STOCKS
Dow and DAX have recovered yesterday but resistances are coming up for them at 30500 and 13800 respectively that can cap the upside and keep them pressured to fall again. Overall the bias is still bearish. Nikkei and Shanghai have also bounced and will have limited room to move further up from here. We expect them to reverse lower again in the coming days after testing their upcoming resistance at 28500 (Nikkei) and 3550/3600 (Shanghai). Sensex and Nifty got a boost from the Union Budget and had surged yesterday. It is important to see if they can get a strong follow-through rise from here which is needed to negate the danger of seeing a fall again.
Dow (30211.91, +229.29, +0.76%) recovered slightly. But as mentioned yesterday 30500 will be a good resistance now which has to be breached decisively in order to reduce/delay the chances of seeing the break below 30000 and a fall to 29500-29000 going forward.
DAX (13622.02, +189.15, +1.41%) has risen back above 13600 again. But the bounce seems to lack momentum and can face resistance near 13800. While below 13800, our bearish view of seeing 13200 on the downside remains intact. As mentioned yesterday, a corrective bounce from 13200 to 13600 can be seen before a deeper fall to 13000 and lower levels happen.
Nikkei (28376.20, +285.15, +1.02%) has risen back above 28000. But as mentioned yesterday, the upside could be capped at 28500. While below 28500, the bearish view of seeing 27000-26500 on the downside remains intact. A strong break above 28500 is needed to negate this bearish view.
The corrective bounce to 3550 is happening in Shanghai (3523.28, +17.99, +0.51%) in line with our expectation. It will have to be seen if Shanghai can break above 3550 from here which will then pave way for a further rise to 3600. Overall, 3450-3550 (narrow), 3400-3600 (broad) can be the range that is possible to be seen in Shanghai in the coming weeks. While above 3400, the broader trend is up.
Sensex (48600.61, +2314.84, 5%) and Nifty (14281.20, +646.60,+4.74%) got boost from the Union Budget and surged yesterday. It will have to be seen if they can get a strong follow-through rise from here. Nifty can rise to 14600 while it sustains above 14200. Sensex on the other hand has an intermediate resistance at 49000 which has to be broken in order to revisit 50000 levels.
COMMODITIES
Crude moved up in the evening session yesterday after seeing positive global cues as open interest data shows an increase in long positions. Overall Brent and WTI look bullish towards $58-60 and $55-57 respectively. Gold and Silver has moved up too and could test immediate resistances of 1880 and 29 which if hold could keep the prices low for sometime. Copper is ranged just now and need to break below 3.50 to see a sustained fall from here. While above 3.50, it may remain ranged for now.
Brent (56.92) and Nymex WTI (54.15) have moved up after the initial base building and trade within a very narrow range as expected. The prices now look bullish and we may expect a rise towards $58-60 o Brent and $55-57 on WTI in the near term.
Gold (1864.20) has risen well targeting 1880 on the upside. Our earlier mentioned 1880-1820 range remains intact and we may expect a break out on either side in the medium term. For now, while the Gold prices rise, watch price action near 1880 to see if it breaks on the upside to target 1900+ levels.
Silver (28.75) has dipped slightly from a high of 29.15 as resistance near 29 seems to have held well. While below 29, we may expect a dip to 27-26 in the near term.
Copper (3.5580) trades lower but could spend some time in the 3.65-3.50 region before deciding on further direction. A break below 3.50 is needed to drag it lower towards our expected 3.45/40 in the medium term. Watch price action near 3.50.
FOREX
Dollar Index trades near the upper limit of the 91-90 range and if a break on the upside is seen it can test 91.50 on the upside dragging down Euro towards 1.2050 or even lower. Dollar Yen has resistance in the 105.0-105.20 region and while that holds, a dip is possible in the near term. EURJPY looks weak while Aussie and Pound looks ranged just now. USDINR could remain ranged within 73.15-72.75 region for now till we see a break on either side. USDCNY is bullish for the longer run while above 6.42.
Dollar Index (90.88) is trading at the higher end of the 91-90 range and a break on the upside if seen could take it higher towards 91.50. Failure to break above 91 could drag the index down to 90 again in the near term.
Euro (1.2080) continues to remain ranged and while above 1.2050, we may keep alive some chances of seeing a rise towards 1.2150-1.22 in the medium term.
EURJPY (126.73) holds well below 127.50 and while the fall sustains, we may expect a test of 126 again in the near term.
Dollar-Yen (104.89) tested 105.035 yesterday before coming off from there. It may re-attempt to test 105.00-105.20 on the upside in the next couple of sessions before falling off from there back towards 104.50 or lower.
Aussie (0.7657) has bounced from 0.76. Unless a break below 0.76 is seen, we may expect the trend to remain bullish for the near term, again attempting a rise towards 0.77+ in the near term.
Pound (1.3692) is ranged within 1.3750-1.36 and may continue to remain so for the near term. Only on a break on either side of the range we would look for further direction.
USDCNY (6.4611) has risen slightly but needs to see a sustained break above 6.48-6.50 to indicate a reversal from here. Note that on the longer term charts, 6.42/40 is a very crucial support and a bounce back from here is highly possible. View is bullish for the longer run while above 6.42. A break above 6.50 is soon expected either immediately or after some sideways movement.
USDINR (72.9850) tested an intra-day high of 73.12 before coming off from there sharply to close at lower levels. The high volatility seen during and after the Union Budget 2021 has been surprising as the market sentiment looks positive. Note that 73.12/10 is decent resistance below 73.25/20 and while that holds, a re-test of 72.80/75 cannot be negated. If the RBI has been intervening to buy near 72.75/78 levels then we may possibly see some sideways trade immediately followed by a break above 73.12/20 on the upside but we would wait to confirm on that.
INTEREST RATES
The US Treasury yields sustain higher and keep alive the chances of seeing another fresh rise. The fall that we had been expecting earlier seems to be not happening immediately. The German yields are holding higher and can move up to test their resistances before falling back again. The 10Yr GoI has surged above 6% yesterday thereby negating our earlier bearish view. The revision in the fiscal deficit target and higher borrowing plans announced in the Union Budget yesterday had triggered this sharp rise. The outlook has turned bullish now and a further rise is possible now while the yields sustain above 6%.
The US 2Yr (0.12%), 5Yr (0.42%), 10Yr (1.08%) and 30Yr (1.86%)remain higher and stable. Our view remains the same. While above 1% (10Yr) and 1.75% (30Yr), the yields can rise to 1.20% (10Yr) and 1.95%-2% (30Yr) in the coming weeks. A fall below 1% (10Yr) and 1.75% (30Yr) is now needed to turn the view bearish and bring the yields under pressure.
The German 2Yr (-0.73%), 5Yr (-0.73%), 10Yr (-0.52%) and 30Yr (-0.08%) yields remain stable. A further rise from here can take the 30Yr up to 0% and even 0.05% in the near-term. The 10Yr has immediate resistance at -0.50% and a break above it can see a rise to -0.40%. For now, our earlier bearish view of seeing -0.60% (10Yr) and -0.20% (30Yr) on the downside is not happening and seems to be getting delayed.
The 10Yr GoI (6.0796%)has surged breaking above 6% yesterday on the back of the Union Budget outcome. The outlook is now bullish to test 6.1250% immediately and even 6.25% from a medium-term perspective. Supports are at 6.05% and 6%. Our earlier bearish view of seeing 5.88%-5.86% on the downside has got negated.
