STOCKS
Equities continue to trade higher. Dow and DAX still have room to move up from current levels before the expected correction happens. The US markets are closed today. Nikkei has tested its key resistances as expected and needs to see if it reverses lower from here itself or after an extended rise. Sensex and Nifty can sustain higher and consolidate sideways before seeing a fresh fall. Shanghai is closed till Wednesday this week. Overall we retain our cautious stance in equities to see a sharp correction any time although there is still room for a rise from current levels.
Dow (31458.40, +27.70, +0.09%) hovered near 31500 on Friday as well. The chances of seeing 32000 are still there. A break above 31500 will pave way for it. However we reiterate that 32000 can cap the upside. A corrective fall to 31000-30000 or even lower can be seen from there. We will be cautious as the Dow moves up from here.
DAX (14049.89, +8.98, +0.06%) oscillates around 14000. A break above 14200 can see an extended rise to 14500-14600 before a corrective fall is seen. 13800 is a good support. A break below it can trigger the expected corrective fall to 13600 and 13400-13200. Whether this fall happens from here itself or after an extended rise to 14500-14600 is not clear at the moment. Overall the index is near a top and we will be cautious to see a corrective fall.
Nikkei (29871.93, +351.86, +1.19%) has surged to test 30000 as expected. As we had mentioned last week, a corrective fall to 29000-28000 is possible from here. But in case if Nikkei breaks above 30000, an extended rise to 30500 can be seen before the expected correction happens. We will have to wait and watch the price action closely in the coming days.
Shanghai (3655.09) is closed till Wednesday on account of the Chinese New Year holidays. The Chinese markets will re-open on Thursday (18-Feb-21).
Sensex (51544.30, +12.78, +0.03%) and Nifty (15163.30, −10, -0.07%) consolidates between 51000-52000 and 15000-15250 respectively as expected. A strong rise past 52000 on the Sensex and 15250 on the Nifty is needed to negate our bearish bias of seeing a corrective fall to 50000-49000 (Sensex) and 14800-14600 (Nifty) from here. Such a break will then pave way for a rise to 53000 (Sensex) and 15400-15600 (Nifty).
COMMODITIES
Gold and Silver prices have risen but Silver looks bullish towards 29.50 while above 26 whereas Gold may have some scope of testing 1780 on the downside before moving up sharply in the medium term. Crude prices have risen and look bullish for the very near term as they also head towards resistance levels which if holds could produce a short corrective dip.
Brent (63.58) has risen well and could be headed towards 65 on the upside. WTI (60.78) has broken above our expected resistance at 60 and could rise towards 65 too in the near term. Any rejection at 65 on Brent if seen could restrict WTI at 63-63.50 levels in the near term. Overall immediate view is bullish but we may soon see near term resistances to hold.
Gold (1824.80) has risen slightly today but we do not negate a fall towards 1780 to be seen in the medium term before a rally starts towards 1900 or higher in the longer run.
Silver (27.69) has scope to rise towards 29-29.50 while above 26. Note that 26 is an immediate support that which holds could keep the overall trend up for Silver.
Copper (3.83) has risen sharply as expected and could test 3.90 before facing a short corrective dip from there.
FOREX
While Dollar Index trades within a broad range, most currencies look bullish for the very near term. Euro, EURJPY, Pound and Aussie have all risen well and look bullish for the near term. USDCNY is stable but Dollar-Rupee may show some fall towards 72.50 on the downside before a bounce comes in from there.
Dollar Index (90.354) is stuck within 91-90 region and needs to break on either side to give a direction for the medium to long term.
Euro (1.2130) is holding above immediate support near 1.21 and while that holds, Euro could trade in a stable manner within 1.21-1.22. A further fall in Dollar Index from current levels is bullish for Euro.
EURJPY (127.39) has broken above 127 and need to break above 127.50 and sustain in order to continue moving up towards 128 on the upside. Watch price action near 127.50 in the near term.
Dollar-Yen (105.03) may head towards 105.50 or even 106 on the upside within the current rally before falling off sharply from there. Immediate view is bullish.
Aussie (0.7774) has risen and has scope for a gradual rise to 0.78 in the near term.
Pound (1.3896) has been rising well and could soon test 1.40 on the upside. View is bullish.
USDCNY (6.4542) may trade within 6.42-6.48 region for the near term.
USDINR (72.7550) closed above 72.70 Friday on the OTC but fell sharply thereafter to fall towards 72.60/50 after the banking hours. Currently the NDF quotes 72.57 which indicates that the pair may attempt to break below 72.70 today on the OTC markets before bouncing back again towards 72.80/85 on the upside. Note that below 72.75, 70.50 is an important support that could hold.
INTEREST RATES
The US Treasury yields have risen back sharply on Friday. The 10Yr and 30Yr are poised at their crucial resistance zone which we expect to hold and trigger a reversal. The US markets are closed today on account of a public holiday. We will have to wait and watch how the market opens the week tomorrow. The German Yields have moved up and are keeping our bullish view intact. The 10Yr GoI has risen back sharply contrary to our expectation for a fall. The yield can move up further from current levels and then can reverse lower again.
The US 2Yr (0.11%) Treasury yield remains stable while the 5Yr (0.49%), 10Yr (1.21%) and 30Yr (2.01%)have risen sharply on Friday. The 10Yr and 30Yr are poised in their crucial 1.20%-1.25% and 2%-2.05% resistance zones respectively. We expect these resistances to hold and drag the yields lower to 1%-0.90% (10Yr) and 1.80%-1.75% (30Yr) in the coming weeks. A strong rise past 1.25% (10Yr) and 2.05% (30Yr) is needed to negate the broader bearish view.
The German 2Yr (-0.72%), 5Yr (-0.69%), 10Yr (-0.43%) and 30Yr (0.07 %) have moved across tenors and keeps the bullish view intact. The 10Yr is heading towards -0.40% and the 30Yr has breached 0.05% as expected. We reiterate that the 30Yr looks bullish to see 0.15%-0.20% on the upside. It will have to be seen if this can aid the 10Yr to break above its immediate resistance level of -0.40% and extend the upside.
The 10Yr GoI (05.77 GS 2030, 6.0570%) has bounced-back sharply on Friday. There is room to test 6.10% on the upside in the near-term on a break above 6.06%. But a strong rise past 6.10% is necessarily needed to negate our bearish view of seeing a break below 6% and a fall to 5.98%-5.95%. We expect 6.10% and trigger a reversal.
The 10Yr (05.85 GS 2030, 5.9905%) can test 6.03%-6.04% before reversing lower again to target 5.93%-5.90% on the downside in line with our expectation.
