STOCKS
Indian indices continue to trade strong and outperform the global equities. The Sensex and the Nifty 50 remains bullish and can move further higher. Dow is testing a key resistance and DAX can remain sideways with a bullish bias. Shanghai remains vulnerable for further fall.
Dow Jones (25,702.89, +148.23, +0.58%) tested the 21-day moving average resistance at 25,772 yesterday. A decisive break above this resistance can take the Dow higher to 25,900 and 26,000. On the other hand, support is at 25,500 which if broken can increase the downside pressure and drag the index to 25,100.
DAX (11,572.41, +48.24, +0.42%) is mixed and can remain range bound between 11,400 and 11,650for some time. The bias within this range is bullish to see a break above 11,650 and target 11,800.
Nikkei (21,431.28, +141.04, +0.66%) seems to be getting support from the 100-day moving average at 21,307. As long as it sustains above this support, a rise to 21,600 is possible in the near term. But a decisive close below 21,300 will increase the possibility of a fall to 21,000.
Shanghai (3,006.89, -20.06, -0.66%) is moving lower as expected and is heading to test the psychological level of 3,000. As mentioned yesterday, the index can break below 3,000 and test 2,970 and 2,950 in the coming days.
Sensex (37,752.17, +216.51, +0.58%) and Nifty 50 (11,341.70, +40.50, +0.36%) have surged further and are keeping the bullish view intact. Sensex has a support at 37,570. The index can move further higher to 37,930 and 38,050. Support for the Nifty 50 is at 11,290 while above which a test of 11,400 and 11,450 can be seen in the coming days.
COMMODITIES
Gold and Silver has hit a resistance and can dip in the near term while copper looks relatively positive for a rise in the near term. Declining inventories have pushed oil prices higher and has opened doors to see further rise it the coming days.
Gold (1306) and Silver (15.42) moved higher yesterday as expected to test 1310 and 15.5 respectively, but has come-off thereafter. A dip to 1300 is possible and gold can consolidate between 1300-1310 for some time. A strong break above the 1310-1315 resistance cluster is needed for to gold to move further higher. Silver can dip to 15.3 while below 15.5.
Copper (2.93) can inch higher to test 2.95 again. The bias is positive for it to break 2.95 and rise to 2.97 and 2.98 in the near term.
The dip to 66-65.7 on Brent (67.65) mentioned yesterday did not happen. Instead Brent has risen decisively above 67. The price action indicates that Brent is gearing up to break the 64-68 range above 68 and rally to 70 soon.
WTI (58.3) has broken above the key resistance at 58. While above 58, the outlook is bullish for a test of 59.5 and 60.3.
FOREX
The UK parliament is set to vote on whether it would extend the Brexit deadline on 29th Mar’19. While no-deal Brexit looms Pound is seen to weaken against the Dollar. Technically, 1.33 is an important level which could keep the Pound (1.3270) lower for the coming sessions, pushing it towards 1.30 again. But if the Pound manages to break above 1.33, we could see upper resistances of 1.34 and 1.35 coming into the picture that could help Pound to again come down in the medium term.
We think that Dollar-Rupee (69.5350) can trend lower, both because of its trajectory on the charts as well as in reaction to the $5 bln buy/sell swap announced by RBI yesterday (view RBI statement at: https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=46542 ) , apart from the prospect of more FPI inflows being lined up. However, there are different views on this in the market. As a resolution, we come back to the same point: Overall trend remains bearish while below 69.80. Our view of immediate fall towards 69.25-69.00 remains intact for the near term.
Dollar-Index (96.56) has immediate support at 96.25 and while that holds, a bounce is possible towards 97.25 again. Break below support at 96.25, if seen would open up chances of sharp fall towards 95.75-95.25 but that seems less likely while the index trades above 96.25. Watch price action near 96.25.
Euro (1.1325) could face immediate resistance near 1.1350/60 and higher at 1.14. While the near term could see a short upmove, we expect an eventual fall in Euro back towards 1.130-1.125 in the medium term.
Euro-Yen (126.21) has risen in line with our expectations. It could rise further towards 126.80-127.00 in the near term from where a rejection could be expected pushing the pair back towards 126-125 levels.
Dollar Yen (111.46) is stuck above 111 trading in a very narrow and small range for the least few sessions. While above 111, there is scope of rising towards 112.0-112.5 but lacks momentum just now.
Aussie (0.7071) has resistance near 0.71-0.7150 from where a decent fall could be seen soon. Overall trade within 0.70-0.7150 is likely in the next 1-2 weeks.
USDCNY (6.7085) has been stable for the last 2-sessions. While daily resistance at 6.72 holds, Yuan is likely to strengthen towards 6.68/67 in the near term.
INTEREST RATES
The US yields have bounced slightly. The 5Yr (2.44%), 10Yr (2.63%) and 30Yr (3.02%) have bounced by 1bps. While there is room for the 30YR to test 2.95% and the 10Yr and 5YR to test 2.6% and 2.4% respectively, if the current bounce sustains, the yields could start rising from here itself back to higher levels.
The UK-US 10YR (-1.43%) is trading at near term resistance which if holds could push the spread back towards -1.45% or lower in the near term. Fall in the spread would indicate near term weakness in Pound.
The RBI announced yesterday that it will do $5 bln 3-year buy/sell swap on 26th March, on an auction basis, for infusion of Rupee liquidity.
This could lead to (a) a dip in USDINR Forward Premia, especially at the far end and (b) a steepening on the Indian yield curve, as money market rates might dip while bond yields might move up a bit, IN CASE the RBI reduces OMO bond purchases to the same/ similar extent.
