STOCKS
Equities need to hold above immediate supports to bounce back. After the Dow fell sharply yesterday on Fed chair Powell’s statement, there could be chances of a fall to 34000 if it does not recover and bounce back immediately tonight. Dax needs to hold above 15000-15250 to rise again in the near term. Nikkei and Shanghai need to hold above 28500 and 3550 to turn bullish for the near term. Nifty trades within 16800-17400 and we need to see if it breaks below 16800 or attempts to rise higher. Sensex has scope to test 56500-56000 before bouncing from there.
Dow (34483.72, -652.22, -1.86%) fell sharply after Powell statement that inflation is high and QE should be wound up fast. Near term Support at 34500 is broken. If the Dow does not bounce back to levels above 34500 immediately, the next level to watch would be 34000 (40-45% chances). Watch where the market closes today.
DAX (15280.86, +23.82, +0.16%) has fallen sharply and may test the support at 15100/15000. A strong and sustained rise above 15250 is needed for the view to bullish towards 15500.
Nikkei (28498.91, +214.99, +0.76%) has risen slightly today after falling down sharply yesterday. A strong break above 28500 is needed to take the index towards 29000-29500 initially.
Shanghai (3568.72, +6.03, +0.17%) went up to test 3572 but came down from there. The view is bullish to see a test of 3600 in the coming sessions. A strong break above 3600 is needed to take the index towards 3700 else a fall back to 3550/3500 is possible.
Nifty (17053.95, +27.50, +0.16%) came down sharply after testing the high of 17324.65. The view is bearish below 17400. Sharp fall in Dow yesterday can have a negative impact on the Indian market today. The range of 16800-17400 is holding well. We need to see if Nifty nreaks below 16800 today.
Sensex (57260.58, +153.43, +0.27%) also fell sharply and has closed just above 57000. Further fall towards 56500/56000 is possible before we see a corrective upmove.
COMMODITIES
Crude prices fell sharply overnight and needs to now hold above respective supports to turn bullish else the current fall could extend downside. Brent needs to hold above 7 to head towards 75-80 else a fall to 65 is on the cards. Similarly, WTI needs to hold above 68/69 else can fall further towards 64/63. Gold is holding above immediate support at 1770 and could be ranged within 1770-1820 for now. Silver is ranged within 24-22. A break on either side will determine the next course of direction in the medium term. Copper is bullish while above 4.25 towards 4.50.
Brent (70.74) Brent fell to 69.345 before rising slightly from there. It needs to hold above 70 and rise above 75 to be bullish again towards 80. While below 75/70, an eventual fall below 65 is on the cards. Price action near crucial support at 70 needs a close watch.
WTI (67.56) has also fallen sharply due to the new covid variant scare and the volatility seen in the FX markets. WTI needs to rise above 68/69 to be bullish towards 75 else a fall to 64/63 can be on the cards.
Gold (1780.30) fell sharply to test support at 1770 yesterday but has started rising up again. Gold can continue to consolidate between 1770-1810/1820 before we see a break on either side.
Silver (22.86) has been falling since past few days. While below 23 the view is bearish to see a test of 22 on the downside. While above 22, an eventual rise back towards 24/24.50 is possible in the medium term.
Copper (4.3190) trades above support at 4.25 and while that holds, there is scope for a rise to 4.45/50 soon. View is bullish above 4.25.
FOREX
Huge volatility in the currency markets after the FED chair Powell’s statement. Dollar Index fell to 95.517 before bouncing back from there keeping the near term range of 95.50-97 intact for now. Euro tested 1.1283 before rising from there, but watch support near 1.1170/50 which needs to hold to keep Euro higher over the coming sessions. On the upside watch possible cap near 1.1350. EURJPY needs to sustain above 128 to rise towards 129-130 or higher. Continuous attempts to break below 128 can eventually give way to the downside. Aussie is bullish while above 0.71 and Pound is bullish while above 1.33-1.3250/67. Any break below the mentioned levels will force to look for a further fall in the near to medium term. USDCNY continues to fall sharply despite which the Dollar Rupee trades higher. As the NDF quotes 74.98, we may expect a gap own opening today but have to keep a close watch to see if it attempts to rise above 75-75.16 again. The higher than expected India GDP release could also favor Rupee today.
