
Nikkei (27096.65, -184.52, -0.68%) has also broken below support at 27250, contrary to our bullish expectations of rising above 28000. While below 28000, Nikkei can fall to 27000 or even 26000 before bouncing back from there. Near tern view is bearish.
Shanghai (3415.28, -50.27, -1.45%) needs to hold above 3400 and bounce back else can fall to 3350 before any reversal is seen. Watch price action near 3400.
Nifty (16568.85, -45.75, -0.28%) declined in the previous session and looks bearish for the near term towards 16400/350 initially on a break below 16500.
Sensex (55629.49, -162.78, -0.29%) can test 54500-54000 before rising from there. Failure to hold above the mentioned support zone will make it vulnerable to a sharp fall that could continue for the coming weeks. Watch price action near 54500-54000.
COMMODITIES
Crude prices fell sharply yesterday but have recovered a bit. Trend still points to the downside and we may expect a fall in Brent towards 65-60 and WTI towards 60-58 before reversing from there. Gold and Silver can consolidate between 1740/60- 1800 and 23-24 respectively. Copper has also started recovering after falling to 4.00 yesterday. The view is bullish to see a test of 4.20 and 4.30 while above 4.
Brent (66.66) and WTI (63.79) has fallen sharply in line with our expectations. While the momentum looks strong on the downside we may expect Brent to fall further towards 65-60 while WTI can test 60-58 soon before a bounce is seen. The fall is seen as Covid cases surges globally adding to Crude Weekly Inventory data released by EIA yesterday that stated a drop in inventory levels by 3.2mln barrels for week ended 13th Aug, 2021. This exceeded analysts’ projection of seeing a drop by 1.1mln barrels.
Gold (1784.50) came down to test 1774.6 yesterday but has managed to bounce back. A consolidation between 1740/60-1800/10 looks possible for some time before we see an eventual break on either side. The uptrend is intact while above 1740-1760.
Silver (23.21) tested 23.08 before rising and while 23 holds as immediate support, Silver can bounce back towards 24 slowly. Trade within 23-24 is possible for now. A break below 23, if seen in the near term would make it vulnerable to a sharp fall towards 22. Watch price action near 23.
Copper (4.0720) fell sharply as expected and could fall to test 3.80 on a break below 4. On the contrary if 4 sustains to hold, we may expect a bounce back towards 4.20-4.30 soon. Watch price action near 4 for now.
FOREX
Dollar Index has surged well and could be headed towards 94.0-94.50, dragging Euro down to levels below 1.17. Euro could now target 1.16 in the coming days. Aussie, Pound and EURJPY look strongly bearish for the near term. USDCNY has surged beyond 6.50 and can test 6.52 on the upside. We may expect a gap up opening for Dollar-Rupee today expecting a rise towards 74.40/50 which if breaks can open up chances of testing 74.80
Dollar Index (93.56) has broken sharply above 93.30 and looks bullish for a rise to 94.0-94.50 in the near term before any reversal is seen from there. Immediate view is bullish.
Euro (1.1679) has broken below 1.17 finally and looks strongly bearish towards 1.16 in the coming sessions.
EURJPY (128.19) is nearing immediate support at 128 which if fails to hold can drag the cross lower towards 126.50 in the medium term. Watch price action near 128 in the next few sessions.
Dollar-Yen (109.71) seems to be highly fluctuating within 110.50 and 109 levels. It is important for the pair to break on either side and give some directional clarity for the medium term else we may expect sideways movement above 109 to hold.
Aussie (0.7140) has fallen sharply breaking below 0.7250 and while the fall continues, we may expect a further dip to 0.70 before bouncing from there eventually.
Pound (1.3622) fell sharply and a break below 1.3565, if seen will drag Pound lower towards 1.35-1.30 in the medium term.
USDCNY (6.5027) has risen sharply breaking above 6.49/50 that we had been expecting. Sustained trade above 6.50 can take the pair higher towards 6.52 in the near term before a dip is seen. Immediate view is bullish for USDCNY.
USDINR (74.2450) did attempt to fall towards 74.20 in the last session but may rise back towards 74.40/50 or even 74.80 as both Chinese Yuan and Euro trades weak against the Dollar.
INTEREST RATES
The US Treasury yields have dipped further and keep intact our view of testing their key intermediate supports in the near-term. It is important to see if the yields are bouncing back thereafter or not. The German yields are breaking below their key supports which we had expected to hold. The broader downtrend can continue and a further fall is possible from here. The chances of seeing a corrective rally stands reduced as of now. The 5Yr GoI has tested 5.66% as expected and has room to fall further in the near-term.
The US 2Yr (0.22%) and 5Yr (0.77%) Treasury yields remain lower and stable while the 10Yr (1.24%) and the 30Yr (1.86%) have declined further. The 30Yr has dipped below 1.90% and can now test 1.85%-1.8%. The 10Yr on the other hand can test 1.18% in line with our expectation. The price action at 1.8% (30Yr) and 1.18% (10Yr) will be crucial to see if the yields are managing to bounce-back from there or not.
The German 2Yr (-0.76%), 5Yr (-0.75%), 10Yr (-0.49%) and 30Yr (-0.06%) yields have dipped further. The 10Yr is just above its crucial support level of -0.5% while the 30Yr has broken below -0.05%. The expected corrective bounce seems to be not happening now. A further fall from here can drag the yields lower to -0.6% (10Yr) and -0.2% (30Yr) straight away from here itself without seeing a corrective rally.
The 5Yr GOI (5.6577%) fell to test 5.66% as expected and indeed has closed below it. The bearish view remains intact and a further fall to 5.64%-5.62% can be seen in the near-term and then a bounce-back is possible.
