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Market Morning Briefing: USDCNY Is Likely To Trade Within 6.99-7.04 Region For The Near Term

STOCKS

Sell-off continues in the equity segment as the fear pertaining to the corona virus outbreak continues to keep the market highly risk averse. However, as mentioned yesterday, the major indices are coming closer to their crucial support which can have the potential to halt the current fall. Dow has tested its key support level of 27000 yesterday and can bounce-back well from here while this support holds. DAX and Nikkei have room to dip for a day or two before seeing a reversal. Shanghai has bounced well from its key support and keep the bullish view intact. Sensex and Nifty have supports near current levels itself but can break them following the sell-off in the global indices to test their little deeper supports which are likely to hold and produce a bounce-back thereafter.

Dow (27081.36, −879.44, -3.15%) extended the sell-off for the second consecutive day. Strong support is at 27000 which has held well yesterday. A break below 27000 could be difficult. While 27000 holds, a short-covering rally to 27700-28000 and even higher levels is possible the coming weeks.

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DAX (12790.49, −244.75, -1.88%) has declined below the crucial 13000-12900 support zone . While below 12900, a fall to 12500 looks likely. 12500 is the next strong support which is likely to hold and trigger a reversal back to 12900-13000 and even higher levels going forward.

Nikkei (22357.39, −248.02, -1.10%) has tumbled further thereby confirming the downside breakout of its sideways range. A test of 21800-21500 looks possible in the near-term. The region between 21800 and 21500 is a strong support from where a fresh leg of upmove targeting 22500 and even higher levels can begin.

The support at 2950 on Shanghai (3008.18, -4.87, -0.16%) has held very well as expected and the index has bounce-back. While above 2950, our bullish view remains intact to see a rise to 3100-3150 in the coming weeks. However, the possibility of seeing a range bound move between 2950 and 3050 for sometime cannot be ruled out before we see the above mentioned rise.

Nifty (11797.90, -31.50, -0.27%) has closed just below 11800 and need to see if this break sustains today. Inability to bounce-back above 11800 will increase the chances of seeing a break below 11750 and a fall to 11600-11500. However, 11600-11500 is a strong support zone which can halt the current fall. A fresh leg of upmove is likely to begin thereafter which can target 12000 and even higher levels in the next couple of months.

Sensex (40281.20, -82.03, -0.20%) is managing to hold above 40200. The crucial levels to watch today will be 40200 and 40000. While 40000 holds, a bounce-back move to 41000-41400 can be seen in the short-term which in turn will negate the danger of seeing 39500-39000 on the downside. A strong break below 40000 on the other hand can drag the Sensex lower to 39500-39000 and then a fresh bounce can be seen thereafter.

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