STOCKS
Dow sustains above 30000 and keeps alive the chances of seeing 31000 before the expected correction comes into play. DAX looks mixed and hovers below the first resistance level of 13500. Nikkei seems to be turning down and can fall from here itself if it fails to bounce-back immediately. Shanghai retains its 3180-3450 range and can fall within this range now. Sensex and Nifty have room to test 46000 and 13500 after which they can reverse lower. Overall the equity indices are hovering at their tops with little room left on the upside from here. We retain our cautious view of seeing a sharp corrective fall in equities going forward.
Dow (30069.79, −148.47, -0.49%) has come-off yesterday but is still holding above 30000. The chances of seeing 30800-31000 will be alive as long as the Dow remains above 29500. But thereafter we expect a sharp corrective fall to 28000 and even lower going forward. The upside from where is likely to be capped at 31000.
DAX (13271, −27.96, -0.21%) fell below 13200 but has bounced-back well from the low of 13163.26. The near-term outlook remains mixed. We repeat that 13200 and 13000 are important supports. A break below 13000 will trigger the corrective fall to 12400 that we had been mentioning for some time. Key resistances are at 13500 and 13800/900 that can cap the upside.
Nikkei (26468.80, −78.64, -0.30%) has dipped below 26500. Inability to bounce-back above 26500 from here again can drag it to 25500 and even 24500 from here itself. In that case the rise to 27500 that we have been expecting may not happen.
Shanghai (3413.07, −3.53, -0.10%) has been coming down slowly over the last few days. The resistance at 3450 is holding well. As mentioned yesterday, a strong break below 3400 can drag Shanghai to 3300-3250 again. For now the 3180-3450 range remains intact and the index can fall within this range in the coming days.
Nifty (13355.75, +97.20, +0.73%) and Sensex (45426.97, +347.42, +0.77%) have risen further and are heading towards 13500 and 46000 in line with our expectation. However, we will remain cautious and approach the market from the sell side as they head higher from here. We expect the Nifty and Sensex to see a sharp corrective fall to 12800-12500 and 42000 respectively in the coming weeks.
COMMODITIES
With the next OPEC+ meeting scheduled on 4th January 2021, Crude prices are now stable within a broad range. We may expect some upmove by the end of December before an interim correction is seen. Gold could head towards 1880 and Silver ccould test 25 on the upside soon while Copper has come off from important resistance at 3.55 and could dip towards 3.40/3.35 before again bouncing back to higher levels.
Brent (48.42) and Nymex WTI (45.43) have dipped slightly from higher levels seen yesterday. As mentioned in yesterday’s morning briefing edition, we may look for a broad range of 45-52 just now on Brent which if breaks on the upside could have scope for a test of 52-53. WTI on the other hand has a wider range of $40-50 as it trades right in the middle of this range just now. We may expect a narrower range of 44-48 to hold for now before a test of 50 is seen. We are not looking at a fall in WTI to levels near 40 just now. Overall view for crude prices are fairly ranged to bullish.
Gold (1869.80) and Silver (24.78) have risen well. We continue to see a possible test of 1880 and 25 respectively in the next few sessions. The overall view on precious metals is to see a steady rise in the near term.
Copper (3.4890) has come off from crucial trend resistance on the daily candles at 3.55 and while that holds, we may expect a possible corrective dip towards 3.40 or even 3.35 on the downside before attempting to bounce back again towards 3.50 and higher.
FOREX
Dollar Index has inched up a bit pulling up Dollar Yen to levels above 104. While Dollar index could be bearish while below 91, Dollar Yen looks ranged within 103.5-104.5. Aussie and Pound looks stable just now and could see some fall in the near term. Euro may remain bearish while below 1.22. USDCNY could test 6.55 before again falling from there while USDINR could be ranged within 73.70-74.00 with possible break on the upside to test 74.15/25 in the near term.
Dollar Index (90.87) is trying to slowly inch up towards 91 but while below 91, we may not negate a fall towards 89 or even 88 in the medium term. View remains bearish for the medium term with some possible interim corrective upmoves.
Euro (1.2111) is holding well below 1.22 and could trade within 1.22-1.21 region for sometime before again heading higher. A possible test of 1.20 cannot be negated if Euro manages to break below 1.21.
EURJPY (126.02) has dipped slightly and could either be ranged within 126.70-125.70 or attempt a fall towards 125 in the near term before again bouncing back to higher levels.
Dollar-Yen (104.02) has moved up as Dollar Index has inched up slightly. We may look at a broad range of 103.50-104.50 to hold for the near term.
Aussie (0.7424) is trading slightly lower but is likely to be ranged for the near term. While above 0.70, we keep alive chances of seeing 0.75 or even 0.76 on the upside. Immediate downside could be limited to 0.74-0.73.
Pound (1.3349) has been falling well from levels above 1.34 and now looks bearish for a fall towards 1.32 in the near term.
USDCNY (6.5367) has bounced slightly today and could see a small corrective upmove towards 6.55 before again stabilizing a bit. Immediate view is bullish.
USDINR (73.9050) could trade within immediate range of 73.70-74.00 while we do not negate a rise towards 74.15/25 on the upside. Downside is likely to be limited to 73.50 for this month. Overall view is ranged to bullish.
INTEREST RATES
The US Treasury yields have reversed lower after having risen sharply on Friday. The yields seem to lack to gain fresh momentum as they come closer to their long-term resistances every time. While the resistances hold, we expect the Treasury yields to see a fresh fall in the coming days. The German yields remain lower and keep the bearish view intact. A break below their immediate supports can trigger a deeper fall in the coming days. The 10Yr GoI has bounced-back from its support and can rise again in the near-term. We can look for a range of 5.88%-5.95% in the coming days.
The US 2Yr (0.14%), 5Yr (0.39%), 10Yr (0.93%) and 30Yr (1.68%) Treasury yields have dipped yesterday after having surged sharply on Friday. The crucial resistances at 1% (10Yr) and 1.75% (30Yr) seem to hold well for now. While these resistances hold, the long-term downtrend will remain intact and the yields can fall back to 0.85%-0.80% (10Yr) and 1.55%-1.50% (30Yr) again. As mentioned yesterday, a strong and sustained break above 1% (10Yr) and 1.75% (30Yr) is needed to signal a long-term trend reversal which will be a major turn-around.
German 2Yr (-0.77%), 5Yr (-0.78%), 10Yr (-0.58%) and the 30Yr (-0.16%) have dipped across tenors. The bearish view remains intact. A test of -0.60% (10Yr) and -0.20 (30Yr) is likely in the near-term. A break below these levels can drag them to -0.70% (10Yr) and -0.35%/-0.40% (30Yr) eventually over the medium-term. Thereafter we expect a fresh bounce to happen.
The 10Yr GoI (5.9249%) has risen back well above 5.92%. The support at 5.88% has held very well. A test of 5.94%-5.95% is possible again. We expect the 10Yr GoI to remain in the 5.88%-5.95% for some time.
