STOCKS
Equities are mixed. Indian equities continue to show hope of further rise from current levels while Nikkei and shanghai have dipped a bit and could see corrective decline for a couple of sessions before bouncing back from there again. Dow has fallen too as mentioned resistances have held well and could fall to lower supports in the near term. Dax too has dipped and can fall before attempting to rise towards 15300/400.
Dow (34496.06, -250.19, -0.72%) has fallen again. The resistance zone at 34750-35000 mentioned yesterday has held very well. While below 35000 we can see a fall towards 34000\33750 again.
DAX (15199.14, -6.99, -0.046%) has dipped slightly and is hovering near the level of 15200. Immediate view is bearish to see a dip towards 14800 while below 15200\300 level. A strong rise above 15300 is needed for the index to turn bullish towards 15400\500.
Nikkei (28232.32, -265.88, -0.93%) has opened lower today after rising for three consecutive days. The view is still bullish while above 28000 to test 29500. However, if we see a dip below 28000 then a test of 27000 is possible, delaying our expected rise.
Shanghai (3562.84, -28.86, -0.80%) has come down slightly today. View remains to see a test of 3600 and 3700 eventually while above 3550. Any break below 3550 would take it down to 3500 delaying our expected rise.
Nifty (17945.95, +50.75, +0.28%) made an all-time high of 18041.95 yesterday then fell back to close at 17945.95. View remains bullish to see a test of 18250 while above 17800 levels.
Sensex (60135.78, +76.72, +0.13%) has managed to sustain above the 60000 level which means we can see a test of 61000/62000 in the coming 1-2 weeks.
COMMODITIES
Crude prices may fall from immediate resistance levels but could continue to trade higher for the next couple of weeks. Upside is likely to be limited and we would be cautious on going longs just now. Unless a signal of a proper reversal is seen, we may continue to see crude prices trading higher. Gold and silver are stable while Copper has scope to rise to 4.35/40 before falling off from there.
Brent (83.38) and WTI (80.18) have dipped after rising sharply yesterday. Brent could come off towards 80-78 while below 85-86 while WTI has scope to fall towards 77-75 while below 82. That said, we do not negate a further upside in crude. However, the upside is likely to be limited in the next 2-3 weeks followed by a sharp decline. We would be cautious to go long at current levels.
Gold (1757.10) and Silver (22.63) have dipped slightly but remain stuck at same levels since almost a week. Gold is likely to remain within 1740-1780 unless a break on either side is seen while Silver may trade within 22-23 region. No trade seen in precious metals just now.
Copper (4.3190) has broken above very near term support at 4.30 and may be headed towards upper resistance at 4.35/40 from where a possible rejection looks likely back towards 4.20.
FOREX
Dollar Index looks bullish towards 95 which could drag down Euro towards 1.1525-1.1500. EURJPY has moved up sharply breaking above 130.50/75 on sharp rise in USDJPY above 112. Dollar-Yen is now headed towards 114-115 resistance zone. Immediate view is bullish. Aussie and Pound look ranged for now. USDCNY has surprised by rising to 6.44+ and can test 6.4650 before pausing. USDINR may rise to 75.50/75 while above 75.3250. Correlation of USDINR with Brent crude is very high at the moment and both could move together in the near term.
Dollar Index (94.35) has risen up further above 94 and is headed towards 95 soon. View is bullish while above 94.
Euro (1.1555) has risen slightly but continues to remain bearish towards 1.1525-1.1500 for the near term.
EURJPY (130.91) has risen well, breaking above 130.50/75, pulled up by the rise in USDJPY. We need to see if the cross can manage to rise above 131 to test 132 on the upside or falls back from 131 towards 130-129 in the medium term. While Euro trades below 1.16 and Dollar Yen keeps moving up, EURJPY can rise too in the near term.
Dollar-Yen (113.31) has surged and is headed towards the upper resistance zone of 114-115 from where a decline looks possible over the next week. Immediate view is bullish.
Aussie (0.7340) finds difficulty to rise above 0.74 just now and could trade within 0.74-0.7250 for the near term.
Pound (1.3599) is unable to rise above 1.37 just now and while below 1.37, we may expect trade within 1.35-1.37 to hold.
USDCNY (6.4523) has surprisingly bounced back again above 6.44, negating our view of a fall towards 6.41. While above 6.44, we may again look for a test of immediate resistance at 6.4650.
USDINR (75.3550) broke above 75.20 and our expected 75.3250 and now could be headed towards 75.50/75 before facing any short term corrective dip. For Oct’21 we allow for a possible rise to 76.25/50 before reversing from there. In the near term, interim resistance at 75.50/75 may hold. Note that the correlation with Brent crude is at around 92+ and while Brent rises, USDINR may rise too and vice versa indicating that the movement in USDINR could be greatly influenced by Brent just now.
INTEREST RATES
The US Treasury Yields have key resistances ahead (1.65% on the 10Yr and 2.2% on the 30Yr) which will need a close watch. A strong break above them will prove our view of seeing a reversal wrong. Will the CPI inflation data release tomorrow keep the yields their resistances or trigger a break of it? We will have to wait and watch. German yields continue to move up but have limited room on the upside from here as key resistances are coming up. We expect the yield to reverse lower from their respective resistances. The 10Yr GOI has an important resistance ahead which has to hold to avoid a further rise from here and trigger a reversal that we have been expecting. The 5Yr GoI continues to look mixed and can oscillate in a range.
The US 2Yr (0.35%) and 5Yr (1.08%) Treasury yields have risen in early Asian trades today while the 10Yr (1.61%) and the 30Yr (2.16%) %) remain stable. Our view remains the same 1.65% (10Yr) and 2.2% (30Yr) are crucial resistances which if broken will pave way for a further rise to 2%-2.2% (10Yr) and 2.4% (30Yr). That in turn will prove our view of seeing a reversal wrong. The price action in the coming days will need a close watch.
The German 2Yr (-0.69), 5Yr (-0.51%), 10Yr (-0.12%) and 30Yr (0.35%) yields have come up close to their crucial resistances as expected. -0.1%/-0.05% (10Yr) and 0.35%/0.45% (30Yr) are the strong resistances from where we expect a reversal and a fresh fall going forward.
The Indian 10Yr GoI (6.3407%) has come up to an important resistance. 6.35%-6.36% is a crucial resistance. While that holds our view of seeing a pull-back to 6.25%-6.2% and even lower will remain intact. In case of a break above 6.36%, the rise can extend up to 6.4%. We will have to wait and watch.
The 5Yr GoI (5.7347%) can oscillate between 5.66% and 5.76% as mentioned yesterday. A breakout on either side of 5.66%-5.76% will then determine whether the yield can go up to 5.8%-5.85% or fall to 5.62%-5.6% going forward.
