STOCKS
Equities broadly remain negative in the near term. Market looks likely to be turning cautious ahead of the US Fed meeting next week and some profit is being taken off the table. Dow, DAX has room to dip further in the coming days. Asians are also trading in the red following the sell-off in the US equities on Friday. Sensex and Nifty are coming near their significant supports and can see a bounce in the coming days.
Dow (27154.20, -68.77, -0.25%) is facing resistance at 27350 now. The near-term view is negative. It can test 27000. A break below 27000 can see the fall accelerating to 26600. Dow has to rise past 27500 to bring back the bullish sentiment.
DAX (12260.07, +32.22, +0.26%) has resistance between 12350 and 12400. While below 12400 the outlook is bearish to test 12100 and 12000 in the near term.
Nikkei (21394.28, -72.71, -0.34%) has come-off again failing to breach 21450 decisively as expected. The negative view is intact to test 20900 and 20750 on the downside in the coming days. Resistance is at 21500.
Shanghai (2903.04, -21.16, -0.72%) has dipped towards the lower end of it 2900-2950 range. A bounce from here will keep the sideways range intact. But a break below 2900 will drag the index lower to 2850 or even lower in the coming days. We expect 2900 to hold and the sideways move to continue. We will have to wait and see.
Sensex (38337.01, -560.45, -1.44%) tumbled on Friday but has a significant support coming up at 38000 which we expect to hold. A bounce to 38600 and 38800 can be seen after a test of 38000.
Nifty (11419, -177.65, -1.53%) has cluster of supports between 11380 and 11300. We expect the Nifty to bounce to 11600 from this support cluster in the coming days.
COMMODITIES
Commodities are stable. Crude looks bullish for the very near term. Gold and Copper could fall a bit to test support levels in the next couple of sessions. Silver could fall while below resistance near 15.50.
Brent (63.27) and Nymex WTI (56.28) are trading slightly higher. Brent could rise towards 65 in the near term while WTI could test 58 from where another dip looks possible. Although very near term could see slight rise in crude prices, the rise is likely to be short lived. Below current levels there is scope of testing 62 and 54 respectively.
Both Gold (1427.10) and Silver (16.36) have dipped. While silver seems to be holding below immediate resistance near 16.50, Gold has held below 1450. On Gold, 1420 is an immediate support from where a bounce back to levels of 1460/1480 is possible in the medium term. On Silver, while the daily resistance near 16.50 holds on the line chart, price could fall dip towards 16.
Copper (2.7530) rose to test 2.80 on the upside but could not sustain at those levels and instead came down to close lower on Friday. The fall could extend towards 2.70-2.68 from where a rise back towards 2.80 or higher is possible in the longer run. Near term range could be seen within 2.70-2.80.
FOREX
Dollar Index (97.18) is trading slightly up. Overall ranged movement is seen 96.60-97.60 region and could continue for the near term.
Euro (1.1216) is stuck in the 1.12-1.13 region both being immediate support and resistance levels. A sustained break on either side is required to get directional clarity for the coming sessions. While Dollar Index trades below 97.50, Euro could attempt to re-test 1.13 in the next 2-3 sessions.
Dollar-Yen (107.95) has bounced well from just above support at 107. While above 107, Dollar-Yen could rise towards 108.50-109.00 in the near term. View is bullish while above 107.
Euro-Yen (121.09) is stuck above support at 121. The currency pair is trading at crucial levels and a break below 121, if seen and sustains could be vulnerable to a sharp fall in the longer run. We watch price action near 121 closely. A bounce from here could take it back towards 123 but chances of a bounce looks less likely just now.
Aussie (0.7039) and Pound (1.25) have resistance near 0.71 and 1.26 which seem to be holding well and could the currencies towards 0.69 and 1.24/22 in the medium term.
PBOC has set the day’s reference rate at 6.8759 against 6.8635 on Friday. USDCNY (6.8761) could rise towards 6.88-6.90 in the near term. View is bullish while above 6.86.
USDINR (68.8125) could trade within 68.75-69.00 for a couple of sessions with an eventual rise towards crucial resistance at 69.25.
INTEREST RATES
Yields continue to remain negative in the near term. Both the German and the US bond yields can dip further in the coming days. The 10Yr GoI can consolidate and see a corrective bounce in the near term.
The US Treasury yields 2Yr (1.83%), 5Yr (1.82%), 10Yr (2.06%) and 30Yr (2.58%) bounced across tenors on Friday. However, the near term view remains negative. The 30Yr can dip to 2.50% while it remains below 2.60%. The 10Yr Treasury yield can revisit the key psychological level of 2% while it trades below 2.10%.
The German yields have dipped further in line with our expectation. The 2Yr (-0.79%), 5Yr (-0.66%), 10Yr (-0.33%) were down while the 30Yr (0.27%) remained stable. The yields have more room on the downside. The 2Yr can test -0.85% and the 10Yr can dip to -0.40% in the near term.
The 10Yr GoI (6.3615%) remained stable on Friday. As mentioned earlier, a bounce to 6.50% and 6.55% is possible while the 10Yr GoI sustains above 6.25%. A consolidation between 6.25% and 6.42% is also possible before we see the above mentioned rise.
