STOCKS
Short selling continues in the equities globally as most indices break immediate supports and look bearish for the next few sessions. Dow and Dax have broken below 34000 and 15400 respectively and can head towards 33500-33000 and 15000-14800. Nikkei has broken below 30000 and can test 29500-29000 in the near term. Shanghai seems to be the only index amongst all that holds above support near 3570. Nifty and Sensex too can fall today towards 17200-17000 and 58000 respectively.
Dow (33970.47, -614.41, -1.78%) broke below immediate supports at 34500 and 34000 respectively and is now bearish for a test of 33500-33000 in the near term. Any break below 33000 can drag it lower to 32000 but that does not look certain just now. Watch for a possible corrective bounce from 33500-33000 zone.
DAX (15132.06, -358.11, -2.31%) too opened with a sharp gap down and now has chance to test 15000-14800 from where a bounce is possible.
Nikkei (29852.98, -647.07, -2.11%) broke below 30000 and while it continues to trade lower, a test of 29500-29250 or even 29000 cannot be negated. View is likely to be bearish for another couple of sessions.
Shanghai (3613.97, +6.87, +0.19%) has also dipped but seems to be the only one on the mentioned indices that has not broken support at 3570. We expect the support to hold and keep the index ranged for now.
Nifty (17396.90, -188.25, -1.07%) fell sharply in yesterday’s session and looking at the sharp fall in global equities, Nifty can see a sharp fall today possibly breaking immediate supports near 17200. Below 17200, the index can fall towards 17000.
Sensex (58490.93, -524.96, -0.89%) has scope to test 58000 today which is an interim support. Failure to hold above 58000 can be strongly bearish for the next few sessions.
COMMODITIES
Slight bounce is seen in commodity prices globally but we would wait and watch if this is short lived or the prices can again fall back in the near term. Copper is bearish towards 4.10-4.00 while below 4.20, Gold and Silver can fall towards 1725-1700 and 22-21 on a break below current levels. Crude prices have risen well from supports but need to see if they sustain the rise or fall back in the next few sessions. We would wait and watch price action near current levels.
Brent (74.51) dipped slightly but rose back to levels above 74 as support near 74-73.75 held well yesterday. We need to see if the price can bounce back to 75-77 levels or break below support in the near term. Need to wait and watch for now.
WTI (70.79) too has risen from 70.36 but we need to see if the price bounces towards 72-73 in the near term.
Gold (1763.40) has not broken below 1742 yesterday and has instead bounced higher. But while below 1800-1780, there is still scope for a fall towards 1725-1700.
Silver (22.27) has support in the 22-21 zone which can hold and produce a bounce in the near term. Any break below the mentioned support zone can be strongly bearish.
Copper (4.1420) has fallen as expected and while below 4.20, there is scope for a fall to 4.10-4.00 in the near term.
FOREX
Dollar Index has fallen sharply pulling up Euro from 1.17 itself. We need to see if the movement sustains or gives way again in the near term. EURJPY, Aussie and Pound have risen from respective interim supports which need to hold to take them up in the near term. Else a fall again can be seen on the cards. USDCNY has resistance near 6.47/48 but a possible SHS pattern on the USDCNH can indicate bullishness above 6.48. We will have to wait and watch the movement in the near term. USDINR can range between 73.40-73.80-74.00 with bias for a rise towards 74.
Dollar Index (93.217) can see a rise to 93.60 on the upside before seeing profit taking from there. However, if the index holds below 93.40 just now, we may expect a decline towards 93.00-92.80 in the near term.
Euro (1.1730) has bounced from 1.17 but we need to see if the bounce is short lived or if there is scope for a fall to 1.1660-1.1600 in this month. Watch price action near current levels.
EURJPY (128.53) has bounced from 128.14 as support near 128 has held well. The pair should be able to rise back to 129 or higher to avoid an immediate break below 128 which if seen could be very bearish for the medium term. Watch if the bounce sustains over the next few days.
Dollar-Yen (109.58) continues to fluctuate within 110.20/50-109.00/25 region and may hold on for some more time before any fresh break out is seen. Overall view remains ranged.
Aussie (0.7264) tested 0.7220 before rising to current levels. We need to see if the bounce sustains or gives way towards 0.72.
Pound (1.3663) has bounced from 1.3640 but we need to see if the bounce can take the price higher towards 1.37-1.3750 or there is some more downside left in the coming sessions.
USDCNY (6.4655) has risen well but has resistance near 6.47/48 which can hold for the near term. Chinese market is closed today. A possible Shoulder-Head-shoulder pattern seems to be seen on the USDCNH, breaking above 6.48 but we would wait and see how the movement shapes up.
USDINR (73.74) rose by the end of the session yesterday to re-attempt a test of 73.80. We may expect fluctuation within 73.50/60-73.80-74.00 in the near term with slight bias to see an upmove towards 74 while above 73.60.
INTEREST RATES
The US Treasury yields have dipped back. Resistances are ahead which have to be broken in order to move up further. Will the Fed meeting tomorrow provide a trigger to break the resistances? We will have to wait and watch. Otherwise, we see a broad range of move in the Treasury yields with high chances of breaking the range on the downside from a long-term perspective. The German yields are turning down from their resistances as expected marking the end of their corrective rally. A further fall from here will indicate the resumption of the broader downtrend and drag them lower. The 5Yr and 10Yr GoI have broken their range on the downside and are keeping our bearish view intact.
The US 2Yr (0.22%) Treasury yield remains stable while the 5Yr (0.83%), 10Yr (1.32%) and the 30Yr (1.86%) have fallen-back. We see resistance at 1.4%-1.45% on the 10Yr while below which a dip to 1.2%-1.18% is possible. Broadly 1.18%-1.4/1.45% looks to be the range of trade. The 30Yr on the other hand has to break above 1.9% to move up to 2%. Else a test 1.8% and a break below it cannot be ruled out.
The German 2Yr (-0.73), 5Yr (-0.64%), 10Yr (-0.32%) and 30Yr (0.17%) yields have turned down. The resistances at -0.25% (10Yr) and 0.2% (30Yr) have held very well as expected. A further fall from here will confirm the same and can drag the yields lower to -0.5% (10Yr) and 0% (30Yr) in the coming weeks.
The Indian 10Yr GoI (6.1380%)and the 5Yr GoI (5.5599%) have declined sharply breaking below their range on the downside as expected. The bearish view remains intact. The 10Yr can test 6.1% and then see a corrective bounce 6.15%-6.16% before extending the fall to 6% over the medium-term. The 5Yr has tested 5.55% as expected and can extend the fall to 5.5% in the coming days in line with our expectation.
