STOCKS
Equities are regaining momentum as the sentiment is getting a boost as Biden has sworn in as the new US President. Dow, Sensex and Nifty are looking bullish. Dow can test 31500. Nifty can move up to 14800-15000 while the Sensex can target 50300-51000. DAX and Nikkei can consolidate sideways within their current uptrend. Shanghai is attempting to break above the crucial level of 3600 which if confirmed will be very bullish from a long-term perspective. Looks like the corrective could get delayed further.
Dow (31188.38, +257.86, +0.83%) risen sharply above 31000 thereby bringing back the chances of seeing 31300-31500 on the upside into the picture. We expect a reversal from 31500. However, a break above 31500 can see the rally extending upto 32000 even. We will have to wait and watch whether the reversal is happening from 31500 or 32000.
DAX (13921.37, +106.31, +0.77%) is attempting to bounce but seems to lack momentum. View remains the same. A consolidation between 13600 and 14000/14100 is possible in the near-term and while below 14100, the bias is bearish to break 13600 and fall to 13200. In case if DAX manages to break above 14100, an extended rise to 14500 can be seen before a reversal happens.
Nikkei (28732.54, +209.28, +0.73%) remains higher and stable. As mentioned yesterday, a sideways range of 28000-29000 can be seen in the near-term. Also, we reiterate that a strong break below 28000 is needed to come under more selling pressure and confirm a reversal to see 27000-26500 on the downside. While above 28000, the uptrend will remain intact to see 29600 and even higher levels.
Shanghai (3614.31, +31.22, +0.87%) is attempting to break above 3600. A strong close above 3625 will confirm the break and open doors for a test of 3700. It will also negate the chances of seeing 3475-3450 on the downside that we have been mentioning for some time. The break above 3625 will be bullish from a very long perspective to see 4400 on the upside.
Nifty (14644.70, +123.55, +0.85%) and Sensex (49792.12, +393.83, +0.80%) have risen further and are retaining their momentum. The outlook continues to remain bullish. Nifty can test 14800 and even 15000. Correspondingly, Sensex will have potential to target 50300 and even 51000 ahead of the Union Budget. As mentioned in the Evening Comments yesterday, we will have to wait and see if the Budget can be a trigger for the long awaited correction.
COMMODITIES
The American Petroleum Institute (API) has reported a rise in US inventory stock levels by 2.6mln barrels for week ended 15th Jan while the Reuters poll forecasted a fall of 1.2mln barrels. Along with this the International Energy Agency cut its crude oil demand recovery outlook for the year by 300,000bpd to 5.5mln bpd in its latest oil market report. The above two together has weighed upon crude prices taking it slightly lower today. Note that crude prices could trade within 55-51 (WTI) and 54-58 (BRENT) for now as both are respective supports and resistances for the near term. Gold and Silver have interim resistances near 1880 and 26 which need to break in order to keep the upside momentum intact. Copper looks bullish towards 3.75/80.
Brent (55.82) and Nymex WTI (53.05) trade lower today. We may expect supports near 54 and 51 to hold respectively while the immediate upside of 58 and 55 could be soon tested. Overall the prices may remain ranged within the supports and immediate resistances mentioned before breaking on either side in the longer run.
Gold (1868.30) has risen well breaking above the interim resistance at 1860 and could test 1880 on the upside. Only a break above 1880 if seen and sustains will make the view bullish for a possible rise towards 1920 or higher in the medium term.
Silver (25.82) is moving towards 26 and needs to break on the upside in order to continue the upmove for the medium term towards 27. Watch price action near interim resistance at 26.
Copper (3.6550) has been moving up well and could soon test 3.75/80 on the upside.
FOREX
Overall most currencies look strong as Dollar Index trades lower. Aussie and Pound may rise towards 0.78+ and 1.37/38 while EURJPY can test 126.50 on the upside. USDINR an fall towards 72.90 while Euro may expect a rise to 1.2180-1.22. Dollar Yen continues to trade lower with a lower dollar Index and may test 103 or lower in the near term.
Dollar Index (90.324) looks stable just now and needs to break below 90 to gain momentum for a sharper fall. Failure to break below 90 could keep the index ranged within 90-91 for sometime.
Euro (1.2126) had dipped slightly from 1.2160 but has now moved up again. A break above 1.2160 is needed just now to take Euro higher towards 1.2180-1.2200 in the near term.
EURJPY (125.57) looks bullish for a rise to 126-126.50 in the near term.
Dollar-Yen (103.53) has fallen well and could be slowly headed towards 103 or even lower in the near term.
Aussie (0.7772) has risen well and could be headed towards 0.78-0.7830 in the near term.
Pound (1.3681) has been steadily rising towards 1.37 and needs to break above that to further rise towards 1.38/39 in the longer run. Immediate view is bullish but watch price action at 1.37.
USDCNY (6.4603) has come down a bit. Immediate view is to see a fall towards 6.44.
USDINR (73.0250) came down to test 73.02 in line with our expectation and closed near yesterday’s low. We may expect a possible break below 73 today taking the pair down to 72.90 before a possible bounce could be seen. Only if the pair further manages to break below 72.90 would we look for lower levels of 72.80/75 in the medium term. For now immediate target is 72.90 before a bounce is expected.
INTEREST RATES
The US Treasury yields have dipped further at the far end. We expect the yields to fall further in the coming days and the view is bearish. The upside will be limited even if any sharp bounce-back is seen from current levels. The German yields remain stable. With immediate resistances ahead, we keep our bearish view intact to see a fall in the coming days. ECB meeting outcome is due today which will need a close watch. The 10Yr GoI has bounced slightly yesterday but has resistances ahead that can cap the upside and keep it pressured to fall again. View is bearish.
The US 2Yr (0.13%) and 5Yr (0.45%) Treasury yields remain stable while the 10Yr (1.08%) and the 30Yr (1.83%)have dipped further. Our view of seeing a test of 0.90%-0.80% (10Yr) and 1.75%-1.70% (30Yr) on the downside remains intact. As mentioned yesterday, the upside is likely to be capped at 1.20%-1.25% (10Yr) and 1.90%-1.95% (30Yr) in case of any strong bounce from current levels.
The German 2Yr (-0.72%), 5Yr (-0.73%), 10Yr (-0.53%) and the 30Yr (-0.12%) continues to trade stable. We retain our bearish view of seeing -0.60% (10Yr) and -0.20% (30Yr) on the downside initially and then -0.30% (10Yr), -0.70% (30Yr) over the medium-term eventually remains intact. Immediate resistances are at -0.50% (10Yr) and -0.10 (30Yr) that can cap the upside from here.
The 10Yr GoI (5.9433%)has risen back above 5.94%. However, 5.95%-5.96% region can be a good resistance now. While below 5.96%, the bearish view of seeing 5.90%/5.88%/5.86% on the downside will remain intact. A strong break above 5.96% will be needed to bring back the chances of seeing 6%-6.02% on the upside.
