STOCKS
Dow trades higher while Dax can bounce sharply after falling for a few sessions towards its near term support. Nifty and Sensex may pause a bit to see a corrective decline before again attempting to rise further. Nikkei trades higher just now and could fall from 30500/700. Shanghai on the other hand can fall towards 3575-3550 before again bouncing from there.
Dow (34798, +33.18, +0.095%) rose slightly and continues to trade in the green. While the rise continues, we expect a test of 35250 soon.
DAX (15531.75, -112.22, -0.72%) has scope to test 15700-15800 resistance while above 15500 and unless that is broken we may look for some recovery soon. Else a fall below 15500 can indicate bearishness towards 15400-15300 again in the near term.
Nikkei (30358.62, +109.81, +0.36%) has risen today. While above 30000 we expect the index to test the level of 30500-30700 before we see a corrective fall from there.
Shanghai (3587.05, -26.98, -0.72%) has fallen a bit today and could continue to fall to re-test support zone of 3575-3550 before again bouncing back from there in the medium to long term.
Nifty (17853.20, +30.25, +0.17%) surged up to test 17947 and has come down from there last week. The view is to see a corrective fall towards 17600 before we see a fresh rally towards 18000-18200 again.
Sensex (60048.47, +163.11, +0.27%) has risen sharply and closed above 60000 on Friday. A small corrective fall towards 58500-59000 can be seen now before a possible resumption of the upmove.
COMMODITIES
Globally major commodities trade higher today. Crude prices have surged well but we are cautious near current levels where crucial resistances are seen. Watch if Brent faces decline from crucial resistance at $80 and WTI at $76/77 else a major break out could be in place. Gold has moved up from 1740 but we do not negate a possible fall back to 1725-1700. Silver is bullish towards 23.0-23.50 while above 22.0-22.50. Copper is bullish while above 4 towards 4.40
Brent (79.15) has risen well and heads to test the crucial resistance at $80. We continue to expect $80 to hold and produce a decline in the next 1-2 sessions.
WTI (75.03) has risen above our expected $75 and has scope to test $76-77 before coming off from there. Watch immediate resistance near $76/77.
Gold (1759.30) rose a bit from levels near 1740. We continue to look at support near $1700-1725 to hold and produce a bounce towards 1800/1810 on the upside. Immediate view is to see sideways movement within a narrow range.
Silver (22.65) has scope to rise towards 23-23.50 on the upside. Immediate view is bullish while above 22.00-22.50.
Copper (4.2975) has been rising well from support at 4.00 and while that holds, view is bullish towards 4.30/40 in the near term.
FOREX
Currencies saw less volatility over the last 3-months and could gain volatility in October. While direction is not clear, we wait to go with the market flow. We have to see if Dollar Index rises above 93.50 or falls back, whether Euro rises above 1.1750 or falls lower below 1.1665. USDJPY has immediate resistance at 110.80 which unless breaks can cap and limit the upside. USDCNY has resistance near 6.47/48. USDINR may break above 73.80 to test 74 or higher. Aussie and Pound look ranged.
Dollar Index (93.249) has resistance near 93.50/40 which if holds can bring the index down towards 93.00-92.75 before a bounce is seen again in the medium term. Watch price action near 93.50/40.
Euro (1.1719) holds above 1.1665-1.17 for now and we need to see if it manages to rise above 1.1750 and head towards 1.18 or higher in the near term. Failure to rise above 1.1750 will be bearish for the exchange rate in the near to medium term taking it eventually down towards 1.1650/.1600.
EURJPY (129.66) is rising towards 130.50 and while that holds, we may have to look for another decline towards 129-128 in the medium term. Watch price action near 130-130.50 in the near term.
Dollar-Yen (110.61) has risen well and could test 110.75/80. A break above that would be bullish for a rise towards 111.50/60. Else while below 110.80, a dip to 110.40/20 could be likely. Watch price action near 110.80.
Aussie (0.7286) has resistance near 0.7377 and needs to break above that in order to turn bullish and rise further towards 0.74 or higher. While below 0.7377, Aussie can come off towards 0.71.
Pound (1.3670) has fallen sharply from 1.3750 last week and while that holds, a fall towards 1.36 is in place for the sessions to come. Immediate view is bearish while below 1.37.
USDCNY (6.4565) has come down while resistance near 6.47/48 holds. A break above the mentioned resistance if seen can take the pair higher towards 6.50/51 else a fall towards6.45/44 is possible.
USDINR (73.70) has immediate resistance at 73.80 and higher at 74 while supports are visible near 73.60 and 73.40. A broad range of 73.40/60-73.80/74.00 may hold for now. That said, the RBI might want USDINR to close above 74 ending Sep 30th. If that be so, we might expect a rise over the next few sessions. Watch price action on a break above 73.80.
INTEREST RATES
The rise in the US Treasury yields seems to be gaining strength. However, crucial resistances are coming up on the 10Yr and 30Yr which if broken can pave way for an extended rise and prove our view of seeing a fall-back wrong. We will have to wait and watch. The German yields have broken above their resistances which we had expected to hold. A further rise is possible in the coming days. The 10Yr and 5Yr GoI have risen sharply on Friday and have to move further up from here before seeing a reversal.
The US 2Yr (0.27%), 5Yr (0.94%), 10Yr (1.45%) and the 30Yr (1.98%) Treasury yields have risen further on Friday across tenors. The 10Yr is heading towards 1.5% and the 30Yr to 2% as expected. These levels of 1.5% (10Yr) and 2% (30Yr) are crucial resistance which we expect to hold and trigger a reversal towards 1.4%-1.3% (10Yr) and 1.9%-1.8% (30Yr) again. A strong rise past these hurdles will pave way for a further rise and prove our view of falling back wrong. The price action in the coming days will need a close watch.
The German 2Yr (-0.70), 5Yr (-0.57%), 10Yr (-0.23%) and 30Yr (0.26%) yields have moved further up on Friday. The break above 0.20% (30Yr) is sustaining well and there could be room to test 0.30%-0.35% on the upside now. Our view of seeing a reversal from 0.2% has gone wrong. The 10Yr on the other hand can rise to -0.1% on a decisive break above -0.2%.
The Indian 10Yr GoI (6.1810%)and the 5Yr GoI (5.6520%) have risen sharply on Friday. The 10Yr has risen past 6.16% and can now test 6.2%. It will have to be seen if it reverses lower from there or not. The 5Yr on the other hand has risen above 5.64% contrary to our expectation to see a reversal from there. It can now test 5.69%-5.7% before seeing a reversal.
