STOCKS
The equity indices have bounced a bit from sharp declines seen over the last couple of sessions. We need to see if the recovery is short lived and if more decline is left to be seen in the near term. Watch supports near 34750-34500 on Dow, near 15000 on Dax and near 28000 on Nikkei. On shanghai there is support near 3475/3500 while Nifty and Sensex needs to trade above supports at 16780 and 57000 to move up in the coming sessions.
Dow (35135.94, +236.60, +0.68%) has support between 34750-34500 on the Daily Candles which can hold in the near-term, keeping the Dow ranged between 34500-35750 for most of Dec’21.
DAX (15280.86, +23.82, +0.16%) has risen slightly but is overall bearish towards a 15000 on a break below 15250. We may expect a bounce from 15000 in the medium term. Till then view remains bearish. Any rise above 15550 can take the index towards 15750 before a decline is again seen from there.
Nikkei (28498.91, +214.99, +0.76%) has risen today. Nikkei needs to break above 28750 to rise towards resistance at 29000-29500. While below 29500/28750, the view of a fall towards 28000 or lower cannot be negated.
Shanghai (3568.72, +6.03, +0.17%) has come up and heading towards 3575/3600. A strong break above 3600 can take the index towards 3625/50. Else a fall back to 3550/3500 or even 3475 is possible.
Nifty (17053.95, +27.50, +0.16%) made a low at 16782.40 before coming up to close above 17000. Nifty has to sustain above 17000 to be bullish towards 17200/400. Else a break below 17000 would mean a fall towards 16000/15980 in the coming sessions.
Sensex (57260.58, +153.43, +0.27%) tested 56482.93 before coming up to close above 57000. A further fall towards 56000/55000 is possible in the near term while below 58000. Only a sustained break above 59000, if seen can again make the index bullish for the medium term. Till then sideways to bearish movement could be expected.
COMMODITIES
Stability is seen in most commodity prices. Crude prices have dipped a bit but we need to see if respective supports of 70 and 67/68 hold on Brent and WTI to produce a short bounce in the near term. Failure to hold above the mentioned supports may give way for a fall. Gold may trade within 1780-1820 while Silver can break below 23 to test 22 before bouncing back from there. Copper can test supports near 4.25-4.00 before bouncing higher.
Brent (74.10) and WTI (70.89) have dipped a bit from levels seen yesterday. Brent tested 73.89 and WTI tested 70.03 before bouncing back from there. As mentioned yesterday, Brent needs to hold above 70 to bounce back towards 75/82 on the upside again. While below 75, the price may slowly give way to an eventual fall towards 65 in the medium term. Watch price action near 70/75. On WTI, we need to see if it sustains trade above 67/68.
Gold (1791) tested 1784.30 before rising from there. We continue to expect trade within 1780-1810/20 to continue for the near term unless a break on either side of the range is seen.
Silver (22.99) is breaking below 23 and if the fall sustains, we can expect a decline towards 22 which is an important support.
Copper (4.3455) trades slightly lower. It has important support at 4.25 and can bounce back if the support holds. In case the price breaks below 4.25 (less likely), it can fall to 4.00 before reversing from there.
FOREX
Currencies look more or less range for now. Dollar Index may remain within 95.75-96.50/97 which can keep Euro above 1.12 and below 1.1450/1.14 for the next couple of weeks. EURJPY has risen back above 128 and can continue to rise within the 128-130 range. Any break below 128 can open up chances of a fall to 125. Aussie and Pound look ranged too for now. USDCNY has fallen sharply within 6.37-6.40 and needs to bounce from 6.37 else a fall to 6.36/35 would come into the picture. USDINR can test 75.25/50 for now. A maximum rise to 75.75 is possible before falling off from there.
Dollar Index (96.13) trades lower but has to break below 95.75 to turn further bearish. Till then we may expect trade within 95.75-96.50/97 to continue.
Euro (1.13) tested 1.1331 before coming off from there. Immediate resistance is seen near 1.1360-1.14 which can be tested soon before a slight dip is seen. In the next 2-weeks, we may expect a rise to 1.14-1.1450 before again declining from there.
EURJPY (128.50) fell to test 127.48 before bouncing back again to 128+ levels. While above 127.48-128, view is bullish towards 129-129.60 before another decline is seen.
Aussie (0.7151) is holding above 0.71 and while that holds, a rise to 0.72 can be possible.
Pound (1.3325) is trading above immediate support near 1.328/326 and while that holds, the Pound could be found in a sideways range within 1.325-1.34. Thereafter, we would wait to see which way the price moves for further direction cues.
Dollar-Yen (113.65) has bounced from 113 and attempting to move up over the past 2-sessions. If it holds above 113, a rise back to 115-115.50 is possible. Else a fall back towards 112 can come into the picture. Watch ranged movement within 113-115 for now.
USDCNY (6.3732) has fallen sharply to test the lower end of the 6.40-6.37 range. If the pair does not immediate bounce back, it can fall towards 6.36/35 eventually.
{USDINR(75.1025) rose sharply to close above 75 yesterday. This was contrary to our initial expectation of a fall from 74.80 and brings forth the less likely alternative view of a rise towards 75.25/50 on the upside before declining from there. A maximum upside of 75.75 (only on a break above 75.50) is possible within the current upmove, to be followed by a sharp fall back towards 74.80/60.
INTEREST RATES
The US Treasury yields have come down further in line with our expectation. Supports are coming up near current levels and it needs to be seen if the yields can bounce-back from there or not. The German yields are likely to fall from current levels and keep the broader downtrend intact. The 10Yr and 5Yr GoI have inched up slightly yesterday. They can rise further within their overall broad range if they manage to sustain the uptick seen yesterday.
The US 2Yr (0.50%), 5Yr (1.17%), 10Yr (1.51%) and the 30Yr (1.86%) continue to move down in line with our expectation. The 10Yr has come closer to the 1.5%-1.45% region and the 30Yr is just above 1.85%. Need to see if they can bounce-back from there or not. We reiterate that we can see a broad 1.45%-1.65% (narrow) / 1.35%-1.75% (broad) on the 10Yr and 1.75%-2.1%/2.2% on the 30Yr.
The German 2Yr (-0.77%), 5Yr (-0.63%), 10Yr (-0.32%) and 30Yr (0.01%) yields remain lower and stable. Our view of seeing a fresh fall to -0.45% / -0.5% (10Yr) and -0.1% / -0.2% (30Yr) remains intact. The yields will have to break above -0.2% (10Yr) and 0.10% (30Yr) to negate this bearish view and rise to -0.1% (10Yr) and 0.2% (30Yr).
The Indian 10Yr (6.3351%) and the 5Yr (5.6614%) have inched up slightly. While above 6.32%, the 10Yr can move back up to 6.36%-6.38% again. The narrow 6.3%-6.38% range remains intact for now. The 5Yr can rise to 5.7% if it manages to sustain above 5.66%. Else a dip to 5.62%-5.61% is possible.
