Asian equities are trading in the red and keep alive the chances of seeing a sharp fall going forward. Nikkei can fall to 28000-27000 while it remains below 30000 and Shanghai can test 3450-3400. Sensex and Nifty have surged past 51000 and 15000 respectively but need to see if they sustain their gains on the back of the sharp fall in Asian markets in the morning. Dow is struggling to gain momentum to rise past 31650 and looks vulnerable for a fall below 31000. DAX is retaining its 13800-14200 range and the bias remains negative to see a downside break of this range. Overall we continue to remain cautious on the equity segment.
Dow (31270.09, −121.43, -0.39%) has come-off failing to breach 31650. A fall below 31000 can take it to 30000. A further break below 30000 will confirm a reversal and drag the Dow lower to 29000-28000 thereafter. While the Dow manages to sustain above 31000, a range of 31000-32000 is possible and the above mentioned fall below 31000/30000 will get delayed. Also the upside is likely to be capped at 32500-33000 even if a strong break above 32000 is seen.
DAX (14080.03, +40.23, +0.29%) tested 14200 and has come-off from there. The 13800-14200 range remains intact. Our broader view remains the same. A fall to 13200 is more likely to be seen in the coming weeks. However, we may have to allow for an extended rise to 14500-14600 before the above mentioned fall happens in case if DAX breaks above 14200 decisively now.
Nikkei (29014.80, −544.30, -1.84%) has declined sharply and keeps our view of seeing a fall to 28000 intact. A break below 29000 can trigger this fall. The downside can even extend up to 27000. A strong rise past 30000 is needed to negate the above mentioned fall.
Shanghai (3520.83, −56.08, -1.57%) is oscillating between 3500 and 3575 over the last few days. While below 3575, the chances of seeing a break below 3500 and a fall to 3450-3400 cannot be ruled out. But we reiterate that 3450-3400 is a strong long-term support zone from where a fresh rally is possible. Shanghai will be a good long-term buy in the 3450-3400 zone.
Sensex (51444.65, +1147.76, +2.28%) and Nifty (15245.60, +326.50, +2.19%) have surged above the crucial levels of 51000 and 15000 respectively. It will have to be seen if they can sustain above these levels today amid the sharp fall in Aisan markets in the morning. A strong pull-back below 51000 (Sensex) and 15000 (Nifty) will keep the indices under pressure to fall again. Sensex and Nifty will have to sustain necessarily above 51000 and 15000 respectively in order to move up further towards 52500-53000 and 15400-15600 respectively. The price action today will need a close watch.
Precious metals fall as Dollar regains strength after a brief dip seen yesterday. While the Dollar Index continues to move up, the metals could be vulnerable to a further fall. Crude prices may rise a bit over the