Dollar Index (96.02) fell to 95.517, the lower end of the mentioned 95.50-97 region, before bouncing back from there. A sustained trade above 96 can see a test of 96.50-97 again in the medium term. A break below 95.50 would be needed to indicate bearishness towards 95-94 in the longer run.
Euro (1.13) fell sharply to 1.1283 after FED chairman Jerome Powell stated possible downside risks to employment and economic activity and increase in uncertainty for inflation due to the emergence if the Omicron variant. But thereafter Euro has now risen back to 1.1321. Immediate support is seen near 1.1170/50 while immediate upside could be capped at 1.1350. Watch price action within this range before a break on either side is seen.
EURJPY (128.45) tested 127.48 and 127.64 over the last couple of sessions but has bounced well from there. Any more attempts to fall below 128 can trigger bearishness towards 127-126 on the downside. The cross pair needs to sustain above 128 in order to rise sharply towards 129-130 or higher in the medium term.
Aussie (0.7148) fell sharply below 0.71 to test 0.7062 before bouncing back again to current levels. Sustained trade above 0.71 can lead to a rise to 0.72. Immediate range of 0.72-0.71 may hold for now.
Pound (1.3303) too fell sharply to 1.3194 but bounced back well. Any break below 1.33-1.3267/50, if seen again can take the Pound lower and signal fresh bearishness. Overall view is likely to see a bullish reversal from immediate support near 1.33-1.3267/50.
Dollar-Yen (113.42) fell to 112.53 but has recovered a bit today. Overall sideways range of 114-113 looks possible with a possible fall to 112/111 in the medium term. View is sideways to bearish while below 114. A break above 114 is needed to bring back higher levels of 115-115.50 into focus.
USDCNY (6.3624) continues to fall sharply and could be headed towards 6.36/35 in the near to medium term. View is bearish while below 6.38.
{USDINR (75.1650) quotes 74.98 on the NDF and may open with a gap down boosted by Euro strength above 1.13 and on Yuan strength seen over the last couple of sessions. But we would keep a close watch to see if the pair rises back to attempt 75.20/50 on the upside or fall back while 75.20 holds as a decent resistance for now. Also note that the India GDP release yesterday showed a 8.4% growth for quarter ended Sep’21, higher than the 7.9% and 8.1% projections made by the monetary policy committee of Reserve Bank of India and a Bloomberg forecast of economists. This could be in favor of Rupee today.
INTEREST RATES
The US Treasury yields have bounced-back from their day’s low yesterday. The US Federal Reserve Chairman Jerome Powell indicated that the central bank would discuss on increasing the pace of stimulus taper in its meeting this month. Broadly, the yields at the far-end are just above their key range supports which can hold and keep the broad sideways range intact. The German yields have come down further and are keeping our bearish view intact. There is room for further fall. The 10Yr and 5Yr GoI have supports near current levels which can hold and produce a bounce within the expected narrow range in the near-term.
The US 2Yr (0.59%), 5Yr (1.19%), 10Yr (1.49%) and the 30Yr (1.83%) have risen back well from their lows. 1.4%-1.35% on the 10Yr and 1.8%-1.75% on the 30Yr will be the crucial support zones to watch. We expect these supports to hold and keep the broader 1.35%-1.75% (10Yr) and 1.75%-2.1%/2.2% (30Yr) range intact. A break below the above-mentioned supports will be bearish for the yields.
The German 2Yr (-0.76%) and 5Yr (-0.63%) yields remain stable while the 10Yr (-0.35%) and 30Yr (-0.07%) have declined further in line with our expectation. The 10Yr can fall to -0.45% / -0.5% and the 30Yr can test -0.1% / -0.2% on the downside in the coming days and keep the broader bearish view intact.
The Indian 10Yr (6.3263%) and the 5Yr (5.6463%) have closed on a mixed note yesterday. Supports are at 6.3% (10Yr) and 5.62% (5Yr). While the support holds, the 10Yr can bounce-back to 6.35%-6.38% and keep the 6.3%-6.38% range intact. The 5Yr on the other hand can rise back to 5.7% and remain in the range of 5.62%-5.7% for some time.
