STOCKS

  • Asians are trading in red in spite of a strong bounce in the US equities on Friday. The uncertainty prevailing over the US-China trade negotiations continue to keep the sentiment negative. As such any bounce in the equities in the coming days could be short-lived. The broader picture remains bearish and further fall is likely in the equity segment in the coming weeks.
  • Dow (25942.37, +114.01, +0.44%) has to surpass 26250 to bring back the bullish sentiment completely. But that might be difficult given the uncertainty prevailing in the market. While below 26250, the outlook is bearish for a fall to 25000 or even lower in the coming weeks.
  • DAX (12059.83, +85.91, +0.72%) remains bearish for a fall to 11900-11850. It has resistance between 12100 and 12200.
  • Nikkei (21244.29, -100.63, -0.47%) has strong resistances at 21500 and 21750 which can keep the index pressured on the downside to test 20500 or even lower levels in the coming weeks.
  • Shanghai (2918.48, -20.73, -0.71%) has resistance at 2950 which will need a close watch. A break of it can take it to 3000. But while below 2950 a fall to 2820-2800 is likely.
  • Sensex (37462.99, -95.92, -0.26%) and Nifty (11278.90, -22.90, -0.20%) remains bearish. Sensex can test 37000-36800 while the Nifty has room for a fall to 11100-11000 in the coming days.

COMMODITIES

  • Weak equities continue to provide support for gold to retain its sideways range. Silver and copper looks weak for further fall in the coming days. Oil remains stable and might see some upticks in the near-term before the overall downtrend resumes.
  • Gold (1285.9) remains stable between 1280-1292 over the last few days. The broader 1266-1292 range remain intact. The bias is bearish for gold to break this range below 1266 and fall to 1260-1255 going forward.
  • Silver (14.72) is much weaker than gold. It can test 14.65-14.60 in the near term. indeed, while below 15, it can inch slowly lower to even 14 in the coming weeks.
  • Copper (2.75) retains our bearish outlook intact for a test of 2.68. Immediate resistance is in between 2.78 and 2.80.
  • Nymex (61.78) has been oscillating around 62. We need to wait and see to get some clarity of whether it is going to go up to 64-65 before reversing lower or will it fall from current levels itself. While above 60.80, the chances are high for a rise first before we see a fresh fall.
  • Similarly, Brent (69.81) has a chance to test 71.50-72 within its overall downtrend in the near term.

FOREX

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  • Since the beginning of the month, Dollar Index has risen sharply on an attempt to break below 97.25, unable to sustain at lower levels. 97.00 is an important support for the near term and while that holds, we could expect some sideways movement in the 97.00-98.00 region with a gradual rise towards 98-99 in the medium term.
  • Euro (1.1231) is likely to hold below 1.1275-1.1250 in the near term, seeing another dip back towards 1.1200-1.1150. A fall towards 97 in Dollar Index if seen could pull Euro towards 1.13 on the upside but that, if seen would be short lived. Preference is for a fall back towards 1.1150 or lower in the medium term.
    However, we keep a close watch on the German-US 10YR yield (refer interest rates section below) which if rises from here could pull up Euro towards 1.13 or higher.
  • USDCNY (6.8552) has risen sharply breaking above our expected resistance near 6.85. While the pair sustains above 6.85, we could expect a rise towards 6.90-6.91 in the coming sessions. Above 6.85, we have two important levels at 6.90/91 and 6.9550 respectively.
  • The Euro-Yen (123.28) is stuck in the 123.50-122.50 region and is likely to remain so for now. A downside extension to 122 could be possible in the near term from where a bounce looks possible.
  • Dollar Yen (109.76) is trading above immediate support levels of 109.00-109.50 and while the support holds, Dollar Yen could move higher towards 110.50 again in the medium term.
  • Aussie (0.6979) is trading just below 0.70. Below this level, there could be scope of testing 0.6950-0.6900 on the downside. Near term is bearish while below 0.70.
  • Dollar-Rupee (69.92) came down a bit on Friday to close at 69.91. We could see another attempt to rise back towards 70.00-70.30 over the next 2-3 sessions. Downside is expected to be limited to 69.75.

INTEREST RATES

  • The US yields are trading lower and look bearish for the near term. The 30Yr (2.86%), 10Yr (2.44%) and 5Yr (2.23%) have fallen. Near term looks weak for the yields and have scope for them to fall towards 2.80% (30Yr), 2.40% (10YR) and 2.20% (5Yr).
  • The US-JGB 10Yr (2.49%) has fallen and looks bearish for the medium term towards 2.45%.
  • The German-US 10Yr (-2.48%) is trading just above immediate trend support and while that holds, the yield spread could start to move up towards -2.45%. This is indicative of Euro strength possibly towards 1.13 in the near term.
  • The UK yields have bounced a bit from levels seen on Friday. The 5YR (0.82%), 10Yr (1.14%) and the 20Yr (1.59%) are up by 1bps but look bearish for the medium term and could fall towards 0.75%, 1% and 1.50% respectively.
  • The Indian 10Yr GOI (7.5077%) could have scope of testing 7.55% on the upside before falling towards 7.40% support. The yield could move up for the next 2-3 sessions followed by a fall by the week end.

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