STOCKS
Dow is managing to hold above 30000 and has recovered slightly. The chances of seeing 31000 on the upside before a sharp correction still remain alive. DAX looks vulnerable to break its immediate support and fall in the coming days. Nikkei is hovering above its intermediate support and need to see if it can hold above it or not. Shanghai has risen sharply and is coming closer to a crucial resistance. The price action in the coming days will need a close watch. Sensex and Nifty continues to trade strong and can extend their upmove further.
Dow (30391.60, +167.71, +0.55%) has recovered some of the loss made on Monday. As mentioned yesterday, a strong break/close below 30000 will be needed to bring the index under pressure and indicate the beginning of a corrective fall. While above 30000, the chances of seeing 31000 is still alive before the expected correction comes into play.
DAX (13651.22, −75.52, -0.55%) is managing to hold above 13600 but seems to lack strength. We expect it to break 13600 and fall to 13200 initially in the coming days. As mentioned yesterday, the resistance at 13900 has held very well in line with our expectation and is keeping our broader bearish view of seeing a deeper corrective fall to 12400 in the coming weeks.
Nikkei (27102.44, −56.19, -0.21%) is holding above 27000. As mentioned yesterday, a strong break below 27000 will trigger the long awaited corrective fall to 26000-25500 initially and then to 25000-24000 eventually. While above 27000, Nikkei can remain stuck in a narrow range of 27000-27500 for sometime which in turn will delay the expected corrective fall.
Shanghai (3541.46, +12.78, +0.36%) has risen sharply and has tested 3550 as expected. 3600 will be a very crucial level to watch now as a strong and sustained break above it will be very bullish from a long-term perspective. A pull-back from the 3600 region can drag the index lower to 3450-3400 going forward. The price action at 3600 will need a close watch.
Nifty (14199.50, +66.60, +0.47%) and Sensex (48437.78, +260.98, +0.54%) retains their strength and have moved up yesterday. The bullish view of seeing 14300 on the Nifty and 48500-48700 on the Sensex remains intact. We expect that unless the Dow indicates a clear sign of a reversal, Sensex and Nifty are likely to continue their upmove.
COMMODITIES
Crude prices rise as Saudi Arabia surprised with an announcement if a 1mln barrel per day output cut after the OPEC+ meeting that concluded yesterday. This came in after the OPEC+ decided to allow a 75000bpd combined increase from Russia and Kazakhstan in February and March. Along with the rise in crude prices, Gold, Silver and Copper also look bullish for the near term.
Brent (54.01) and Nymex WTI (50.15) have risen well, breaking above immediate resistances of 53 and 48-49 respectively. Brent could get a [possible short corrective dip from 54.15/20 levels before attempting to move higher towards $55. Overall view is bullish for the medium term towards $55 on Brent and $52-53 on WTI but we would wait to see if the rise seen today manages to keep the upside momentum intact or drags it down again to keep the sideways range intact.
Gold (1951.90) continues to rise and could be headed towards 1980 as we have been mentioning over the past 2-days. Immediate view is bullish. A corrective dip from 1980 could be possible in the medium term.
Silver (27.57) also continues to move up and could test 28-29.50 on the upside before falling from there.
Copper (3.6640) has negated a possible fall to 3.40/35 and has sustained well above 3.50 re-testing 3.65/70. While above 3.65, we may expect a further rise in Copper to 3.70/80 in the near term. Overall view is bullish.
FOREX
Dollar Index may see a corrective bounce to 90.50 while dragging Euro down from resistance zone of 1.23-1.2350. But this could be short lived. Aussie, Pound, EURJPY look bullish for the near term. Dollar Yen may bounce to 103.50/75 before again falling off from there. USDCNY has bounced back well but the rise could be short lived as we keep our downside targets intact. Dollar-Rupee needs to break above 73.25 and sustain to attempt a rise to 73.50. Within a narrow range of 73.0-73.25, there is possibility on an extension on either side to 73.50 and 72.80/75.
Dollar Index (89.60) has attempted a bounce from 89.33 which could be limited to 90-90.25 on the upside before the index resumes its fall. Unless a sustained break above 90.25 is seen, it would be difficult to look for a possible short term reversal. Medium term view of 88 remains intact.
Euro (1.2284) has dipped from 1.2327, within the resistance zone of 1.23-1.2350. It would be important to see if this resistance holds for a few sessions to drag down Euro and indicate Dollar strength for the next few sessions. However, immediate weakness in Euro could be limited to 1.2150. A break above 1.2350 is needed for further strength in the Euro towards 1.24-1.25 in the longer run.
EURJPY (126.31) has dipped a bit but looks bullish for a rise to 127.27 in the near term.
Dollar-Yen (102.82) tested 102.59 before bouncing back from there. We may expect the bounce to be limited to 103.50/75 before another dip is seen. Immediate scope of a rise to 103.50/75 looks likely.
Aussie (0.7735) has risen back after a short dip seen yesterday. We continue to look for a test of 0.78 in the near term, a break above which will open up chances of further rise towards 0.80 in the medium term.
Pound (1.36) has dipped but immediate downside could be limited to 1.34 and a bounce back towards 1.38 could be expected over the medium term.
USDCNY (6.4611) has bounced sharply instead of heading lower towards 6.40/38 mentioned yesterday. While we do not negate the downside chances completely, we may expect the current rise to a corrective bounce that could hold on for a few sessions before the pair turns lower again.
USDINR (73.1850) rose from 73 yesterday and while above 73, we will have to see if the pair today breaks above 73.25 and attempts to move up further towards 73.50. We may expect a narrow range of 73.25/30-73.00 but there is scope for an extension on either side towards 72.80/75 and 73.50 respectively.
INTEREST RATES
The US Treasury yields have risen sharply and are coming closer to their crucial resistances. We expect the yields to breach these resistances and move up further if not immediately but eventually in the coming weeks. The German yields have bounced but are unlikely to sustain. The outlook is bearish to see a fresh fall breaking below their immediate supports. The 10Yr GoI remains bearish and can test 5.82%-5.80% on the downside.
The US 2Yr (0.12%), 5Yr (0.39%), 10Yr (0.98%) and the 30Yr (1.73%)Treasury yields have surged across tenors. The 10Yr and 30Yr have broken their narrow range on the upside above 0.95% and 1.70% respectively. A further rise past the crucial levels of 1% (10Yr) and 1.75% (30Yr) will pave way for a fresh rise to 1.10%-1.25% (10Yr) and 1.85%-1.90% (30Yr) over the medium term.
The German 2Yr (-0.73%), 5Yr (-0.75%), 10Yr (-0.58%) and the 30Yr (-0.17%) yields are attempting to bounce-back but are unlikely to sustain. We expect the yields to see a strong break below -0.60% (10Yr) and -0.20% (30Yr) and resume the downtrend towards -0.70% (10Yr) and -0.30% (30Yr) in the coming weeks. Resistances at -0.50% (10Yr) and -0.10% (30Yr) are likely to cap the upside.
The 10Yr GoI (5.8520%)has dipped further. The bearish view of 5.82%-5.80% on the downside remains intact and the yield can bounce-back thereafter.
