STOCKS
Further rise in the Dow yesterday as the US government reached a deal for a $2 trillion stimulus, the bill for which will be voted and is likely to be passed in a day or two. Dow has an important resistance ahead which will have to be broken to see further rally. DAX , Nikkei and Shanghai look bullish and have room to rise in the coming days. Sensex and Nifty seems to be gaining momentum. A strong rise past their immediate resistance will clear the way for a further rally.
Dow (21200.55, +495.64, +2.39%) has moved further up but looks mixed on the daily candles as it had come-off after testing 22000. As mentioned yesterday, we will have to see a decisive close above 21500 this week for the current bounce-back move to extend further 23000-24000 and also to confirm the reversal. While above 20500, the bias is bullish to see a break/close above 21500 and a rally to 23000-24000 in a week or two.
As expected, DAX (9874.26, +173.69, +1.79%) has risen further to test 10000 yesterday but has come-off from the high of 10137.62. The near-term view is positive to test 10400-10500 on the upside. A strong close above 10000 will accelerate the rally. Supports are at 9500 and 9200.
Nikkei (18803.29, −743.34, -3.80%) has come-off today but is likely to find support in the 18500-18200 region. We expect this 18500-18200 support zone to hold and keep the bullish view intact to test 19800-20000.
Shanghai (2773.05, +50.62, +1.86%) is holding well above 2750 and looks bullish to breach 2800 and rise to 2850. As mentioned yesterday, a strong close above 2750 this week will be bullish to revisit 3000-3100 levels in the coming weeks.
Nifty (8317.85, +516.80, +6.62%) has risen sharply above 8000. A strong rise past 8400 will pave way for a further rise to 8750 and 9000. It will reduce the chances of seeing a fall-back to test 7000 on the downside that we had mentioned earlier. Such a break above 8400
Sensex (28535.78, +1861.75, +6.98%) can surge further to 31000-32000 on a strong break above 29000-30000 resistance zone. Such a break will negate the chances of seeing 24000 on the downside that we had mentioned earlier.
COMMODITIES
Commodities are stable and could see some sideways range trade in the near term. Gold has fallen from 1700 levels and could re-attempt a rise towards 1700-1740 in the near term. Copper and Silver could head towards respective resistances. Crude prices are stable.
Brent (27.23) and Nymex WTI (24.10) continues to remain ranged below $30 and may take some time to rise from current levels. A possible sideways consolidation above $20 and below $30 looks possible for the near term on both WTI and Brent.
Gold (1624.70) has immediate resistance near 1700-1720-1740 levels which if holds could push the prices back towards 1500 or lower. But on the longer term while above 1450, we cannot negate a rise to 1800.
Silver (14.50) has risen and could test resistance at 15.50 before falling from there.
Copper (2.1890) is holding below 2.25 and could be seen trading within 2.25-2.05 in the near term. Even if a rise above 2.25 is seen, there are chances to see stiff rejection from 2.35/40 in the medium term. A sustained rise above 2.40 is needed to bring back bullishness into the picture.
FOREX
Currency pairs have recovered slightly but the Yuan, Aussie and Pound still looks weak for the near term. Dollar Index could see some extension in the current corrective fall and could pull up Euro along with it. Dollar Yen has fallen and could be bearish while below 112. Dollar Rupee might trade lower today.
Dollar Index (100.91) has fallen and could test 100 or lower levels of 98-97 in the near term. This is indicative of a rise in Euro (1.0896) towards 1.09-1.10 as mentioned yesterday. While above 1.07/1.08, Euro is bullish for the near term.
Dollar-Yen (110.61) tested 111.72 on the upside before falling from there as crucial resistance near 112 seems to be holding well for now. While the corrective fall is in place, we may expect a fall towards 109.27/25 initially with a possible extension to 107.72 on the downside before again bouncing back towards 112 or higher.
EURJPY (120.76) has moved up sharply and is headed towards our expected 121 mark which is a decent resistance on the line charts. A possible rise towards 122 also cannot be negated just now which is a near term resistance on the 3-day candles. Watch for a rejection from either 121 or 122 in the near term for a fall back towards 118.
Aussie (0.5882) tested 0.60734 before falling from there. Failure to sustain trade above 0.60 brings back bearish possibilities for the currency for the near term. A test of 0.5792 looks possible before a rise back towards 0.60 or higher.
Pound (1.18332) is trading slightly higher today but we would not turn bullish unless a break above 1.20 is seen in the near term. While below 1.20, we may expect another dip to 1.16.
USDCNY (7.1057) has risen again. Near term could see a sideways range trade in the broad 7.04-7.1250 region before moving on either side of this range in the medium term.
USDINR (75.89) might open lower today as Indian equity markets saw a decent rise as Nifty bounced back to 8000+ which if continues to hold would be positive for the Rupee. We may expect 76.50 to hold for the near term gradually pushing the pair towards 75.
INTEREST RATES
The US Treasury yields have come-off slightly after the US government had stuck a deal for a stimulus package. Though the yields have chances to move up in the near-term, they are likely to reverse lower again and resume the downtrend. The German yields have gone up further and are bullish to see further rise. The 10Yr GoI can consolidate sideways before we see a fresh fall.
The US 2Yr (0.31%), 5Yr (0.47%), 10Yr (0.80%) and 30Yr (1.38%) Treasury yields have come-off slightly yesterday. . As mentioned yesterday, we expect the upside to be capped at 0.9%-1% (immediate) and 1.2% (wider) on the 10Yr and 1.65%-1.70% on the 30Yr. Though a test of these resistances cannot be ruled out in the short-term, we would be looking for the yields to reverse lower again eventually to target 0.40% (10Yr) and 1.10% (30Yr).
The German 2Yr (-0.63%), 5Yr (-0.47%), 10Yr (-0.27%) and 30Yr (0.15%) yields have risen further sharply across tenors. The 30Yr is heading towards 0.20% in line with our expectation. A strong close above 0.20% will be bullish to see 0.30%-0.40% in the short-term and even higher levels over the medium-term. The 10Yr is coming closer to its crucial resistance level of -0.20% which will need a close watch. A strong break above -0.20% will be very bullish and will pave way for 0% and 0.15% in the coming weeks.
The 10Yr GoI (6.3042%) can remain in the range of 6.20%-6.40% in the near-term Though the chances of a rise to 6.45%-6.50% cannot be ruled out, we expect the upside to be capped and the 10Yr GoI to resume its downtrend eventually.
