STOCKS
Indian Equities came in from the cold with the big bank tax cut on Friday, with the Nifty closing substantially higher at 11274.20. Thankfully, we had waited for a day before going bearish on Friday. The Nifty is now reported to be trading near 11491 on the SGX today. There is a decent chance of further short-squeeze which could take the Nifty up towards 11500. People are likely to buy dips now, while above 11100.
Likewise, the Sensex (38014.62) can try to move up towards 38500-39000 while above 37500.
Note that while the Indian environment can be bullish, the global environment is cautious (if not inclined towards bearishness) as the world approaches the mid-October trade talks between USA and China.
As expected, the Dow (26935.07) was down a bit on Friday and is likely to test 26700-500 on the downside. There can be equal chances of a fresh rally from there towards 27500 or a deeper decline towards 26000 or lower.
The Nikkei (22079.09, +34.64, +0.16%) has been seeing a vertical rise. While we continue to see it as the most bullish index in the long-term, we should not grudge the Nikkei (22141.96, +97.51, +0.44%) a small pullback towards 21750-500.
As expected, the Shanghai (2973.87, -32.58, -1.08%) has started seeing some profit-taking and can test 2950-25 in the near term, but might try to rise towards 3150 going into October.
The KOSPI (2086.62, -4.90, -0.23%) remains in an uptrend for now, but continues to have long-term Resistance near 2115-25, which can cause a profit-taking dip towards 2075-50.
We continue to see good Resistance at 12500 on the Daily Line and Weekly Candles on the DAX (12468.01), with potential to push it down towards 12200 and lower.
COMMODITIES
Gold and Silver have moved up within their range. It will have to be seen if they can break their respective range on the upside to rise further and negate the chances of any further fall. Copper, though managing to hold above its key support, looks vulnerable to break and fall below it. Oil seems to be seeking for a direction after a volatile move following the drone attacks in Saudi oil fields. The near-term looks mixed and both Brent and WTI are likely to consolidate in a broad range.
Gold (1515) has risen towards the upper end of its 1480-1520 range. A strong break above 1520 will negate our bearish view for a fall to 1460-1440 and will take gold higher to 1555. But while 1520 holds, the sideways move will continue for some more time.
Silver (18.15) has risen closer to the key resistance level of 18.25 and seem to be gaining strength. A strong break above 18.25 will pave way for a revisit of 18.50 and 18.75 levels. Such a move will wipe-out the chances of seeing 17.25 and 17 on the downside that we had been expecting.
Copper (2.60) dipped below 2.59 but has managed to bounce from the low of 2.585. The bias on the charts is bearish for it to test 2.55-2.53 on the downside in the near term. Only a strong rise past 2.65 will turn the outlook positive.
Brent (65.05) sustains above 64 and remains mixed. It can trade in a broad range of 62-68 for some time.
WTI (58.82) is stuck in between 57.50 and 59.50 over the last few days. A breakout on either side of 57.50 or 59.50 is needed to get a clear idea on the next direction of move.
FOREX
Dollar Index and the Euro continue to consolidate sideways and remains mixed in the near term. Dollar-Yen is witnessing a corrective fall now and can dip further before resuming its overall uptrend. Aussie can see a corrective bounce and can consolidate thereafter within its downtrend. Though Pound has room to dip in the near term, the supports can limit the downside and keep the uptrend intact. USDCNY has risen above 7.10 and can move further higher. The Dollar-Rupee tumbled on Friday after the Government surprised and boosted the market sentiment by cutting the corporate tax rate. Though the Dollar-Rupee can fall further, an intermediate corrective bounce is possible before seeing further downmove.
Dollar Index (98.47) remains stuck in between 98 and 98.75 in line with our expectation. Within this range, intraday charts indicate that a dip to 98.20-98.10 is possible today. As we have been mentioning over last week, a breakout on either side of 98 or 98.75 will determine whether the dollar index will go up to 99-99.25 or fall to 97.50-97.25.
The Euro (1.1023) fell sharply on Friday within its 1.0985-1.1090 range but has managed to bounce from the low of 1.0996. The sideways range remains intact and a rise to 1.1050-1.1075 is possible within this range in the near-term.
Dollar-Yen (107.70) remains below 108. It can test 107.20-107.15 while it remains below107.9. But thereafter, the pair is likely to reverse higher and keep the uptrend intact to target 109-109.20 which we had been expecting.
The EUR-JPY (118.75) cross has been facing strong resistance at 120 for now. But at the same time it has a significant support at 118. We expect the cross to consolidate between 118 and 120 for some time before a breakout on either side of 118 or 120 gives a cue on the next move.
Aussie (0.6775) fell in line with our expectation and is getting support near 0.6760. A corrective bounce to 0.6790-0.6800 is possible while it remains above 0.6760.
Pound (1.2485) has come-off sharply from the high of 1.2582. A dip to 1.2435 or even 1.24 looks likely before we see a fresh rise. The broader picture remains bullish to test 1.2700 and even 1.2750 with strong supports at 1.24 and 1.2370.
USDCNY (7.1170) has risen well above 7.10 and keeps alive the chances of seeing a rise to 7.13-7.14.
Dollar-Rupee (70.9450) has bounced after tumbling to a low of 70.67 on Friday. The broader view is bearish. But an intermediate rise to 71.30-71.35, on a break above 71.10, cannot be ruled out before we see a fresh fall again targeting 70.34 on the downside.
INTEREST RATES
The US Treasury yields have tumbled across tenors last week indicating that the corrective rally has ended. The broader downtrend is likely to have resumed and the Treasury yields can fall further this week. The upmove in the German yields also seems to lose momentum. The near-term looks bearish for the German yields as well. The 10Yr GoI has surged on Friday and can consolidate in a broad range for some time now.
The US 2Yr (1.68%), 5Yr (1.60%), 10Yr (1.72%) and 30Yr (2.16%) have tumbled across tenors last week indicating the end of the corrective rally. The 30Yr can now fall to 2% while the 10Yr can test 1.57% on the downside.
The German yields 2Yr (-0.71%), 5Yr (-0.71%), 10Yr (-0.52%) and 30Yr (-0.04%) have dipped further. The 30Yr has declined below 0% which will now keep it pressured on the downside to test -0.1% and even -0.2% on the downside. The 10Yr can test -0.60% and even -0.68% in the coming days.
The 10Yr GoI (6.7885%) has come-off after surging to 6.8765% on Friday. A strong rise past 6.85% could open doors to test 7% on the upside. But while the 10Yr GoI remains below 6.85%, it can consolidate in a broad range of 6.65% and 6.85% for some time
