STOCKS
Dow and DAX have recovered well after the sell-off towards the end of last week. It will have to be seen if Dow can rise past 31650 to revisit 32000 levels and ease the downside pressure. DAX is back into its 13800-14200 range. The Asians sustains higher after yesterday’s bounce but indicates lack of strength to extend the bounce back move. Nikkei is holding below 30000 and keeps alive the danger of seeing a further fall. Shanghai looks vulnerable to break below 3500. Sensex and Nifty have strong resistances ahead while below which they can fall further in the coming weeks. Overall, we can expect the current bounce to be short-lived and the equities can see a corrective fall in the coming weeks. As such we remain cautious on this segment.
Dow (31535.51, +603.14, +1.95%) has risen back sharply above 31000. A rise past 31650 from here will ease the downside pressure and take the Dow higher to revisit 32000. It will reduce the chances of seeing the fall to 30300-30000 mentioned yesterday. 31000-32000 looks to be the near-term range now and will have to see if Dow gains momentum to breach 32000 now or not.
DAX (14012.82, +226.53, +1.64%) has risen back into the 13800-14200 range. The fall to 13400-13200 that we have been expecting will get delayed now. In case if DAX gathers momentum and manages to breach 14200 from here, the chances of seeing an extended rise to 14500-14600 will come into the picture before the corrective fall to 13200 happens.
Nikkei (29528.58, −134.92, -0.45%) has come-off after testing 30000 in early trades today. The key level of 30000 is continuing to hold and is keeping intact our view of seeing a fall to 28000 eventually in the coming days. As mentioned yesterday a strong rise past 28000 is needed to negate the chances of the above mentioned fall.
Shanghai (3534.13, −17.27, -0.49%) sustains above 3500 but seems to lack momentum. We do not negate a fall breaking below 3500 towards 3450-3400. But from a long-term picture 3450-3400 is a strong support that can limit the downside and trigger a fresh rally. Shanghai has to breach 3575 immediately in order to avoid the fall below 3500 mentioned above.
Sensex (49849.84, +749.85, +1.53%) and Nifty (14761.55, +232.40, +1.60%) had recovered yesterday and can move up further following the other global indices However, a strong rise past 51000 on the Sensex and 15000 on Nifty is necessarily needed to become bullish again. While below these levels our view of seeing 48500-48000 (Sensex) and 14250-14200 (Nifty) remains intact.
COMMODITIES
Most commodities trade sharply lower today contrary to some recovery seen yesterday. Strong Dolalr has pulled down Copper, Gold and Silver which could now be headed towards respective supports near 4.00, 1700-1660 and 26. Crude prices also could dip towards 62-61 (Brent) and 59-58 (WTI) in the near term before bouncing back from there. Overall immediate view for commodities look bearish.
OPEC output for Feb’21 fell to 24.89mln bpd, lower by 870,000 mbpd from the Jan’21 figures. Brent (62.60) and WTI (59.55) have both dipped and could test 62-61 and 59-58 levels in the near term before bouncing back from there. There could be some volatility in crude prices this week, ahead of the OPEC meeting scheduled on Thursday.
Gold (1714.60) is sharply down on fresh Dollar strength (Dollar Index trades above 91). While the Dollar trades higher, we may expect a test of 1700-1660 before a sharp rise is seen again back to 1750 and higher. Immediate view is bearish with crucial supports at 1700 and 1660.
Silver (26.25) has fallen and could test support just above 26. It would be important to see if 26 manages to hold and produce a bounce back towards 28.50 in the near term. Failure to hold above 26 would drag it lower towards 24.
Copper (4.0730) fell sharply yesterday following the fall in Chinese PMI. 4.0 is an immediate support now which if holds could produce a bounce back towards 4.20/30 levels in the near to medium term. Failure to bounce back from 4 would trigger fresh fall in the metal opening chances if a further fall towards 3.80/70. For now watch price action near 4 from where a bounce is expected.
FOREX
Dollar Index trades higher dragging down Euro, EURJPY, Pound, Aussie and Yen. Overall view is bearish just now on major currencies. USDINR may trade within 73.00-73.80 broad range within the next few sessions. USDCNY may remain stuck in a sideways range.
Dollar Index (91.22) has broken above immediate resistance near 91 and could now be headed towards 92-93 levels in the near term before facing rejection from there. Immediate view is bullish while above 91.
Euro (1.2020) has fallen sharply but remains above 1.20. A break below 1.20 could drag the Euro down towards 1.1950-1.1900 in the near term.
EURJPY (128.33) has fallen sharply too and could test 128-127.50 on the downside before bouncing higher again. Immediate view is bearish while the Dollar holds strong.
Dollar-Yen (106.76) has risen on stronger Dollar. A test of 107 looks likely just now. Only a break above 107 would open up chances of a rise to 108 else we may expect a dip from 107 itself in the near term.
Aussie (0.7747) has dipped too and has scope for a fall towards 0.77. A break below 0.77, if seen would open up chances of a further fall towards 0.76.
Pound (1.3887) has not been able to rise above 1.40 and has fallen sharply from there indicating a further fall towards 1.38-1.3780 in the near term. View is bearish for now.
USDCNY (6.4726) remains stuck within 6.48/50-6.44 and may continue the range for now.
USDINR (73.5450) fell sharply to 73.1825 yesterday after opening at 73.77/78 but moved back to close at 73.5450. Our mentioned 73.20 has held well. While below 73.80, we may expect some volatile movement within 73.00-73.80 to hold for a few sessions. We wait for further clarity in direction from here.
INTEREST RATES
The US Treasury yields remain lower and can test their key resistance-turned-supports in the near-term. But as mentioned yesterday, the yields will have to break below these supports in order to turn the outlook bearish and negate another fresh rise. The German yields have dipped further and are coming closer to their supports which will need a close watch. A fall below their supports will negate our bullish view of seeing further rise. The 10Yr GoI remains bullish but can see intermediate dips before moving further higher.
The US 2Yr (0.12%), 5Yr (0.69%), 10Yr (1.42%), 30Yr (2.20%) remains stable after coming-off sharply on Friday. Our view remains the same. The broader trend is still up. The recent pull-back could be a corrective dip. 1.33%-1.30% on the 10Yr and 2.10% on the 30Yr are important supports that can be tested if the downmove continues. A strong break below 1.30% (10Yr) and 2.10% (30Yr) is needed to signal a reversal. While these supports hold, a rise back to 1.55%-1.60% (10Yr) and 2.50% (30Yr) cannot be ruled out.
The German 2Yr (-0.70%), 5Yr (-0.63%), 10Yr (-0.34%) and 30Yr (0.14%) have come-off sharply across tenors. The 30Yr has dipped below the key level of 0.15%. Inability to bounce-back above 0.15% from here will negate our view of seeing 0.35% on the upside. However, the 10Yr has a key support in the -0.35%/-0.40% region which has to hold to keep the chances alive of seeing -0.20% / -0.15% (10Yr) on the upside. The price action in the coming days will need a close watch.
The 10Yr GoI (6.2094%) dipped below 6.20% but then had bounced-back from the low of 6.1932% yesterday. While above 6.20%, the bullish view of seeing 6.25%-6.28%-6.30% on the upside remains intact. However, a strong break below 6.20% can take the yield lower to 6.14% before the above mentioned rise is seen.
