STOCKS
A strong recovery in the Dow yesterday well ahead of the levels that we had expected it to happen. Need to be seen if this recovery sustains and also breaks above the upcoming crucial resistances to turn the outlook positive completely. Asian indices have also risen back well and need to see if they can sustain. Sensex and Nifty which are coming closer to their crucial supports might also see a strong bounce today. Overall, the equity segment will need a close watch to see if the bounce-back move sustains or not.
The expected recovery in the Dow (26703.32, +1293.96, +5.09%) has happened well ahead of our preferred level of 24350 which we had mentioned yesterday. It is now important to see if it can rise past the crucial resistance levels of 27000 and 28000 from here. Only a strong break above 28000 will turn the picture bullish completely again.
The resistance in the 12100-12200 region mentioned yesterday continues to hold well on DAX (11857.87, −32.48, -0.27%). While below 12200, the outlook is bearish to see a fall to 11500 and even 11000 in the coming weeks. A strong rise past 12200 is needed to get a breather and move higher towards 12400-12500.
Nikkei (21355.20, +11.12, +0.052%) has given back most of the gains made in early trades today. 21200-21100 will be an important support zone which will have to hold in order to take the index further higher to the levels of 22400-22500 that we had mentioned yesterday. We will have to wait and watch how Nikkei closes for the day today.
Shanghai (3018.61, +47.68, +1.60%) has risen back above 3000 again. 3040-3050 is the near-term resistance which will need a close watch. Shanghai has to sustain above 3000 and also breach 3050 in order to bring back the chances of seeing 3100-3150 on the upside into the picture.
Nifty (11132.75, -69, -0.62%) has a crucial support at 11000 which will need a close watch today. We expect this support to hold and a bounce to 11500-11600 is possible in the coming days. We will have to wait watch closely the price action around 11000.
Sensex (38144.02, -153.27, -0.40%) on the other hand has supports at 38000 and then another a little deeper between 37500 and 37200. . 38000 itself might hold as the global markets have recovered. A rise to 39500-40000 can be seen while above 38000. However, as mentioned yesterday, 37500-37200 is a slightly deeper support available below 38000 which can halt the current fall in case of a break below 38000.
COMMODITIES
Most commodities trade higher today. Crude prices have bounced well. OPEC is scheduled to meet this week (5-6th March) where Saudi Arabia is planned to propose a significant cut to oil production which might keep the oil prices higher in the near term. Gold, Silver and Copper also look bullish for the near term.
Brent (53.14) have moved up more as compared to Nymex WTI (47.98). While above 50, Brent could test 55-57 in the near term while WTI is likely to move up towards 50.
Gold (1599) has bounced well and could rise towards 1630 in the near term before pausing. Immediate view is bullish.
Silver (16.95) trades well above support at 15.70-16.00 and could rise towards 17.50 in the near term.
Copper (2.6035) has risen from 2.57 seen yesterday but is overall ranged sideways within the broad 2.65-2.50. Near term could see a test of 2.65.
FOREX
Weakness in Dollar Index sustains pulling up Euro and dragging down Dollar Yen. EURJPY is volatile just now but within broad range. Pound has signaled bearishness, breaking below important support while Aussie could rise from current levels. USDINR trades near crucial levels but view is tilted towards near term bullishness.
Dollar Index (97.48) continues to fall but its impact on other currencies may not be as strong. Support near 97.0-96.50 could be tested before a rally starts. Near term is bearish towards 97 or slightly lower.
Euro (1.1139) has moved above our expected 1.11 and while Dollar Index is headed towards 97, we may expect Euro to test 1.12 before coming off from there in the near to medium term.
Dollar-Yen (107.96) trades below 108 and is moving in line with the fall in Dollar Index and a rising Gold. Further fall towards 107.0-106.80 will have to be seen if there is no pull back above 108 in the next couple of sessions. Watch movement in Gold and Dollar Index closely as that could trigger volatility in Yen.
EURJPY (120.28) has moved up and could attempt to test 120.50-121.00 on the upside. While above 118 near term could be bullish but volatile.
Aussie (0.6515) has bounced from levels near 0.6434 and could rise towards 0.66 in the next few sessions. While Copper rises towards 2.65, Aussie could pick up some upward momentum too just now.
Pound (1.2775) has broken below 1.28 contrary to our expectation of a bounce from 1.28. Now Pound looks bearish for the near term with a possibility to fall towards 1.26.
USDCNY (6.9662) may trade above 6.95 for now but has room towards 6.90 in the longer run. While the pair holds above 6.95, we may expect a fair bounce towards 7.00.
USDINR (72.7350) broke above 72.50 to indicate a breakout of the sideways ranged movement within 70.50-71.50 seen since Aug’19. A sustained rise above 72.50 is needed to be further bullish for USDINR taking it higher towards 73 in the near to medium term. Looking at the rising momentum, USDINR seems to be under strong bull influence just now. View is bullish unless a sustained dip back to levels below 72.50 is seen.
INTEREST RATES
The US Treasury yields have recovered from their lows seen on early trades yesterday. It will have to be seen if they can bounce-back sharply above their key support-turned-resistance levels in order to avoid further fall. We will have wait and wait for a few sessions. The German yields remains lower and continue to be bearish for further fall. The 10Yr GoI looks mixed in the near-term and can trade in a sideways range for some time.
US 2Yr (0.87%), 5Yr (0.91%), 10Yr (1.14%) and 30Yr (1.69%) Treasury yields have remains lower but have recovered slightly from the levels seen on early morning trades yesterday. We need to wait and watch if the yields can bounce-back above the key levels to avoid further fall. The 2Yr has to move above 1% to signal a reversal. The 10Yr and the 30Yr have to rise past 1.25% and 1.90% respectively in order to avoid a fall to 1% (10Yr) and 1.50% (30Yr) that we had mentioned yesterday.
The German 2Yr (-0.84%), 5Yr (-0.81%), 10Yr (-0.63%) and 30Yr (-0.17%) yields have dipped further and keeps our bearish view intact. As mentioned yesterday, the 30Yr can test -0.20%. A break below -0.20% can drag it even lower to -0.30% and -0.35%. The 10Yr on the other hand can fall to -0.80% and -0.83% on a break below the immediate support level of -0.60%.
The 10Yr GoI (6.3469%) hovers around 6.35% and looks mixed in the near-term. A range of 6.31% -6.41% can be seen for sometime. A breakout of this range will then decide whether the 10Yr GoI is going up to 6.45%-6.47% first before falling back or will move down to 6.28% straight away from current levels. We will have to wait and watch the price action for a few days.
