STOCKS
Equities continue to trade mixed. Dow and DAX continue to hover higher and keep alive the chances of seeing a further rise before a correction is seen. Sensex and Nifty have declined further sharply as expected and are poised near their crucial supports. While an intermediate bounce from these supports cannot be ruled out, the broader picture looks weak to see a break of these supports and a further fall eventually. Shanghai has come-off sharply and can see a corrective fall in the coming days. Nikkei is closed today and needs to see if it can sustain above 30000 going forward. As mentioned yesterday, though equities hover higher, they are not convincingly strong. As such we will continue to remain cautious.
Dow (31521.69, +27.37, +0.09%) still looks mixed in the near-term and is continuing to oscillate around 31500. Our view remains the same. For now 31000-32000 can be a possible range in the near-term. But, the upside is likely to be capped at 32000 from here. We expect the Dow to break below 31000 and see a corrective fall to 30000 and even lower eventually.
The near-term support at 13800 on DAX (13950.04, −43.19, -0.31%) is continuing to hold well. As mentioned yesterday 13800-14200 can be a possible range that can be seen in the near-term. A break above 14200 can see an extended rise to 14500-14600. From a bigger picture we expect DAX to break 13800 and fall to 13600 and 13400-13200 either from here itself or after a rise to 14500-14600.
Nikkei (30156.03, +138.11, +0.46%) is closed today on account of a public holiday. It had managed to sustain above 30000 yesterday and keeps the chances alive of seeing the rise to 33000-34000. It will have to be seen if it can continue to hold above 30000 when it reopens tomorrow.
Shanghai (3646.45, +4, +0.11%) failed to sustain the break above 3700 yesterday and had come-off sharply from the high of 3717.27. Our view of seeing 3600-3550 on the downside remains intact. 3730-3750 will be an important resistance that can cap the upside for now.
The fall to 14600 on the Nifty (14675.70, -306.05, -2.04%)) is happening much faster than expected. 14635.05 was the low recorded yesterday. A break below 14600 can see the fall extending to 14200 and even 13800. The upside is likely to be capped at 14800/15000 from here in case if Nifty bounces from 14600.
Sensex (49744.32, −1145.44, -2.25%) extended its fall and has come closer to 49500 as expected. 49500 will be the immediate important support. A break below it can take Sensex lower to 48000. Resistance is at 51000 and it can cap the upside in case if a bounce is seen from 49500.
COMMODITIES
Crude, Gold, Silver and Copper all trade higher and look bullish for the near term. Brent and WTI may target 70 and 65 respectively while Copper may rise towards 4.60. Gold and Silver may rise towards 1825 and 29.50-30 soon. The strong upmove is likely to continue at least for the next 2-3 sessions.
Brent (66.54) and WTI (62.77) have risen well. Brent has broken above immediate resistance at 65 and could head towards crucial longer term resistance coming up near 70 which is likely to hold and produce a rejection from there. WTI on the other hand may test 65 in the near term.
Gold (1813.00) has risen well and could have immediate interim resistance near 1820/25 whicch needs to break in order to indicate further upmove towards 1840/50. Watch price action near 1820/25 over today and tomorrow.
Silver (28.35) has started to rise and may extend towards 29.50-30 soon. Overall view is bullish for Silver in the coming sessions.
Copper (4.1530) continues to rise and has scope for a test of 4.6 on the upside. View is bullish while above 4.
FOREX
The House Budget Committee yesterday voted in favor of President Joe Biden’s stimulus proposal . Dollar Index has fallen well and trades lower pulling up Aussie, Pound, Euro, Yuan and Rupee. Most currencies look strong just now against the US Dollar and could continue so for the near term as DOlar Index may head towards 89.50-89.00 in the coming sessions.
Dollar Index (89.95) has broken below 90, the immediate support that we were looking at. While below 90, there is scope for a sharp fall towards 89.20-89.00 levels in the near term. View is bearish while below 90.
Euro (1.2174) is also heading towards 1.22 as expected. A decisive break above 1.22 is needed for Euro to move up further towards 1.2350.
EURJPY (127.76) has dipped a bit but needs to gradually break above 128.0-128.50 to move up further towards 130 in the medium to long term.
Dollar-Yen (104.93) has been dragged lower by a lower Dollar Index despite Nikkei trading strong. A break below 104.90 will accelerate the fall towards 104.50-104.00 in the near term.
Aussie (0.7926) looks bullish for a rise to 0.80 in the near term. View continues to remain bullish.
Pound (1.4081) has risen well on weak Dollar Index and may soon head towards 1.42. View is bullish while above 1.40.
USDCNY (6.4573) has dipped too and could now be ranged within 6.48-6.44 in the near term. Within the range a fall looks possible.
USDINR (72.51) tested 72.2775 before bouncing back from there. A possible re-test of yesterday’s low or even 72.15-72.00 looks possible in the near term from where a sharp bounce looks possible heading back to 72.70/80 or higher in the medium term.
INTEREST RATES
The US Treasury yields continue to hold higher and are sustaining the break of their resistances. The outlook is bullish and the yields can move up further in the coming days. The German yields have come-off across tenors. Inability to bounce in the coming sessions might negate the chances of seeing further rise that was mentioned yesterday. The 10Yr GOI is bullish and can move up in the near-term.
The US 2Yr (0.11%), 5Yr (0.60%) and 10Yr (1.37%) Treasury yields remained stable while the 30Yr (2.17%)has surged further. The outlook is bullish. The 30Yr is coming closer to the first target level of 2.20%. It has room to test even 2.40% on the upside over the medium-term while it remains above the 2.10-2% support zone. The 10Yr on the other hand can rise to 1.45%-1.55% in the coming weeks. .
The German 2Yr (-0.70%), 5Yr (-0.63%), 10Yr (-0.34%) and 30Yr (0.16%) have declined sharply across tenors. The 30Yr has to rise back above 0.20% in order to keep the chances alive of seeing 0.40% on the upside. The 10Yr has support at -0.40% while above which a rise to -0.25% mentioned yesterday is still possible. Overall the price action in the next few sessions will need a close watch.
The 10Yr GoI (6.2017%, 05.85 GS 2030) had surged well above 6.18% yesterday. The outlook is bullish to test 6.28% on a break above the immediate resistance level of 6.22%.
