STOCKS
Equities continue to hover higher. The price action in the coming days will need a close watch as we see limited room on the upside from here. As mentioned yesterday, 31300-31500 on the Dow, 14500 on the DAX are crucial levels from where we expect a corrective fall. Nikkei can test 28300 before reversing lower. 3600 on Shanghai has held well as expected and the index has declined sharply. A further fall is possible in the coming days. Sensex and Nifty continues to surge and are likely to extend their rally unless there is a strong signal for a reversal from the other global equities.
Dow (31008.69, −89.28, -0.29%) has been oscillating around 31000 over the last three trading days. Our view remains the same. While there is room to see an extended rise to 31300-31500, the broader stance is to stay cautious at these levels. We expect a sharp corrective fall anywhere from the broad 31000-31500 region going forward.
DAX (13936.66, −112.87, -0.80%) has come-off below 14000 but is getting support near 13800. Another support is also at 13600. While above 13600, the chances are still alive for seeing an extended rise to 14500 before the expected corrective fall begins. DAX has to fall decisively below 13600 to signal that a top is in place.
Nikkei (28186.75, +47.72, +0.17%) has risen above 28000 contrary to our expectation for a reversal from there. The index has room to test 28300 and then the expected correction can happen from there. We will have to wait and watch.
The resistance at 3600 has held very well as expected and Shanghai (3555.29, +23.79, 0.67%) has come-off sharply from the high of 3597.70 yesterday. While below 3600, a fall to 3450 and even 3420-3400 can be seen in the near-term.
Nifty (14484.75, +137.50, +0.96%) and Sensex (49269.32, +486.81, +1%) have risen further and are retaining their strength. While there is no sign of looking back on these indices, the other global indices will have to be watched to see if they can give any signal for a reversal in Nifty and Sensex. On that front, we would watch if the expected reversal in the Dow from the 31000-31500 region can halt the rally in the Indian indices.
On the individual stocks front, Tata Motors (220.65, +22.50, +11.36%) surged on news that the company could partner with Tesla to manufacture electric vehicles. Tesla (811.19, -68.83, -7.82%) was down sharply on Monday NASDAQ.
COMMODITIES
Steep sell off seen in the Bitcoin is raising concerns on the cryptocurrency front as the Bitccoin plunged around more than 20% over the last two days. The fall has lead to a $140 billion wipe in the total market cap admist rising Dollar.
Commodities have moved up a bit today. Crude prices look bullish towards $58 (Brent) and $55 (WTI) while Gold and Silver could remain above supports near 1820 and 24.36 over the next few sessions at least. Copper may rise from anywhere between 3.55-3.50 back towards 3.75/80. Overall immediate view is bullish while above immediate support levels.
Brent (55.63) and Nymex WTI (52.25) look bullish for the near term towards $58 and $55 respectively before a decline sets in. Immediate supports are seen at $54 and $51 respectively.
Gold (1847.80) has bounced from 1820 and the rise look like a corrective one which could be capped at 1880 on the upside. We cannot rule out possibilities of a fall towards 1760-1740 in the longer run. Immediate view could be to see a ranged trade within 1820-1880 for the next couple of sessions at least.
Silver (25.20) has bounced from 24.36, exactly from the earlier resistance turned support seen on the daily candles. While above 24.36, we may expect a rise to 26-26.50 before any dip is seen again.
Copper (3.5810) has fallen as expected and could bounce back from 3.55-3.50 region to head higher towards 3.75/80 again in the medium term.
FOREX
Dollar continues to trade strong and looks bullish for the near term while Euro may fall to 1.2050 and EURJPY could test 126. Aussie could test support at 0.7650 while Pound may hold strong while above 1.36. USDCNY has dipped a bit but could be trading within the broad 6.40-6.50 region. USDINR need to hold below 73.50 to trade lower else a rise to 73.75 cannot be negated. Dollar Yen looks bullish towards 104.50-105.
Dollar Index (90.577) is rising well and could be headed towards 91-91.50 for the near term. View is bullish for the near term.
Euro (1.2144) has broken below immediate support at 1.2150 and while the currency trades below 1.2150, there is scope for a fall towards 1.2050-1.2000 in the near term. View is bearish below 1.2150.
EURJPY (126.66) may test 126 before attempting to bounce from there. Immediate view is bearish.
Dollar-Yen (104.29) has risen well breaking above immediate trend resistance at 104.12 and now heads towards 104.50 or even 105.20 on the upside from where a rejection looks likely back towards 104-103.50. Immediate view is bullish while the Dollar Index trades strong.
Aussie (0.7697) has support near 0.7650 and while that holds, the currency could bounce back to 0.7750-0.78 again in the medium term.
Pound (1.3523) has bounced back sharply from 1.3450 and while that holds we may expect a re-test of 1.36 or higher on the upside. While above 1.3450, Pound is bullish for the near term.
USDCNY (6.4709) has dipped a bit and could possibly attempt to fall to 6.44 over the next couple of sessions. Our bullish view of seeing a test of 6.50 is not negated but still acts as the upside limit for the near term.
USDINR (73.3850) has tested the first level of resistance at 73.50 and it would be important to see if that holds or produces a fall towards 73.35/25 from here before again rising back. At the same time, failure to hold below 73.50 could take it higher towards the upper resistance near 73.75.
INTEREST RATES
The US Treasury yields sustain higher and keep our bullish view intact to test their crucial resistances in the coming weeks. The German Yields have moved up and are poised at key resistance levels. A further rise past these resistances will negate our bearish view of seeing a fall-back. The 10Yr GoI rose to test its key resistance and has come-off from there. While the resistance holds, a further dip is possible in the near-term.
The US 2Yr (0.14%), 5Yr (0.51%), 10Yr (1.15%) and the 30Yr (1.88%)Treasury yields continues to trade higher. Our bullish view of seeing 1.20%-1.25% (10Yr) and 1.90%-1.95% (30Yr) on the upside remains intact. Thereafter we expect a fresh fall in the yields.
The German 2Yr (-0.71%) and 5Yr (-0.72%), 10Yr (-0.50%) and the 30Yr (-0.10%) have moved up further and are poised at crucial levels. A strong break above -0.50% (10Yr) and -0.10%(30Yr) will pave way for a fresh rise to -0.40% (10Yr) and -0.02%/0% (30Yr) going forward. That will negate our bearish view of seeing a fall-back to -0.60% (10Yr) and -0.20% (30Yr) that we had been expecting so far.
The 10Yr GoI (5.9259%) surged to a high of 5.9427% yesterday and has come-off from there. 5.94%-5.95% is a strong resistance zone which is likely to cap the upside. While below this resistance zone, a dip to 5.88%-5.86% can be seen again. A strong break above 5.95% is needed to boost the bullish momentum and move further higher to 5.98%-6%.
