STOCKS
Equities broadly look mixed while they manage to hover at higher levels. Dow will need a strong rise past 31000 to move further higher. DAX, Nikkei and Shanghai can consolidate sideways for some time. Sensex and Nifty have recovered sharply and can move further up if they can sustain the bounce today. Overall, it is a wait and watch mode on the equities and we retain our cautious stance to see a sharp correction in this segment going forward.
Dow (30930.52, +116.26, +0.38%) is attempting to bounce-back. A strong rise past 31000 will be needed to bring back the chances of seeing 31300-31500 on the upside. While below 31000, a test of 30200-30000 is likely this week indicating an early sign of a reversal. A further fall below 30000 will confirm that a top is in place and drag it to 29500-29000 and even lower going forward.
DAX (13815.06, −33.29, -0.24%) looks mixed. As mentioned yesterday, a consolidation between 13600 and 14000/14100 is possible in the near-term. Within that, while below 14100, the bias is bearish to see a break below 13600 and a fall to 13200 initially signaling a reversal.
Nikkei (28504.38, −129.08, -0.45%) holds higher but seems to lack momentum. A sideways move between 28000 and 29000 looks possible in the near-term. As mentioned yesterday a strong break below 28000 is needed to confirm a reversal which can drag the index lower to 27000-26500. We will have to wait and watch.
Shanghai (3583.10, +16.72, +0.47%) continues to hover below 3600 and remains in the 3525-3600 range as expected. Our view remains the same. A strong rise past 3600 is needed to become further bullish from here. While below 3600, a fall to 3475-3450 is possible in the coming days.
Nifty (14521.15, +239.85, +1.68%) and Sensex (49398.29, +834.02, +1.72%) have recovered sharply yesterday. Nifty could get a further boost if it manages to breach 14600 decisively and can test 14800 on the upside. Sensex on the other has potential to test 50000 while it sustains above 49000 now. The danger of seeing a deeper fall mentioned yesterday has eased as the indices have bounced-back from near their crucial resistance levels of 14200 (Nifty) and 48300-48000 (Sensex).
COMMODITIES
According to a report by S&P Platts, US Crude inventory for week ended 15th Jan is expected to remain steady as exports remained steady. According to the report, the total commercial crude stockpiles are expected to have seen a draw of 2.5mln barrels taking the inventory figure to 479.7mln barrels. This has been a positive news to the oil prices as they move up in trade today. Brent may continue to head towards $58-60 in the near term while WTI may test $55 soon. Gold and Silver may trade within 1860-1820 and 24-26 region for the near term. Copper is moving up slowly and could soon test 3.70 in the near term. While above 3.55, view is bullish.
Brent (56.20) and Nymex WTI (53.31) have moved up well and could be soon headed towards their respective resistances near $58-60 and $55 respectively.
Gold (1847.40) has risen well within the 1820-1860 range and while the price remains below 1860, there is a fair chance of seeing a dip back towards 1820-1800 in the near term. Only a sustained break above 1860, if seen would make the view bullish for the medium term. Watch price action near 1860 for now.
Silver (25.49) continues to hold in the 24-26 region and trade so for a few more sessions before breaking on either side. While above 24, view is bullish.
Copper (3.6370) may slowly move up towards 3.70 or higher in the near term. Immediate view is bullish while above 3.55.
FOREX
Dollar Index continues to dip keeping Dollar Yen low and pulling up Euro towards 1.2150. Euro may now extend towards 1.22 as Dollar Index moves down towards 90-89.50 in the near term. Aussie and Pound look bullish for a rise towards 0.78 and 1.37. USDCNY may test 6.44 while USDINR may test 73.00 today.
Dollar Index (90.344) has fallen further today while 91 holds good for now. A continued decline from current levels could take the index down to 90-89.50 levels again in the near term.
Euro (1.2148) has bounced well and while the Dollar Index is headed towards 90-89.50, Euro may attempt to test 1.22 or higher. Immediate view is bullish.
EURJPY (126.05) could attempt to rise towards 127.0-127.50 again in the near term. Immediate view is bullish.
Dollar-Yen (103.75) has dipped from levels below immediate resistance near 104.10/20 and while that holds, a fall towards 103 looks likely soon. While the Dollar Index heads lower, Dollar-Yen could also move lower.
Aussie (0.7722) may attempt to rise to 0.78 and if it manages to break higher, it can continue to move up in the medium term.
Pound (1.3655) may test immediate resistance near 1.37 and needs to break above that in order to move up further towards 1.38 on the upside. Watch price action near 1.37 in the next few sessions.
USDCNY (6.4682) is holding below immediate resistance at 6.50 and while that holds, we may expect a slow dip towards 6.44 and probably even towards 6.40 in the longer run. Watch price action near 6.44.
USDINR (73.17) traded within 73.14-73.30 region yesterday but has scope for a fall towards 73 in the near term. We keep the near term sideways range of 73.35-73.00 intact within the broader range of 73.50-73.00.
INTEREST RATES
The US Treasury yields have dipped slightly after Janet Yellen, the nominee for the new Treasury Secretary testified to the Senate Finance Committee. Market will be closely watching the policy developments as Joe Biden swears in tonight. Broadly we see limited upside on the Treasury yields from current levels and expect the yields to resume their long-term downtrend going forward. The German yields remain stable below their immediate resistances which are expected to hold and keep the bearish view intact. The ECB meeting is due tomorrow. The 10Yr GoI has declined below 5.94% and looks vulnerable to fall further.
The US 2Yr (0.13%), 5Yr (0.45%), 10Yr (1.10%) and the 30Yr (1.84%)have dipped slightly from levels seen in early Asian session yesterday. Our view remains the same. We expect the yields to fall to 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) in the coming weeks. Any sharp rise from current levels could be restricted to 1.20%-1.25% (10Yr) and 1.90%-1.95% (30Yr).
The German 2Yr (-0.72%), 5Yr (-0.72%), 10Yr (-0.53%) and the 30Yr (-0.12%) remains stable. As mentioned yesterday, the bearish outlook is intact as long as the yields trade below their immediate resistance levels of -0.50% (10Yr) and -0.10 (30Yr). A fall to -0.60% (10Yr) and -0.20% (30Yr) initially and then -0.30% (10Yr), -0.70% (30Yr) over the medium-term eventually can be seen.
The 10Yr GoI (5.9383%)has declined and closed below the immediate support level of 5.94%. The chances of seeing 6%-6.02% stands reduced now. The 10Yr GoI is now vulnerable to see 5.90%/5.88%/5.86% on the downside again in the coming days.
