STOCKS
Equities continue to look mixed. Dow and Nikkei can trade in a narrow range for some time while keeping the possibilities alive of seeing one more leg of rise before a sharp correction is seen. DAX remains bullish and can move up in the coming days. Sensex and Nifty have closed on a strong note on Friday and will have room to rise further this week. Shanghai has bounced-back from its key support in line with our expectation and can move up further.
The Dow (26671.95, −62.76, -0.23%) remains stable below 27000 and could consolidate in a narrow range of 26000-27000 in the near-term. We expect the upside to be capped at 27500-28000 on a break above 28000 and will be looking for a corrective fall. Whether this corrective fall happens from below 27000 itself or after a rise to 27500-28000 is not clear at the moment.
The DAX (12919.61, +44.64, +0.35%) sustains well above 12800 and keeps our bullish view intact of testing 13200 on the upside. From a bigger picture DAX has potential to target 13500 and 13800 over the medium-term.
Nikkei (22616.23, −80.19, -0.35%) has dipped to test 22500 as expected. We expect it to sustain above 22500 and remain in a narrow range of 22500-23000 for sometime. A strong rise past 23000 is needed to boost the momentum and take the index higher to 24000. In case of a break below 22500, the downside can extend up to 22000. We will have to wait and watch.
Shanghai (3282.68, +68.55, +2.13%) has bounced-back well. 3200 is holding well in line with our expectation. While this bounce sustains, a further rise to 3350 can be seen this week. As mentioned on Friday, Shanghai can now run into a broad sideways consolidation between 3200 and 3450 for a few weeks now.
As expected Nifty (10901.70, +161.75, +1.51%) broke above 10830 and has closed on a strong note on Friday. The outlook is bullish to test 11000 and 11250 in the coming days. Strong support is now in the 10700-10600 region.
Sensex (37020.14, +548.46, +1.50%) has closed just above 37000. While it manages to sustain this break above 37000 a further rise to 38000 can be seen this week.
COMMODITIES
Commodities are mixed just now with possible upside in Gold and Silver towards 1820 and 20 but may be short lived as Silver may face rejection from crucial resistance at 20 which could also pull down Gold in the medium term. Copper looks bullish for the near term while Crude prices could see a corrective fall in the near term.
Brent (42.87) and WTI (40.51) may see some corrective movement while below 45 and 41 respectively in the coming sessions. Overall narrow trade could be seen within 45-42 (Brent) and 41-38 (WTI) respectively in the near term.
Gold (1809) and Silver (19.70) are back to higher levels and could be bullish towards 1820 and 20 respectively. Silver may remain within 19-20 region for some more time while Gold looks bullish while above 1810.
Copper (2.8925) is almost stable but has moved up contrary to our expectation of seeing a fall towards 2.80. A rise back to 2.95 looks likely on the near term s.
FOREX
Dollar Index may remain within the sideways range for some more time while Euro looks bullish along with Dollar-Yen and EURJPY. Aussie is likely to continue its sideways trade while Pound looks bearish for the near term. Yuan may remain stable while USDINR could dip slightly if the falling momentum seen on Friday remains intact.
Dollar Index (96.13) could remain stable in the 95.80-96.50 in the near term. Only a break above 96.50, if seen and sustained in the near term, could take it higher towards 97+; else we may expect sideways trade to continue for some more time.
Euro (1.1422) is trading above 1.14 and could test 1.1450-1.1500 on the upside which is a near term resistance zone before falling sharply from there. While Euro sustains above 1.14, view is bullish.
EURJPY (122.63) has risen well too and looks bullish towards 123 just now. View is bullish for an eventual test of 124 on the upside.
Dollar-Yen (107.37) is likely to break above the 106.5-107.5 range and move higher towards 108 in the near term. For today, we would watch price action near 107.50.
Aussie (0.6980) continues to remain stable while below 0.70. Either a sharp break above 0.70 is needed that could take it higher towards 0.71/72 or a fall back towards 0.68 could be likely if it manages to trade below 0.70 in the near term. We would wait and watch price action near 0.70.
Pound (1.2525) has fallen in line with our expectation and could be headed towards 1.24 while resistance near 1.26-1.2650 holds.
USDCNY (6.9966) has bounced from just above 6.98 and while that holds, we may expect an eventual rise towards 7.01 in the coming sessions.
USDINR (75.0150) saw a sharp fall to 75 on Friday and if the falling momentum continues, we may expect a further extension of the fall today towards 75.85/75 while upside could be limited to 75.15/20. Watch price action near 75 for today.
INTEREST RATES
The US Treasury yields continue to trade lower as the increasing corona virus cases weigh on the market sentient. Key supports are coming up for the Treasury yields which we expect to hold and trigger a fresh leg of rally in the coming weeks. The German Yields can trade in a narrow range for sometime before moving lower. The 10Yr GoI continues to remain weak and can move down in the coming days.
The US 2Yr (0.14%), 5Yr (0.28%), 10Yr (0.62%) and the 30Yr (1.32%) Treasury yields continue to trade lower and stable. Our view remains intact. Supports are at 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr which we expect to hold. The Treasury yields are likely to reverse higher after testing these supports. Such bounce can take the 10Yr higher to 0.70%-0.75% and the 30Yr to 1.50% eventually in the coming weeks.
The German 2Yr (-0.68%), 5Yr (-0.66%), 10Yr (-0.45%) and the 30Yr (-0.01%) have bounced across tenors. A narrow range move of -0.05%/0% on the 30Yr and -0.45%/-0.40% on the 10Yr is possible before we see a fresh fall.
The 10Yr GOI (5.8049%) has dipped further and continues to remain weak. Our bearish view of seeing 5.78%-5.75% on the downside remains intact while the 10Yr GoI remains below the key resistance level of 5.85%
