STOCKS
Global equities trade lower and may continue to fall for the near term before any reversal is seen again. Dow and Dax can fall towards 34000-33500 and 15200-15000 respectively while Nikkei and Shanghai may break below 29400 and 3500 to head lower. Nifty and Sensex needs to sustain the recovery seen yesterday else could be vulnerable to a sharp decline over the next few sessions that could drag them lower towards 17400/200 and 59000 respectively.
Dow (34299.99, -569.38, -1.63%) fell sharply and failed to break above 35000-35250 region possibly pausing at current levels. A dip to 34000-33500 cannot be negated on the downside.
DAX (15248.56, -325.32, -2.09%) fell sharply and while the momentum continues, a further decline towards 15000 looks possible before a pause is seen. 15200-15000 is an important zone.
Nikkei (29442.14, -741.82, -2.46%) plunged more than 700 points in a single session. A fall to 29000-28500 cannot be negated if the fall continues with such strong momentum.
Shanghai (3523.22, -79.00, 2.20%) has broken below immediate support near 3550-3525 and while it trades below 3525, it can fall towards 3450-3400 in the near term. However, we would see if the index bounces while above 3500.
Nifty (17748.60, -106.50, -0.60%) dipped to levels below 17600 yesterday and recovered but will the fall in global equities drag down Nifty towards 17400/200 or will the recovery seen yesterday take it higher to 18000 again? We would wait to see how it fares today.
Sensex (59667.60,-410.28, -0.68%) fell below 60000 yesterday but we would wait to see if it continues to fall lower today also and slowly head towards support at 59000.
COMMODITIES
Crude prices have fallen as expected from respective resistance zone and can come down further in the near term. However we would wait for confirmation on a decline below 74 on WTI and below 76 on Brent. Gold tested 1728 and rose back but we cannot negate a fall again towards 1725-1700. However we would be careful at current levels. Silver has dipped too and can test 22 before bouncing back higher. Copper is bullish towards 4.30/40 while above 4.00/10
Brent (78.11) came down well as expected as resistance near $80.75 holds on Brent. A decline towards $75-70 looks possible eventually but we would need initial confirmation on a break below $76 for ensuring a top is in place.
WTI (74.40) has also fallen as expected and could be headed towards $72-71 on the downside in the near term. Similar to Brent, we would need confirmation of a reversal on a break below $74 on WTI.
Gold (1738.30) fell to test 1728 unable to rise past 1780 on the upside. A slow fall to 1725-1700 cannot be negated while below 1780. However we would be careful at current levels.
Silver (22.55) has come down to test 22.40/50 and while above 22, there are chances of a decent fall towards 22 before rising back towards 23-23.50 in the medium term. .
Copper (4.2460) has dipped a bit but remains bullish towards 4.30/40 while above crucial support at 4.0/10.
FOREX
Volatility continues in currencies. Aussie and Pound fell sharply but are likely to recover. Dollar Index has crucial resistance near 93.80-94.00 which if holds can drag it lower towards 93.50-92.75 soon. Euro can trade sideways while above 1.1665 between 1.1750-1.1665 but a break on the downside to test 1.1625-1.16 cannot be negated. EURJPY tests important resistance at 130.50 and can fall from there. Dollar Yen may not rise above 112 and eventually come off while 112 holds. USDCNY is likely to trade within 6.44/45-6.48 region. USDINR can test 74.20/25 before falling off from there. Break above 74.25 may take it higher to 74.45/50.
Dollar Index (93.708) tested 93.80 yesterday. Note that 93.80-94.00 is an important resistance zone and while that holds, the index could come off in the near term towards 93.50-93.00.
Euro (1.1683) although below 1.17 has not sustained break below 1.1665 and hence could show some sideways range within 1.1665-1.1750 region for sometime. Our bearish view for medium term towards 1.1625-1.1600 remains intact but would gain weightage on a sustained break below 1.1665. Such a fall could be rather slow. We remain cautious near current levels.
EURJPY (130.19) almost tested 130.50 before coming off from there. While 130.50 holds as decent resistance, a rise to 131 or higher seems difficult. Any rejection from here can take the cross down to 129.50 again.
Dollar-Yen (111.46) may find difficulty to rise above 112 and could decline from there back towards 111.20-110.80 in the coming sessions while resistance at 112 holds.
Aussie (0.7243) has risen slightly from 0.7225 seen yesterday. A rise from current levels is needed for Aussie to move up towards 0.73 eventually. Watch price action near current levels.
Pound (1.3544) plunged sharply yesterday to 1.3520. While above 1.35, there is still scope to see a bounce back to 1.36/37 in the medium term. Any break below 1.35 would make it vulnerable to a sharp fall in the coming weeks.
USDCNY (6.4666) opened sharply higher near 6.4751 but has fallen from there. While resistance near 6.47/48 holds, the pair can be ranged within 6.48-6.45/44 for the medium term.
USDINR (74.0450) tested 74.1175 on the onshore markets but has tested 74.25 on the NDF. A fall from there is expected towards 73.90/80 before again resuming to rise further. We may look for initial resistance at 73.20/25 and higher near 73.45/50 which is likely to hold for the medium term. Downside is likely to be limited to 73.80.
INTEREST RATES
The US Treasury yields continue to move up. But we see limited room left on the upside as important resistances are coming up on the charts. As such we will be cautious for a possible reversal in the Treasury yields either from here itself or after a slight extension on the upside. The German yields sustain higher and can rise further from here before reversing lower again. The 10Yr and 5Yr GoI can rise in the near-term to test their key resistances and then reverse lower.
The US 2Yr (0.30%), 5Yr (0.1.01%), 10Yr (1.54%) and the 30Yr (2.09%) Treasury yields have risen further. The 10Yr and 30Yr have risen above 1.5% and 2% respectively. It will have to be seen if the yields are reversing lower from here itself or after a slight extension towards 1.6% (10Yr) and 2.2% (30Yr). The price action in the next few sessions will need a close watch.
The German 2Yr (-0.70), 5Yr (-0.55%), 10Yr (-0.20%) and 30Yr (0.26%) yields continue to move up. Our view of seeing a test of 0.3%-0.35% on the 30Yr remains intact. The 10Yr can rise to -0.1% on a break above -0.20%. Thereafter we can expect the yields to come down again.
The Indian 10Yr GoI (6.2281%)has surged further yesterday and can head up towards 6.25%-6.26% as mentioned yesterday. The 5Yr GoI (5.6749%) on the other hand fell to a low of 5.6236% yesterday but had risen back well from there. 5.7% is the key immediate resistance which if broken can take the 5Yr up to 5.76% and higher in the coming days. Support is at 5.64%.
