STOCKS
Dow can remain in the range of 28800-30000 in the near-term and can dip within it. DAX remains stuck in the narrow 13000-13300 range. Sensex and Nifty have bounced on Friday but have strong resistances that can cap the upside and keep them in a sideways range for some time before a corrective fall happens. Shanghai is moving up and is coming closer to the upper end of its 3180-3240 sideways range. Nikkei is closed today. As mentioned on Friday, a sideways consolidation can be seen in equities in the near-term. With limited upside from current levels, we will continue to remain cautious to see a sharp corrective fall going forward.
Dow (29263.48, −219.75, -0.75%) can head lower within the 28800-30000 range mentioned on Friday. The broader view remains the same. 30000 and 30800-31000 are important resistances while below which we will be looking for a corrective fall to 28000 and even lower in the coming weeks. A break below 28800 will trigger this fall.
DAX (13137.25, +51.09, +0.39%) continues to remain stuck in between 13000 and 13300 and looks mixed in the near-term. We retain our broader view of seeing a fall to 12400 in the coming weeks. While above 13000, the chances of seeing a rise to 13400-13500 and 13850 before the fall is still alive. A strong break below 13000 will negate this chance and drag the index to 12400 from here itself.
Nikkei (25527.37) is closed today.
Shanghai (3393.35, +15.63, 0.46%) has risen to 3400 as expected and can move up further towards 3450. Inability to breach 3450 will keep the broader 3180-3450 range intact and can drag the index lower towards the lower end of this range thereafter. We will have to wait and watch the price action near 3450.
Nifty (12859.05, +87.35, +0.68%) has bounced-back from the low of 12730 on Friday. A sideways consolidation between 12730 and 13000 is possible in the near-term. 13000-13200 is a broad resistance zone that we expect to cap the upside and we expect the Nifty to see a sharp corrective fall to 12500-12250 in the coming weeks.
Sensex (43882.25, +282.29, +0.65%) on the other hand has strong resistance in the 44000-44500 region which can cap the upside. While below 44500 we retain our cautious view of seeing a corrective fall to 42000 or even lower. A break below 43000 can trigger this fall.
COMMODITIES
Positive news from Pfizer and Moderna on vaccine has taken Copper prices sharply up which could now test our expected levels of 3.30/35 now. Gold and Silver have risen a bit but looks ranged overall. Crude has immediate resistances which if breaks could take them higher towards next important resistances of 47.50 (brent) and 45 (WTI) respectively.
Brent (44.97) and Nymex WTI (42.34) seem to break above immediate resistances near 45 and 43 respectively and if such a move sustains, we may expect a further rise towards 47.50 and 45 respectively in the coming 1-2 weeks. Crude prices look bullish for the very near term.
Gold (1869.90) trades in the 1860-1870 region and is unable to break on either side from here for the last few sessions. We may expect sideways consolidation to continue for some more time before either rising sharply towards 1900 or towards 1840 before a bounce is seen from there. It is more likely to test 1840 on the downside.
Silver (24.30) has bounced a bit from levels seen on Friday. While above 24, view is bullish. Only on a break below 24, if seen and sustained we would look for a fall towards 22-21 in the longer run. For now support at 24 seems to be holding well.
Copper (3.2820) has risen sharply and is moving towards our target of 3.30/35 as seen on the weekly charts. We may expect resistance at 3.35 to produce a fall in the medium term. Immediate view is bullish on Copper.
FOREX
Dollar Index and Euro look stable within 92-93 and 1.18-1.1920 respectively. USDJPY may also trade within 103.50-104.50 just now. EURJPY has bounced back a bit but we may not negate a fall to 122-121.50 on the downside. Aussie and Pound have scope to test resistances at 0.74 and 1.34 before falling off from there. USDCNY could test 6.50 while USDINR may remain ranged within 74.50-74.00.
Dollar Index (92.24) has dipped slightly but while above 92, we may expect ranged movement within the broad 92-93 region.
Euro (1.1873) is also likely to remain stuck within 1.18-1.1920 region as long as Dollar Index is unsure of the further course of movement. Only a break below 92 on the index will trigger a sharp rise on the Euro.
EURJPY (123.18) is stable. As mentioned on Friday, the cross may attempt to test 124 on the upside just now but we may not negate a fall to 122-121.50 in the medium term as there could still be some chances of a fall after the current corrective bounce.
Dollar-Yen (103.73) is stable just now and could trade in the broad 103.50-104.50 region before moving on either side. Immediate view is ranged.
Aussie (0.7316) could test immediate resistance at 0.74 in the near term before facing a rejection from there. Immediate view is bullish towards 0.74.
Pound (1.3320) could test 1.34 on the upside before falling back from there. Immediate view is bullish.
USDCNY (6.5583) has fallen as expected and could be headed towards 6.50 in the next few sessions.
USDINR (74.1650) needs to break below 74.10/00 in order to move down to 73.80 in the near term. RBI intervention near 74.00/10 would take the pair back towards 74.50 keeping the 74.00-74.50 region intact for now.
INTEREST RATES
The US Treasury yields have reversed lower last week in line with our expectation. A break below the immediate supports can trigger a fresh fall that we have been cautioning for some time. The German Yields have dipped further and keeps our bearish view intact. Intermediate supports are coming up and a break below it can take the yields further lower. The 10Yr GoI can oscillate in a narrow range of 5.85%-5.90% before seeing a test of 5.80% on the downside.
The US 2Yr (0.16%), 5Yr (0.37%), 10Yr (0.82%) and 30Yr (1.52%) Treasury yields had closed lower especially sharply at the far end. Our view of seeing a turn-around in the upmove in yields is working out well and the outlook is turning bearish. 1.50% on the 30Yr and 1.78% on the 10Yr are intermediate supports. A break below 1.50% can drag the 30Yr yield to 1.43%-1.40% initially and then even to 1.25% eventually. Similarly the 10Yr can fall to 0.60% on a break below 0.78%.
The German 2Yr (-0.77%), 5Yr (-0.77%), 10Yr (-0.59%) and the 30Yr (-0.18%) yields remain lower and can retest -0.60% (10Yr) and -0.20% (30Yr) levels as mentioned on Friday. The broader bearish view is intact. A break below -0.60% (10Yr) and -0.20% (30Yr) will see a further fall to -0.70% (10Yr) and -0.35%/-0.40% (30Yr) in the coming weeks. Thereafter a fresh bounce is possible.
The 10Yr GoI (5.8788%) can continue to trade stable in the 5.85%-5.90% range in line with our expectation. The bias is negative and we expect the yield to break the range below 5.85% and fall to 5.80% eventually.
