STOCKS
Equities remain higher and have moved up in line with our expectation. However, the major indices are coming closer to their key intermediate resistances that will need a close watch to see if the current upmove can extend and will there be a fresh corrective fall. Dow has resistance at 29100 which needs to be broken to see further rise. DAX has more room on the upside than the Dow. Resistance for the DAX is at 13400. Nikkei has an immediate resistance at 23700 which is holding well for now. Shanghai can move up within its 2180-3450 sideways range. Sensex and Nifty have resistances at 41000 and 12100 which will need a close watch in the coming sessions.
Dow (28837.52, +250.62, +0.88%) is heading towards 29000 as expected. We reiterate that 29000-29100 will now be a crucial level to watch to see whether the Dow will extend the rally to 30000 or fall to 28000-27000 again.
DAX (13138.41, +87.18, +0.67%) sustains higher. The bullish view is intact to see a test of 13400 in the coming days. As mentioned yesterday, the price action at 13400 needs to be watched to see if the DAX can move up further to 13800 or will fall-back to 13000-12800.
Nikkei (23525.95, −32.74, -0.14%) sustains above 23500 but seems to lack strength to breach 23700 decisively. As mentioned yesterday, Nikkei will have to sustain above 23500 now in order to move up towards 24000 by breaking above 23700. A fall below 23500 from now will reduce the chances of seeing 24000 on the upside and in turn will drag it to 23000 again.
Shanghai (3336.28, −22.18, -0.66%) has dipped slightly after witnessing a strong surge yesterday. It is now poised at the middle of its 3180-3450 range. We retain our view of seeing a rise towards 3400-3450 (the upper end of the range) in the coming days.
Nifty (11930.95, +16.75, +0.14%) tested 12000 and has come-off slightly yesterday. 12100 will be an important level to be watched in the coming sessions. A strong break above 12100 will be needed to pave way for a further rise to 12250-12500. Support is at 11800 while above which we see high chances of the Nifty moving up to 12250-12500 in the coming days.
Sensex (40593.80, +84.31, +0.21%) rose to test the 40800-41000 resistance zone and has come-off from the high of 40905 yesterday. As mentioned yesterday Sensex will have to break 41000 decisively in order to move up further to 41500-42000. Inability to breach 41000 can trigger a dip to 39500 in the coming days.
COMMODITIES
Commodities see a short corrective dip which may last for a couple of sessions before a resumption of the earlier trend is seen. Copper and Silver look bullish while above 3 and 24 respectively. Gold may test 1920/00 before bouncing back from there. Crude prices could see a dip to for the next few sessions before bouncing back from there to higher levels.
Brent (41.73) and Nymex WTI (39.45) dipped further today and could fall towards 39.30 and 37.50 respectively. The current dip is expected to extend further for the near term before we may expect a bounce back to higher levels. Immediate view is bearish but we may soon expect a bounce back to higher levels.
Gold (1917) seems to be holding well below immediate trend resistance at 1940/50 and could dip towards 1920/00 in the next 3-4 sessions before deciding whether to fall sharply towards 1840 or rise higher breaking above 1950.
Silver (24.83) has dipped a bit but while above 24, scope for a test of 26-27 on the upside remains intact. We may expect a short dip over the next 1-2 sessions before a rise towards 26-27 sets in.
Copper (3.0455) has dipped slightly but while above 3.00, we may expect a break above 3.10 to eventually test 3.15/20 soon. View is bullish for the longer run.
FOREX
Dollar Index trades weak but the other currencies don’t look very strong just now and see some corrective dips which could soon resolve to turn out strong in the medium term. Aussie and Pound could remain ranged while EURJPY, Euro, Dollar Yen and USDCNY could move lower in the next few sessions. USDINR could test 73.50 on the upside before falling back towards 73.
Dollar Index (93.03) looks bearish for the near term. Although the Dollar Index trades lower, we see negative movements in the other currencies which could be short lived and soon bounce back to see higher levels.
Euro (1.1794) has dipped back below 1.18 unable to sustain higher levels above 1.1835. It may continue to rise higher if we see a bounce back within the next 1-2 sessions; else a dip towards 1.1750-1.17 cannot be ruled out.
EURJPY (124.39) has dipped too on line with our expectation of a fall mentioned yesterday. We may expect a fall to 123.80 before a possible rise towards 126-126.80 is possible. For the very near term, view is bearish.
Dollar-Yen (105.35) could test 105 on the downside before bouncing back from there towards 106. Overall the 105-106.12 range is likely to hold for now.
Aussie (0.7168) could dip further towards 0.71-0.7090 before again resuming the uptrend. Range of 0.70-0.72 remains intact for now with a possible extension to 0.74 in the longer run.
Pound (1.3044) may rise towards 1.31 before falling back from there.
USDCNY (6.7550) has risen a bit and could be headed towards 6.80 soon. View is bullish for the pair for the rest of the week.
USDINR (73.2750) rose back from 73.05 instead of breaking below 73 yesterday. The bounce could possibly be because of the presence of central bank near 73. But if the Euro and Yuan continues to trade strong, Rupee could eventually fall in the near to medium term. Upside could be capped at 73.50.
INTEREST RATES
The US Treasury yields have dipped slightly yesterday. The virus stimulus talks continue to weigh on the market. The short-term view is bullish. The Treasury yields can move up to test their key resistances in the coming days and then reverse lower. The German Yields have dipped to resume their broader downtrend. The corrective bounce that was expected is not happening. The 10Yr GoI has extended its fall as expected and remains bearish. There is room to fall further in the coming days.
The US 2Yr (0.15%) Treasury yield remains stable while the 5Yr (0.32%), 10Yr (0.76%) and the 30Yr (1.55%) have dipped slightly. The bullish view remains intact. We expect the 30Yr to move up to 1.72% on a strong break above 1.60%. Support is at 1.50%. The 10Yr on the other hand can test 0.90% on the upside on a break above 0.80%. Thereafter we expect the yields to reverse lower.
The German 2Yr (-0.74%), 5Yr (-0.74%), 10Yr (-0.55%) and the 30Yr (-0.12%) yields have dipped further. The bearish view is intact. The 10Yr can fall to -0.60% and the 30Yr can test -0.20% on the downside. The expected corrective bounce seems to be not happening.
As expected the 10Yr GOI (5.8990%) has declined further to test 5.90% yesterday. The bearish view is intact and the yield can fall to 5.85% now and extend further towards 5.80%-5.75% eventually in the coming weeks. 5.98%-6% range will act as a strong support-turned-resistance and will cap the upside.
