STOCKS
Dow, Nikkei, Sensex and Nifty sustain higher and are keeping alive the chances of seeing some more upticks from current levels. However, as we have been mentioning for some time, there is limited upside from current levels as strong resistances are ahead. We retain our cautious view of seeing a sharp corrective fall going forward. DAX seems to have lost steam and has declined sharply giving early signs that the correction has begun already. A break below 13000 will confirm the same. Shanghai is moving down within its 3180-3450 range and can test the lower end of this range in the coming days.
Dow (30046.37, +47.11, +0.16%) has been hovering around 30000. There is room on the upside to test 30800-31000. But a rise past 31000 is unlikely. We reiterate that 31000 will be cap on the upside from here and we will be looking for a sharp corrective fall to 28000 and even lower going forward.
DAX (13114.30, −181.43, -1.36%) has declined sharply below 13200 on Friday. A further fall below 13000 from here will confirm that a top is already in place. Such a break will trigger the corrective fall to 12400 that we had been expecting for some time. It will also negate the chances of seeing 13800/13900 on the upside.
Nikkei (26838.27, +185.75, +0.70%) remains stuck in between 26500 and 27000. While above 26500 the chances of a rise to test 27500 on the upside cannot be ruled out. However, as we have been mentioning for some time, 27500 is a strong resistance that is likely to cap the upside. We expect Nikkei to reverse lower from 27500 and fall to 25500-24500 or even lower on profit taking.
Shanghai (3352.59, +5.40, +0.16%) has declined further on Friday and keeps our view of seeing a fall to 3300-3250 intact. The broader 3180-3450 range continues to hold well and the index is currently moving down towards the lower end of this range.
Nifty (13513.85, +35.55, +0.26%) had failed to close above 13550 on Friday. This keeps our cautious view of seeing a corrective fall to 13000 initially and then 12800-12500 eventually in the coming weeks. However, a sideways consolidation between 13400 and 13600 cannot be ruled out for a few days before the above mentioned correction happens. Also as seen from the 3-day candles, there is room to test even 13700 on the upside. We will have to wait and see as whether the correction happens from here itself or will get delayed further.
Sensex (46099.01, +139.13, +0.30%) on the other hand will have resistance at 46500 which can cap the upside. We retain our view of seeing a sharp corrective fall to 42000 and even lower from the above mentioned resistance.
COMMODITIES
Overall commodities trade slightly lower today. Copper has faced rejection from important resistance and could dip towards 3.50/45 while Gold and Silver may trade above 1820-1840 and 24 respectively and attempt to rise from current kevels in the medium term. Crude prices remain stable at higher levels and could head towards our expected resistances near 52-53 (Brent) and 48-50 (WTI).
Brent (50.01) and Nymex WTI (46.58) have dipped slightly but overall trade higher. We keep our view intact to see a possible rise towards $52-53 and $48-50 respectively gradually.
Gold (1839.40) and Silver (24.05) have dipped too from levels seen on Friday. Gold needs to remain above 1840 in order to move up else we may not negate a possible test of 1820 on the downside before a bounce towards 1880 or higher is seen again in the longer run. Silver is likely to remain ranged within 24-25 in the near term while support at 24 holds.
Copper (3.5480) tested exactly the daily trend resistance at 3.6245 on Friday before facing rejection from there. While there is room for a rise towards 3.65, a corrective dip from here could drag it lower towards 3.50/45 which is an interim support zone.
FOREX
Dollar Index and Euro looks ranged before a possible fall and rise towards 90 and 1.23/24 respectively. EURJPY and Pound also looks ranged within 127-125.80 and 1.30-1.34 respectively for the near term while Aussie may face rejection from 0.76 and could fall towards 0.7485. USDCNY may limit its fall to 6.50 in the near term with a possibility to rise back above 6.55 soon. USDINR may head towards 73.80-74.00 while above crucial support at 73.50.
Dollar Index (90.78) is likely to be ranged within 90.00-91.50 for a few days before a break on the downside is seen towards 90. View is ranged to bearish for the near term.
Euro (1.2131) is likely to remain above 1.21 and slowly head towards 1.23-1.24region before facing a corrective dip from there. Immediate view is bullish while above 1.21.
EURJPY (126.17) is ranged in the 125.80 and 127 region which is likely to hold for a few more sessions before a break on either side is seen. View is to see ranged movement for the next couple of days at least.
Dollar-Yen (104.01) has risen to test 104 just now but we may not negate a possible fall towards 103.50-103.00 in the near term. Upside could be limited to 104.50 in the next few sessions.
Aussie (0.7538) is rising well but could face rejection from 0.76 which an immediate resistance on the upside. While below 0.76, there is scope for a fall to 0.7485.
Pound (1.3320) is likely to trade in the broad 1.34-1.30 region where an initial test of 1.30 is possible before a bounce back towards 1.34 is likely. Only on a break below 1.30, we may expect further decline to lower levels. Watch price action near 1.30.
USDCNY (6.5366) has dipped but need to see if it sustains to trade lower or rises back to 6.55+ levels in the near term. Immediate downside could be expected to be limited at 6.50.
USDINR (73.6550) held above 73.50 last week and while that sustains we may expect a rise to 73.80-74.00 in the near term.
INTEREST RATES
The US Treasury yields have declined sharply especially at the far-end in the past week. The struggle in reaching a deal on the next virus stimulus package is weighing on the yields. There is room to dip further. For now, the crucial resistances are holding well and the long-term downtrend is intact. The German Yields continue to move down and are keeping the downtrend intact. The 10Yr GoI has broken the 5.88%-5.95% range on the upside and can move up further in the near-term.
The US 2Yr (0.12%), 5Yr (0.37%), 10Yr (0.90%) and the 30Yr (1.63%)were down across tenors and especially sharply at the far-end. The 10Yr has room to test 0.80% and the 30Yr can test 1.60%-1.58% in the coming days. From a bigger picture, the crucial resistance levels of 1% (10Yr) and 1.75% (30Yr) are holding well and the long-term downtrend remains intact. A break below 0.80% (10Yr) and 1.60%-1.58% (30Yr) will confirm the same. We will have to wait and watch.
German 2Yr (-0.79%), 5Yr (-0.82%), 10Yr (-0.64%) and the 30Yr (-0.24%) yields have declined sharply in line with our expectation. The bearish view of seeing -0.70% on the 10Yr and -0.35%/-0.40% on the 30Yr remains intact. As we have been mentioning for some time, the German yields can see a fresh bounce from -0.70% (10Yr) and -0.35%/-0.40% going forward.
The 10Yr GoI (5.9564%) has risen and also broken above 5.95%. A further rise to 5.97%-5.98% can be seen now. Inability to breach 5.8% can drag the 10Yr GoI lower to 5.94%-5.92% again. The price action at 5.98% will need a close watch this week.
