STOCKS
Dow is likely to remain within 34750-33750 range while Dax needs to rise above 15000 to head higher else could be bearish for the near term. Nikkei can rise to 28000 and higher while Nifty and Sensex needs to hold above 17600 and 59000 to keep bullish possibilities intact.
Dow (34416.99, +102.32, +0.30%) continues to fluctuate within 33750-34750 and unless a break on either side is seen, it is difficult to predict further movement from here. The mentioned range may continue to hold for now.
DAX (14973.33, -221.16, -1.46%) fell sharply to test 14818 before closing higher. While below 15000, view is bearish. If 14800 holds and produces a rise back to 15000+ levels, we may avoid to see further lows in the near term. Watch price action near current levels.
Nikkei (27990.32, +461.45, +1.68%) has risen today after falling sharply for four consecutive days. The support at 27000 has held very well and we can now see a test of 28000 initially and 28500-29000 eventually in the near to medium term.
Shanghai (3568.17, +31.87, +0.90%) markets are closed till 7th Oct. While above 3550, view is bullish. We need to wait and watch to see where it opens after the long break.
Nifty (17646, -176.30, -0.99%) came down sharply from levels above 17800 seen yesterday. 17600 is important immediate support for today which needs to hold to push the index higher towards 17800 again in the near term. Failure to bounce from 17600 would open up chances of a fall towards 17400.
Sensex (59189.73, -555.15, -0.93%) came down after testing a high of 59942.As mentioned yesterday, the 59000 level is a crucial support. While above 59000, view remains bullish to see 60000 and 61000 eventually. If any decline below 59000 is seen then the next level to watch will be 58000.
COMMODITIES
Brent and WTI have fallen as US gasoline stocks have increased for the fifth time in this week. Brent and WTI can test $85 and $80 again while above $77-80 and $74-75 respectively. Gold and Silver are trading in a range. Copper can consolidate between 4.10\4.25 for some time.
Brent (80.59) has fallen sharply from 82.69 and has room to fall to 77 on the downside before any fresh rise is again seen eventually. We do not negate our earlier mentioned view of testing 85/86 on the upside.
WTI (76.69) has fallen after testing 79.35. While below resistance near 80 mentioned yesterday, a fall to 75-74 can be seen before another bounce sets in. Immediate view is bearish but we cannot negate another rise on the upside.
Gold (1758.30) is ranged within 1780/60-1740/20 region and may continue so for a few more sessions with possible rise to the upper end of the mentioned range.
Silver (22.57) has risen within the 21.50-23 range and may continue to hold for the near term.
Copper (4.1840) has risen from levels seen yesterday. But Copper needs to break above 4.20/25 to head higher to 4.35/40 else a fall back to 4.10/00 cannot be negated in the near term.
FOREX
Dollar Index has risen well above 94 and could eventually head higher in the coming week. Euro has risen from yesterday’s low but we do not negate a fall back towards 1.15-1.1495 while below 1.1650. Aussie, Pound, EURJPY all look ranged within 0.7320-0.7220/00, 1.3650-1.35 and 128-130.50 respectively. USDJPY can trade within 112-110.60 with possible extension to 112.50. USDINR has high correlation with Brent and as Brent has fallen sharply from levels below 83 to current level of 80.60, Rupee may strengthen towards 74.80/60 today.
Dollar Index (94.243) has risen well above 94 and as mentioned yesterday, the index can slowly rise towards 94.50-94.75 on the upside. Immediate view is bullish while above 93.75.
Euro (1.1554) fell to 1.1529 yesterday before bouncing back from there. We need to see if the bounce sustains to rise back towards 1.16 and higher or declines back to test .15-1.1495 in the near term. Bias is to see further decline over the coming sessions.
EURJPY (128.80) fell below 129 to test 128.33 yesterday before bouncing from there. Overall the broad 128-130.50 region may hold for the near term. Unless a break on either side of this range is seen, it is difficult to get clarity on further direction.
Dollar-Yen (111.47) is holding below 112 and while below that, we may expect a range trade of 112-110.60 to hold for now. Broad range of 112-110.60 may hold with possible extension to 112.50 on the upside.
Aussie (0.7281) is holding below 0.73 and could trade within 0.7320-0.7220/00 region for sometime.
Pound (1.3580) fell sharply to 1.3548 yesterday before bouncing from there. Overall range of 1.3650-1.35 may hold for the near term within the broader range of 1.37-1.34.
USDCNY (6.4466) will open tomorrow after a long break. Support is seen at 6.44 which may hold to produce a bounce towards 6.47/48.
USDINR (74.98) came off sharply after the onshore closing of the markets at 3:30pm IST as Brent Crude fell from its highs. Currently Brent has high correlation with USDINR and a fall or rise in Brent may impact USDINR to fall or rise respectively. Brent has dipped from immediate resistance just below 83 to current levels of 80.61 and this could take the USDINR down today towards 74.80/60. In the broader time frame we do not negate a rise back to 75+ levels in the next 1-2 weeks as we do not negate a rise to $85/86 on Brent which looks a possible test for October. Watch price action near current levels.
INTEREST RATES
The US Treasury Yields sustain higher and have room to move up further and test their crucial long-term resistances. We expect the resistances to hold and see a fresh fall in the going forward. An eye on the crude oil prices will be needed to see if it supports a pull-back in the yields or not. The German yields are inching up to test their long-term resistances as expected. The resistances are likely to hold and trigger a fresh fall in the coming days. The 5Yr and 10Yr GoI can rise in the near-term to test their key resistances and then see a fresh fall.
The US 2Yr (0.31%), 5Yr (1%), 10Yr (1.54%) and the 30Yr (2.09%) %) remains higher at levels seen in the early Asian trades yesterday. The 10Yr touched a high of 1.57% and has come-off slightly. The 30Yr on the other hand sustains higher. As mentioned yesterday, 1.6% (10Yr) and 2.1-2.2% (30Yr) are crucial resistances which we expect to hold and trigger a fresh fall to keep the long-term downtrend intact. A strong rise past these resistances is necessarily needed to gain fresh bullish momentum and move up further.
The German 2Yr (-0.71), 5Yr (-0.55%), 10Yr (-0.18%) and 30Yr (0.30%) yields continue to move up in line with our expectation. Our near-term bullish view of seeing a test of -0.1% (10Yr) and 0.35% (30Yr) remains intact. We expect the yields to reverse lower thereafter and keep the long-term downtrend intact.
The Indian 10Yr GoI (6.2764%) retains its momentum and keeps alive the chances of testing 6.3%-6.32% on the upside. As mentioned yesterday, 6.32% is a strong resistance which can cap the upside from here and drag the 10Yr GoI down to 6.2% and even lower over the medium-term. The price action at 6.32% will need a close watch.
The 5Yr GoI (5.7112%) remained stable around 5.72% yesterday. A sustained rise past 5.72% can take the yield up to 5.75%-5.76% on the upside before a reversal is seen. 5.68%-5.66% is an important support zone which will have to be broken to turn outlook negative.
