STOCKS
Most global indices trade lower and can fall further in the near term, Dow can fall to 35000. Dax can test 16400 before falling sharply while Nikkei and Shanghai have fair scope to rise towards 30000/31000 and 3600/3700 if the indices sustain above 29750 and 3550 respectively in the near term. Nifty and Sensex can be sideways to bearish for the near term.
Dow (35601.98, -268.97, -0.75%) has come down further and can test 35000 in the coming weeks as we had mentioned earlier.
DAX (16159.97, -61.76, -0.38%) has come down slightly today but the view remains bullish to see a test of 16400 while above 16000. A strong break below 16000 is needed to negate bullish view.
Nikkei (29677.95, -67.92, -0.23%) has surged above 29500 again contrary to our expectation of seeing a fall to 28000. The index has interim resistance at 29750, which needs to be broken to see a test of 30000/31000. While below 29750, a consolidation between 29500-29750 can be seen before we see a break on either side.
Shanghai (3580.30, +19.93, +0.56%) has risen today and has broken the resistance at 3550. While above 3550, the view remains bullish to see a test of 3600 and 3700 eventually.
Nifty (17764.80, -133.85, -0.75%) went down steadily on Thursday to close below 17800. A gap up opening followed by a fall can be seen in Nifty as it is opening after 3 days. The overall view remains bearish below 18200/00.
Sensex (59636.01, -372.32, -0.62%) has broken the support at 59900. The view is now bearish to see a test of 59500/59000 in the coming sessions.
COMMODITIES
Most commodities are trading lower today on the back of fresh strength in the US Dollar. While the Dollar strengthens, it could keep commodities prices especially precious metals low for the near term. Crude prices fell sharply on rising Covid-19 cases in Europe that may affect the economic recovery. Some European countries are said to go on a lockdown to curb the rise in cases. Impact is expected to be short lived but may dampen crude demand in the near term. Gold and Silver trade lower and may dip some more before bouncing while Copper may trade within 4.45-4.25 before breaking on either side of the range.
Brent (78.25) has fallen sharply as expected breaking below our initial mentioned support at 79. While the price sustains below 79, there is scope for a fall to 75 on the downside before a corrective rise is again seen. Immediate view is bearish while below 79.
WTI (75.42) has scope to test support near 70 before rising from there in the medium term. While above 70, the channel uptrend since 2020 remains intact.
Gold (1847.40) and Silver (24.71) have dipped on Dollar strength and can fall towards 1840/20 and 24 respectively before bouncing from there again. Immediate view is bearish while Dollar remains strong.
Copper (4.3795) rose well in the last two sessions and has dipped slightly today from resistance near 4.45. We may expect trade within 4.45-4.25 for some sessions before breaking on either side.
FOREX
Dollar Index trades higher and has dragged down Euro below 1.13 again. While Dollar Index rises, Euro can fall to 1.12 or even lower in the longer run. Aussie and Pound have fallen and look bearish. EURJPY needs to hold above 128 to keep alive the upward momentum else could be vulnerable to a sharp fall. USDCNY can trade within 6.40-6.37 while Dollar Rupee may trade within 74-74.45.
Dollar Index (96.15) has risen back, rising strongly above 96 after a brief dip to 95.50 last week. The index looks strong a break above 96.50, if seen can take it higher towards 98 before facing any decline from there. Watch price action near 96.50 this week.
Euro (1.1271) has fallen below 1.13 again instead of a possible rise above 1.13. While Euro sustains trade below 1.13, it can be bearish towards 1.12 from where a possible bounce looks possible. Any break below 1.12, will open up chances of a fall to 1.10 before a reversal is seen.
EURJPY (128.69) has bounced back well from 128 and needs to sustain above 128 to move up again towards 130-131 in the medium term. Failure to hold above 128 could make the cross vulnerable for a deeper decline towards 126-125 in the coming weeks. Watch price action near current levels.
Aussie (0.7236) has broken below immediate support mentioned near 0.7250 and if the fall sustains, we may have to look for a test of 0.7170/60 in the near term.
Pound (1.3432) has fallen too from levels above 1.35 seen last week. A fall to 1.3350-1.330 looks possible while below 1.35.
Dollar-Yen (114.15) sustains above 114 and could trade within 115-113 region for the medium term before a decisive break on either side is seen.
USDCNY (6.3753) may remain within 6.40-6.37/36 region for the near term. Any break on either side if sustains will indicate the medium term direction.
USDINR (74.24) had risen sharply from 74 last week abiding with our expectation of a possible bounce from 74. While above 74 there is scope for a trade within 74.40/45-74.00 for the near term. A decisive break above 74 will be needed for a test of 73.80/60 in the longer run. Weakness in Euro could impact the Dollar Rupee and make it trade above 74 today.
INTEREST RATES
The US Treasury yields have dipped further as expected at the far-end on Friday. The view of seeing a fall within the broad expected range remains intact. The German Yields have tumbled across tenors following the lock-down announced in Austria. The reversal to keep the broader downtrend intact that we have been expecting has happened, though slight swiftly. The yields can fall further in the coming days. The 10Yr GoI remains lower and can come down from here within the current range. The 5Yr GoI on the other hand is holding above the range support and keeps the sideways range intact for now. The bias is bearish on the GoI and we expect the yield to break their ranges on the downside eventually in the coming days and see a fresh fall.
The US 2Yr (0.52%) and 5Yr (1.24%) Treasury yields have inched up while the 10Yr (1.56%) and the 30Yr (1.92%) have dipped further. The 10Yr can come down to 1.5%-1.45% again and the 30Yr can revisit 1.85% levels. Overall, we expect the yields to oscillate in a broad range of 1.35%-1.65% (10Yr) and 1.75%-2.1%/2.2% (30Yr) for some time.
The German 2Yr (-0.79%), 5Yr (-0.64%), 10Yr (-0.35%) and 30Yr (-0.02%) yields have declined sharply across tenors. The expected reversal has happened much sharper and quicker than expected. While this fall sustains, the 10Yr can test -0.45% and -0.5%. The 30Yr can fall to -0.1% and -0.2% while it sustains below 0%.
The Indian 10Yr GoI (6.3455%) has turned down from the resistance at 6.38% again last week. A test of 6.3% is likely. 6.3%-6.45% is the range of trade now. The bias is bearish to see a downside break of this range below 6.3% and a fall to 6.2% and lower over the medium-term.
The 5Yr GoI (5.6738%) is managing to hold above 5.66%. This keeps the 5.66%-5.75%/5.78 range intact. A bounce to 5.7%-5.73% cannot be ruled out from here. But we expect the 5Yr GoI to break 5.66% and fall to 5.63%-5.62% eventually in the coming days.
