STOCKS
The strong bounce in equities seems to be losing steam. The movement this week will need a close watch to see if the indices regain strength and move higher again or are we going to enter into a sideways consolidation for some time. Dow will have to close above 21000 this month to avoid another fall. Nikkei and DAX are struck in a narrow range. Shanghai can consolidate sideways and can fall within this range in the near-term. Sensex and Nifty can also fall in the near-term and can run into a sideways consolidation as they have failed to break their crucial resistance on Friday.
Dow (21636.78, −915.39, -4.06%) will need a close watch for the next couple of days. It is important for it to sustain above 21500 in order to keep the chances alive of seeing 23000-24000 on the upside. Also, the Dow has to see a decisive close above 21000 for March in order to avoid a fresh leg of fall-back to 19000 levels again.
DAX (9632.52, −368.44, -3.68%) is stuck in between 9500 and 10150 over the last few days. 9500 and 9200 are important supports to watch which needs to hold to keep our bullish view intact of seeing 10400-10500 on the upside. A break below 9200 will negate the chances of the rise to 10400-10500 and in turn will take the DAX lower to 9000 and 8500 levels again.
Nikkei (18762.70, −626.73, -3.23% continues to remain stuck in between 18500 and 19500. Though the near-term view is mixed, while above 18500, the bias is bullish to see a break above 19500 and a rise to 19800-20000 in the coming days.
Shanghai (2729.07, −43.13, -1.56%) has dipped below 2750. The 3-day chart indicates that a sideways range move between 2650 and 2815 is possible in the coming days. Within this range, the chances are high for the index to fall towards 2700-2680 and even lower in the near-term.
Nifty (8660.25, +18.80, +0.22%) tested 9000 – the crucial level that we had mentioned on Friday and has come-off from there. As mentioned earlier, the inability to breach 9000 can now drag the index lower to 8400. Also while below 9000, there are chances for it to remain range bound between 8000 and 9000 for some time. A strong rise past 9000 is very much needed to see the recent bounce-back move extending to 9200 and 9500.
Sensex (29815.59, -131.18, -0.44%) has come-off after testing 31000 on Friday. While below 31000 a fall to 28000-27000 can be seen again. A strong rise past 31000 is needed to strengthen the momentum.
COMMODITIES
Crude prices decline further as the pandemic seems to be worsening and concerns of oversupply from the Saudi Arabia-Russia conflict. Analysts now forecast demand to drop sharply by around 20% from last year i.e a 15-20mln barrels per day and say that massive production cuts will be needed not only from the OPEC but other non-OPEC countries as well. We would continue to watch crucial levels of $23-20 on Brent and $20 on WTI for a bounce in the medium term. Gold and Silver trade higher. Copper has dipped and could see some range trade within crucial and immediate support and resistance levels of 2 and 2.25 respectively.
Brent (23.27) tested $23 before rising slightly from there. Trading just above immediate support at 23, it has broken the 26-30 range seen in the last week. While we may look for reversal signals on the technical charts, if the pandemic continues to worsen, prices may break below 23 to test lower levels in the near term. We would not prefer to see a break below 20 even if a fall is seen below current levels.
Nymex WTI (20.38) briefly traded below 20 but has bounced from there. A rise is expected from here back towards 23-25 in the near term. On the charts, we would not prefer a fall below 20 just now.
Gold (1650.30) is stable above 1600. We may look for a possible test of 1600-1580 on the downside within the current move but overall there is scope for a medium term rise back to 1700 or even higher.
Silver (14.15) has dipped a bit. Broadly, on the long term charts, support at 12 seems to be holding well and we may expect a gradual rise towards 16 in the near term. View is sideways to bullish while above 12.
Copper (2.1530) has dipped back from 2.25 and while that holds, we may expect trade in the 2.15-2.00 region before we see a gradual test of 2.40 on the upside. As mentioned in our earlier editions, 2 is a crucial support but a sustained break above 2.40 is needed to bring in medium to long term bullishness.
FOREX
Dollar Index trades lower and is expected to fall some more in the near term pulling up Euro in the next few sessions. Yuan trades weak and is likely to bring in some weakness in Rupee as well. Aussie and Pound try to recover from recent falls but watch important and immediate resistance on Pound just above current levels. USDJPY looks weak for the near term and could broadly move in line with the direction in Dollar Index.
Dollar Index (98.65) fell sharply from 103 last week to wipe out all gains seen in the week earlier, coming back to levels below 100. We may expect a test of 97 in the near term before seeing a bounce from there back towards 99-100. Overall while below 100, we may negate a further rise back towards 103 or higher.
Euro (1.1086) is likely to face some resistance near 1.1150 in the near term from where a fall back towards 1.09-1.08 could be on the cards within the next 1-2 weeks.
Dollar-Yen (107.45) has fallen back from levels below 112 to below 108 now and while the fall continues, there is scope for a fall towards 106 in the near term before a possible bounce is seen. Near term view is bearish towards 106.
EURJPY (119.01) has dipped a bit and could test 118.50 before again rising back from there towards 120.50. Note that on the medium term, 121.50-122.00 is holding for the near term and could eventually push down prices.
Aussie (0.6143) has moved up slightly but while above 0.60, we may expect a gradual rise towards 0.63-0.6350 in the near term before dipping back towards 0.58. Overall near term view is bullish while above 0.60.
Pound (1.2369) has scope to rise towards 1.25-1.27-1.29 over the next couple of weeks before a dip from there back towards current levels is seen. Overall medium term looks bullish but we would look for a possible decline from 1.25 in the near term before attempting a rise towards higher levels of 1.27-1.29.
USDCNY (7.0914) has risen from levels near 7.05 seen on Friday as PBOC sets the rate for the day at 7.0940. A test of 7.10/12/15 looks possible now in the coming sessions.
USDINR (74.87) is likely to hold above immediate support near 74.50/30 and bounce back towards 75.50-75.80 over the next few sessions before again declining back in the medium term.
INTEREST RATES
The US Treasury yields have declined further and remain bearish. The broader downtrend is intact. The German Yields have declined below their key support thereby negating the chances of seeing any further rise that we had expected. The outlook is bearish and we may see the German yields coming down further. The 10Yr GoI can remain sideways for sometime before it breaks the range on the downside and see a fresh fall.
As expected the US 2Yr (0.24%), 5Yr (0.38%), 10Yr (0.65%) and 30Yr (1.21%) Treasury yields are coming down again thereby reducing the chances of seeing one more leg of upmove. The outlook is bearish. The 10Yr can fall towards 0.4%-0.3% and the 30Yr can test 1.10% on the downside. A break below 0.3% can drag the 10Yr to 0% or even lower. The 30Yr on the other hand can fall to 0.7% on break below 1.1%.
The German 2Yr (-0.75%), 5Yr (-0.67%), 10Yr (-0.48%) and 30Yr (-0.04%) yields have declined further sharply across tenors on Friday. The 10Yr has declined below -0.40% and the 30Yr has dipped below 0%. As such the rise that we had been expecting stands negated now. The 10Yr can fall to -0.60% and even lower. The 30Yr will need a watch to see if it is sustaining below 0% or not. While below 0% the outlook is bearish to see -0.20% on the downside.
As expected, the 10Yr GoI (6.1435%) fell to test 6% on the downside and has bounce-back sharply from the low of 5.9831%.%. A range of 5.98%-6.40%/6.45% is visible on the weekly chart which can remain intact while the yield sustains above 5.98% now. However, the broader picture is bearish and we expect the 10Yr GoI to break this range below 5.98% eventually and fall to 5.80% and even lower.
