STOCKS
The US new stimulus hopes and progress on the covid-19 vaccine roll-out are keeping the sentiment positive and in turn the equities higher. Dow has risen back above 30000 and keeps alive the chances of seeing 31000 before a sharp correction happens. DAX is consolidating between 13000 and 13500 now. Nikkei remains stuck inside 26500-27000. Shanghai can move down within its 3180-3450 range. Sensex and Nifty have limited room on the upside from here and are likely to reverse lower going forward. Overall we retain our cautious stance as there is limited room left on the upside in equities. We will be looking for a sharp corrective fall going forward.
Dow (30199.31, +337.76, +1.13%) has risen back well above 30000 thereby easing the danger of breaking below 29500 that we had mentioned yesterday. This also keeps alive the chances of seeing 30800-31000 on the upside. A break above 30350 can pave way for this rise. But thereafter we will be looking for a sharp corrective fall to 28000 and lower levels.
DAX (13362.87, +139.71, +1.06%) has risen further. As mentioned yesterday, 13000-13400/500 can be a possible range for now. The upside will be capped at 13800/13900 in case of a break above 13500 is seen. However, from a bigger picture 13500 and 13800/13900 are key resistances that can cap the upside and we expect a sharp corrective fall to 12400 going forward.
Nikkei (26767.74, +79.90, +0.30%) is still stuck in between 26500 and 27000. While the near-term outlook is mixed, from the bigger picture, 27500 will be a cap on the upside from here. We retain our view of seeing a corrective fall from 27500 towards 25500-24500 in the coming weeks.
Shanghai (3376.54, +9.30, +0.28%) sustains above 3350. But the upside could be capped at 3400 from here. We expect the index to reverse lower again and break below 3350 to see 3300-3250 on the downside. Overall, the 3180-3450 range is intact and Shanghai is currently moving down within this range.
Nifty (13567.85, +9.70, 0.07%) is stuck in between 13400 and 13600 over the last few days. The chances of seeing 13700 on the upside is still alive before the expected correction happens targeting 13250-13000 initially and 12800-12500 eventually.
Sensex (46263.17, +9.71, +0.02%) is getting support at 45700-45680 now and has room to test 46500-46700 on the upside. Thereafter we expect Sensex to reverse lower and target 44500-44000 initially and then 42000 eventually.
COMMODITIES
Crude prices have risen slightly but the rise in Gold, Silver and Copper have been sharper contrary to our expectation of a continued corrective fall to be seen for some more sessions. Gold and Silver could be headed towards 1880 and 25 respectively while Copper could rise towards 3.65 soon.
Brent (50.73) and Nymex WTI (47.64) both have risen slightly. We continue to look for ranged movement around $50 and $47 for a few sessions followed by a rise towards $52-53 and $48-50 respectively. Overall medium term view is bullish.
Gold (1861.60) has bounced back sharply instead of falling lower towards 1820 and could now head towards 1880 on the upside before again falling back towards 18450/1840. Silver (24.84) on the other hand has moved up towards 25 as expected. A test of 25 could be seen in the next few sessions.
Copper (3.5540) has surprisingly bounced back sharply to re-test 3.55+ levels contrary to our expectation of a fall towards 3.45 mentioned yesterday. While the underlying bulls remain intat, a test of 3.65 cannot be negated in the near term.
FOREX
Dollar Index trades lower while Euro has risen a bit. EURJPY is likely to remain ranged just now but a test of 127 on the upside cannot be negated. Dollar Yen may fall towards 103.50-103.00.Pound and Aussie looks ranged just now. USDCNY may move up towards 6.58 if it sustains above 6.55 just now else we may expect a range of 6.52-6.56 to hold well. Watch price action near 73.50 on USDINR. A broad range of 73.80-73.45 can hold for now.
Dollar Index (90.46) has moved lower and could be headed towards 90 in the near term. View is bearish.
Euro (1.2157) needs to break above 1.2177 in order to move up sharply towards 1.22 or higher in the longer run. Watch price action near 1.2177 in the next few sessions. Failure to break above 1.2177 would drag it lower towards 1.21-1.2050 again in the near term.
EURJPY (125.96) is also ranged within a wide 126.80-125.75 region and is likely to hold so for some time. A break on either side is needed to confirm on further direction from here.
Dollar-Yen (103.61) has fallen in line with our mentioned view of a possible fall towards 103.50-103.00 mentioned in yesterday’s edition. A test of 103 looks likely for the near term. View is bearish.
Aussie (0.7557) is attempting to move up slowly and could soon test 0.76 on the upside.
Pound (1.3443) has risen above 1.3425 mentioned yesterday. Fluctuation is possible in the broad 1.35-1.32 region for the near term before the currency decides on further direction.
USDCNY (6.5434) failed to sustain above 5.55 and has instead dipped from yesterday’s highs. Broad trade within 6.52-6.56 looks highly possible for now.
USDINR (73.6450) may rise to 73.70/80 while above 73.50/45. Broad range of 73.45-73.80 may hold for the day.
INTEREST RATES
The US Treasury yields have inched slightly higher but are likely to reverse lower to dip the near-term supports. Whether these supports hold or not will need a close watch in the coming days. The outcome of the US Federal Reserve meeting is due tonight. The market will be closely watching for the economic forecast and if there is any change in the asset purchase program which can influence the yield movement. The German yields remain higher. But the resistances near current levels are likely to hold and keep the broader bearish view intact. The 10Yr GoI looks mixed and has equal chances of moving on either side from current levels within its 5.90%-5.98% range.
The US 2Yr (0.12%), 5Yr (0.36%), 10Yr (0.90%) and the 30Yr (1.65%) have inched slightly higher. We retain our view of seeing a test of 0.80% (10Yr) and 1.60%-1.58% (30Yr) on the downside. From a bigger picture, 1% (10Yr) and 1.75% (30Yr) are crucial resistances that are holding well for now. While below these resistances we see high chances of the yields breaking below 0.80% (10Yr) and 1.60%-1.58% (30Yr) and see further fall over the medium-term
German 2Yr (-0.78%), 5Yr (-0.80%), 10Yr (-0.61%) and the 30Yr (-0.21%) yields have been inching higher over the last couple of days. However, as mentioned yesterday, the immediate resistances at -0.20%/-0.18% (30Yr) and -0.60%/-0.58% (10Yr) can cap the upside and keep the broader bearish view intact. A reversal from there can see a fresh fall to -0.35%/-0.40% (30Yr) and -0.70% (10Yr) in the coming weeks.
As expected, the 10Yr GoI (5.9412%) fell to test 5.92% as expected and had bounced-back sharply from the low of 5.9176%. It is now poised at the middle of the 5.90%-5.98% range. We see equal chances for the yields to either see 5.98% on the upside or 5.90% on the downside from here. The immediate outlook is mixed and the yield can oscillate inside the 5.90%-5.98% range.
