STOCKS
Set-back in the Covid-19 vaccine trials and the uncertainty over the virus stimulus talks are weighing on the market sentiment and has dragged the equities lower yesterday. The dip yesterday has happened from near the key resistances that we had mentioned earlier in some of the major indices like the Dow, DAX, Sensex and Nifty. So the price action in the coming days will need a close watch to see if the indices manage to bounce-back or not. Dw has to breach 29100 to move further higher. DAX needs to break above 13200. Sensex and Nifty will have to surpass the resistances at 41000 and 12100 respectively. Nikkei is stuck in a narrow range of 23500-23700 and looks mixed. Shanghai has room to move up within its 2180-3450 range.
Dow (28679.81, −157.71, -0.55%) has come-off slightly. The 29000-29100 resistance is holding for now. The price action in the next few days is very crucial. As we had been mentioning over the last few days a strong rise past 29100 will be needed to see a further rise to 30000 levels. While 29000-29100 holds, a fresh fall to 27000-26500 can be seen again.
DAX (13018.99, −119.42, -0.91%) seems to be facing resistance at 13200. However, for now we retain the bullish view of seeing 13400 on the upside. We will negate this bullish view only on a strong break below 12800. We will have to wait and watch the price action over the next few days.
Nikkei (23589.35, −12.43,-0.05%) is stuck in the narrow range of 23500-23700 for about a week now. We reiterate that the index has to sustain above 23500 and break above 23700 to test 24000 levels on the upside. A fall below 23500 from here will drag it to 23000 again and in turn will negate the chances of seeing 24000 on the upside.
Shanghai (3343.67, −16.08, -0.48%) is oscillating around 3350. We retain our view of seeing a rise towards the upper end of its 3180-3450 range in the coming days. An intermediate dip to 3320-3300 is a possibility before the rise to 3450 happens.
Nifty (11934.50, +3.55, +0.03%) seems to be struggling to breach 12000. While below 12000 an intermediate dip to 12800-12700 is possible. However, while above 11700 (revised lower from 11800 mentioned yesterday) we retain our bullish view of seeing a break above 12100 and a rise to 12250-12500 eventually in the coming days.
Sensex (40625.51, +31.71, +0.08%) on the other hand will have to break above 41000 decisively in order to move further up towards 41500-42000. While below 41000, a near-term dip to 40000-39500 can be seen first before a fresh rally happens targeting 41500-42000 on the upside.
COMMODITIES
Commodities look mixed with Gold, Silver and Copper down from levels seen yesterday while Crude trades slightly up. We may expect ranged movement for sometime for crude and expect Gold to dip while below immediate resistance at 1900. Silver has support at 24 and while that holds could be bullish for the medium term. Copper looks ranged.
Brent (42.27) and Nymex WTI (40.02) seem to be stuck in a small range and unless a break on either side is seen, we may not be able to see a sharp movement on either side of the range. For now we continue to look at ranged trade between 43.50-39.30 for Brent and 41.50-36.00 for WTI.
Gold (1895.40) fell below 1900 and if that sustains we may expect the metal to fall towards 1880 initially with a deeper target of 1860. View is bearish while below 1900 just now. Upside for the near term is likely to be capped at 1950.
Silver (24.18) has dipped from levels seen yesterday but continues to trade above 24, keeping hopes of a bounce back alive for the medium term. While above 24, we may keep the upside possibilities of testing 26-27 intact. View is bullish while above 24. Only on a break below 24, we would look for lower targets of 23-22 in the longer term.
Copper (3.0505) is trading in the middle of the very broad 2.95-3.20 range and has equal scope of moving on either side. Any dip from here, if seen could be limited at 2.95 from where a bounce could be seen towards 3.20.
FOREX
Dollar Index has bounced well pulling down Euro, EURJPY, Aussie, Pound and Rupee. We may expect a test of immediate supports on Euro, Aussie and Pound from where a bounce looks possible. USDINR could be limited to 73.50 on the upside while longer term view remains bearish. USDCNY is trading lower but could be limited to 6.72/70 from where a sharp bounce looks possible. USDJPY looks ranged.
Dollar Index (93.531) has bounced from 93 and while the rise holds we may expect a re-test of 93.70-94.00 in the near term. A break above 94, could be further bullish towards 95.15.
Euro (1.1742) has dipped too, unable to sustain above 1.1815. A bounce again from 1.17, if seen could indicate bullishness towards 1.1815 or higher in the medium term but a break below 1.17 could trigger further fall in the longer run. Watch price action near 1.17 in the next few sessions.
EURJPY (123.77) fell sharply after testing 125.09 yesterday. Resistance above 125 could hold well for now and produce a rejection towards 123-122 soon. View is bearish while below 125.
Dollar-Yen (105.38) looks stable unable to decide on which direction to take from here. We may expect 105-106.12 range to hold for the medium term within which a dip to 105 looks initially possible.
Aussie (0.7168) has dipped a bit and while it trades below 0.72, there is scope for a fall towards 0.71-0.70 in the medium term.
Pound (1.2934) has support at 1.28 hence the current fall looks limited to the downside while we may soon expect a bounce back to 1.31 or higher.
USDCNY (6.7452) has dipped again instead of moving up as expected. The dip could be short lived with an eventual rise towards 6.80 on the upside. The current dip could be limited to 6.72/70.
USDINR (73.36) could fall back from resistance at 73.50 to head back towards 73 in the near term. View is bearish while below 73.50.
INTEREST RATES
The US Treasury yields have dipped across tenors. The uncertainty prevailing over the virus stimulus talks continue to weigh on the market. The 10Yr and 30Yr have immediate supports coming up which if broken will negate our short-term bullish and will drag the yields further lower. The price action in the next few days will need a close watch. The German yields remain lower and are keeping our bearish view intact. The 10Yr GoI remains lower but has chances of seeing an intermediate bounce before falling further.
The US 2Yr (0.14%), 5Yr (0.31%), 10Yr (0.73%) and the 30Yr (1.52%) have dipped across tenors. A fall below 1.50% on the 30Yr from here will negate the chances of seeing the rise to 1.72% that we had been mentioning for some time. The 30Yr can then fall to 1.40%. Similarly, a fall below 0.70% on the 10Yr will reduce the chances of seeing 0.90% on the upside and will pave way for 0.60%.
The German 2Yr (-0.74%), 5Yr (-0.75%), 10Yr (-0.56%) and the 30Yr (-0.14%) yields remain lower and keeps our bearish view intact. As we have been mentioning for some time, we expect the 10Yr and the 30Yr to fall to -0.60% and -0.20% respectively in the coming days.
The 10Yr GoI (5.9045%) seems to be getting support near 5.8850% over the last couple of days. As such an intermediate bounce to 5.95% looks a possibility in the near-term before our expected fall to 5.85% happens. The broader trend remains down and we expect the 10Yr GoI to test 5.80%-5.75% eventually in the coming weeks. The key resistances at 5.95% and then at 5.98%-6% are likely to cap the upside.
