STOCKS
Dow has risen fairly after the FOMC and needs to break above 36000 to turn bullish else can fall back to 35250-35000. Dax can hold above 15400 and rise eventually towards 15700/800. Nikkei and shanghai can test 28500/250 and 3625 respectively before rising back from there in the medium term. Nifty can rise to 17400 or higher if it holds above immediate support at 17200. Sensex too needs to sustain above 58000 to head higher towards 59000 else a fall back to 57500-57000 cannot be negated. Dow (35927.43, +383.25, +1.08%) has risen after the FOMC yesterday. But while below 36000, we may not fully negate chances of a fall to 35250-35000 before again reversing higher. Watch a range of 36000-35000 for now.
DAX (15476.35, +22.79, +0.15%) has risen slightly but trades below 15500 mentioned yesterday. If 15400 holds, we may expect a bounce to 15700/800 else a fall to 15200/100 cannot be negated on the downside in the next 1-2 weeks.
Nikkei (28904.25, +444.53, +1.56%) rose with a gap up but fell from an intra-day high of 29044. If the rise does not sustain above 29000, we may expect a fall back towards 28500-28250 on the downside. Maximum upside is seen at 29500 within the current move.
Shanghai (3658.61, +10.98, +0.30%) is heading towards 3625 from where a bounce towards 3675 or higher can again be possible in the medium term.
Nifty (17221.40, -103.50, -0.60%) has chances of bouncing back from current levels as it has support at 17200. If Nifty breaks below 17200 then next level to watch will be 17000/16800. However, if we see a bounce from 17200 then we can a test of 17400 on the upside.
Sensex (57788.03, -329.06, -0.57%) has dipped below 58000 yesterday. The range of 58000-59000 mentioned previously has been broken. The view is now bearish to see a fall towards 57500/57000.
COMMODITIES
Crude prices have risen but are likely to remain within 77-72 (Brent) and 74-69 (WTI) for the near term. Gold has risen on Dollar weakness and while above 1770/60, it can rise to 1790-1800 soon. Silver can rise back to 22.50-23 while above 22. Copper has bounced wll from 4.22 and while above 4.25, it can head towards 4.45/50.
Brent (74.66) has risen after briefly falling below 73 over the past 2-days. We may expect a range of 77-72 to hold for the very near term before a break on either side is seen in the longer run.
WTI (71.52) is likely to trade within 74-69 region for the near term.
Gold (1782.80) and Silver (22.16) have risen from levels seen yesterday. While above 1770 and 22, both Gold and Silver can rise slowly towards 1790-1800 and 22.50-23 on the upside.
Copper (4.2405) fell to 4.2210 before bouncing back sharply from there. While above 4.20, we may expect a slow rise towards 4.45/50 in the near term.
FOREX
The FED announced it would double the pace of tapering to $30bln per month (from earlier $15bln) to end the program by early 2022 rather than the earlier intended mid-2022. Three rate hikes are suggested in 2022 against two rate hikes as expected by most economists. Dollar Index has fallen sharply and can range within 95.50-97 while Euro has risen and could be restricted to 1.1350 on the upside. EURJPY has to break above 129 to turn bullish else could remain within 129-12750 region. Aussie and Pound look stable just now. USDCNY is bearish while below 6.38/37. USDINR is bullish while above 76.20.
Dollar Index (96.40) has fallen sharply from 96.90 yesterday. While 97 is holding well, we continue to look at the 95.50-97 range to hold for the near term unless a break on either side is seen.
Euro (1.1289) has risen well from 1.12219 yesterday and is headed higher just now. It can test 1.1321-1.1325 initially followed by a further rise to 1.1350 before again falling off from there.
EURJPY (128.83) has risen well and needs to break above 129 in order to move up further towards 130. Failure to break above 129 can drag the cross lower towards 128-127.50 again in the near term.
Aussie (0.7152) is likely to trade within 0.72-0.70 in the next few sessions as mentioned yesterday.
Pound (1.3250) has moved up a bit. While above 1.3150-1.32, there is scope for a rise to 1.33-1.3350. Broad range of 1.3350-1.3150 may hold for now.
Dollar-Yen (114.09) has risen well breaking above 114 today. While above 114, there is scope for a rise to 114.50-115 in the near term before a pause is seen.
USDCNY (6.3665) is ranged within the narrow 6.37-6.36 region and may hold that for a few more sessions before falling lower towards 6.35. On the upside immediate limit would be 6.38-6.3850, below that the pair continues to remain bearish.
{USDINR (76.2350) closed above 76.20 yesterday, surging in the last hour of trade. The sharp rise has proved our view wrong of seeing a reversal from 75.80-76.20 region we have been mentioning for quite some time. While above 76.20, there is scope for a rise to 76.75/80-77 on the upside or even 78 over the coming weeks. Watch price action while above 76.20 as that would be bullish for the medium term. Unless an immediate fall is seen by end of this week to close below 76.20, the chances of a pull-back seems less likely.
INTEREST RATES
The US Treasury yields have inched up slightly after the US Federal Reserve meeting yesterday. The Fed as expected had announced to increase the stimulus taper from $15 billion to $30 billion per month from January. As per the projections there will be three rate hikes in 2022. The yields broadly remain well within our preferred range and are likely to move up within it in the near-term. The German yields remain lower and stable. The view is bearish to see a further fall from here. It will have to be seen as what the European Central Bank has on its plate for the markets today after the Fed meeting yesterday. The Indian 10Yr and 5Yr GoI continues to trade mixed within their sideways range. The bias is inclined to see a rise within their respective range in the coming sessions.
The US 2Yr (0.68%), 5Yr (1.25%), 10Yr (1.47%) and the 30Yr (1.86%) yields have moved up across tenors. Our view of seeing a broad sideways range remains intact. 1.3%-1.65% (revised from 1.35%-1.65% mentioned so far) on the 10Yr and 1.7%-2% on the 30Yr is the expected range. Within this range we can expect the yield to move up in the coming weeks.
The German 2Yr (-0.70%), 5Yr (-0.59%), 10Yr (-0.37%) and 30Yr (-0.05%) yields remain stable. The view remains bearish to see a fall to -0.45% / -0.5% (10Yr) and -0.1% / -0.2% (30Yr) from here in the coming days.
The Indian 10Yr (6.3644%) and 5Yr (5.6937%) GoI have inched up slightly yesterday thereby reducing the chances of seeing a further dip as was expected yesterday. A further rise today can take them to their upper end of the range. Overall, 6.3%-6.4% (10Yr) and 5.62%-5.73% (5Yr) is the expected range of trade.
