STOCKS
Dow remains stable above 30000 and has room to test 30800-31000 on the upside before reversing lower. DAX has surged above 13500 and can test 13800-13900 from where we expect it to come down again. Nikkei remains stable between 26500 and 27000. Shanghai and move up to test 3400 and then come down again to test the lower end of its 3180-3450 range. Sensex and Nifty continue to move higher and the correction that we have been expecting seems to be not happening. There is room left on the Sensex and Nifty to move further higher from current levels in the coming days. Overall our view of seeing a correction in equities is getting delayed.
Dow (30154.54, −44.77, -0.15%) sustains above 30000 but is not gaining momentum. Our view remains the same. A break above 30350 will pave way for a further rise to 30800-31000. But 30800-31000 will be a strong resistance that will cap the upside and we expect a sharp corrective fall from there to 28000 and even lower going forward.
DAX (13565.98, +203.11, +1.52%) has risen sharply breaking above 13500. This has opened doors to test 13800-13900 on the upside. As we have been mentioning for some time we expect DAX to reverse from the 13800-13900 and see a sharp corrective fall to 13200-13000 initially and then even to 12400 eventually.
Nikkei (26754.79, −2.61, -0.01%) continues to remain stable between 26500 and 27000. Our view remains the same. A test of 27500 is possible on a break above 27000. But the upside will be capped at 27500 and we will be looking for a corrective fall to 25500-24500 thereafter.
Shanghai (3378.38, +11.40, +0.34%) is holding above 3350 and can move up to 3400. We expect Shanghai to reverse lower from 3400 and keep our view of seeing 3300-3250 on the downside intact. Broadly, the 3180-3450 range is intact and we can see the index move down to test the lower end of this range in the coming days.
Nifty (13682.70, +114.85, +0.85%) and Sensex (46666.46, +403.29, +0.87%) continues to move up and retains their momentum. The corrective fall that we were expecting seems to be not happening from the levels that we had intended. There is room to test 13750 on the Nifty and 47000 on the Sensex in the near-term. We will now wait and watch to see from where the index can reverse lower.
COMMODITIES
Crude prices trade higher after weekly report from the Energy Information Administration (EIA) reported a crude inventory draw of 3.1mln barrels for week ended 11th Dec. We may expect crude pries to move up further in the near term. View is bullish for Crude, Gold, Silver and Copper as all of them have risen well. Gold and Silver could head towards 1880-1900 and 26-27 respectively while Copper has scope for a test of 3.65.
Brent (51.40) and Nymex WTI (48.33) have both risen sharply breaking above the immediate narrow range and could now be headed to our expected levels of $52-53 and $48-50 respectively. View is bullish for the near term.
Gold (1867.10) has broken above immediate resistance at 1860 and while the rise sustains, we may expect a rise towards 1880 and 1900-1920 eventually in the medium term. View is bullish while above 1860.
Silver (25.41) has also broken above the narrow range of 24-25 and has moved up today. The price should sustain above 25 in order to move up further towards 26-27 in the coming sessions.
Copper (3.5710) continues to move up and could be headed towards 3.60/65 on the upside. We may expect a corrective dip from 3.65 in the medium term.
FOREX
Dollar Index is headed towards 90 as Euro moves up and has scope for a test of 1.2350 on the upside. EURJPY could remain ranged below 126.80. Aussie and Pound are bullish on stronger commodities and a weaker dollar. USDCNY may move lower towards 6.50. USDJPY has fallen sharply on sharp rise in Gold and other commodities as Dollar trades weak. A test of 103 is on the cards for the next 1-2 sessions. USDINR needs to break below 73.45 to head lower else could be ranged within 73.45-73.70 for the very near term.
Dollar Index (90.13) is closer to 90 and a break below that could accelerate the fall towards 89 in the near term. Watch for a possible short corrective upmove from 90 before resuming the fall towards 89 in the longer run.
Euro (1.2211) has moved up sharply breaking above the immediate resistance of 1.22. A gradual rise to 1.2300-1.2350 is possible in the medium term before a pull back is seen towards 1.22-1.21 again in the longer run. View is bullish while above 1.21.
EURJPY (126.15) trades below resistance at 126.80 and could be ranged within the 126.80-125.00 region for the near term.
Dollar-Yen (103.30) has fallen in line with our expectation of a possible fall towards 103.50-103.00. A test of 103 looks likely for the near term but a break below that if seen would be further bearish towards 102 in the longer run. View is bearish for the near term but watch price action near 103.
Aussie (0.7586) is up as most commodities trade higher. Aussie looks bullish for the near term towards 0.76 or even higher. A rise in Copper towards 3.65 could boost a sharper rise in Aussie in the near term.
Pound (1.3539) is attempting to break above immediate resistance near 1.35 and while that sustains, we may not negate a rise to 1.36-1.37 in the near term. View is bullish while above 1.35.
USDCNY (6.5325) has dipped lower too and could be headed towards 6.50 in the near term. View is bearish for the pair. But while above 6.52, we may keep the 6.52-6.56 range intact.
USDINR (73.5750) tested 73.47 before bouncing back from there to 73.60. Note that continuous attempts to break below 73.50 could actually take the pair down soon. A successive break below 73.50/45 is bearish for a fall to 73.00-72.90 but we look at price action to be ranged in the 73.45-73.60/80 region before a fall is seen.
INTEREST RATES
The US Treasury yields have moved up further. The dip to test the supports seems to be not happening. As such the yields can move up to test their crucial resistances again in the coming days. The US Federal Reserve kept the rates unchanged and will continue with their bond purchases until they attain their goal of maximum employment and price stability. The economic growth outlook has also been revised higher. The German yields have broken above their resistances and can now move further higher contrary to our expectation to see a fall. The 10Yr GoI can move up again to test the upper end of its 5.90%-5.98% range.
The US 2Yr (0.12%), 5Yr (0.37%), 10Yr (0.93%) and the 30Yr (1.67%) have moved up further yesterday. A further rise from here can take the yields higher again towards the key resistance levels of 1% (10Yr) and 1.75 % (30Yr) that have been holding well for now and keep the long-term downtrend intact. It will also reduce the chances of seeing and also breaking below the near-term support levels of 0.80% (10Yr) and 1.60%-1.58% (30Yr) immediately. We will have to wait and watch the price action in the coming days.
German 2Yr (-0.74%), 5Yr (-0.75%), 10Yr (-0.57%) and the 30Yr (-0.17%) yields have risen above their near-term resistances. Our view of seeing a reversal from -0.60% (10Yr) and -0.20% (30Yr) has gone wrong. While the yields manage to sustain above -0.60% (10Yr) and -0.20% (30Yr) the near-term outlook will be bullish to test -0.50% (10Yr) and -0.10% (30Yr). Such a move will also reduce the danger of seeing the fall to -0.70% (10Yr) and -0.40% (30Yr) that we had been expecting.
The 10Yr GoI (5.9447%) sustains above 5.94% and has closed higher. The chances are high for the yield to move up towards 5.97%-5.98% again from where a reversal is possible again. We expect the 5.90%-5.98% range to remain intact for some more time.
