STOCKS
The sweeping victory of BJP in the state election results on Saturday would be taken positively in the Indian Markets today. Nifty (8934.55, +0.08%) could open with a gap up today and could well break beyond the 9000 level on the upside. Initial target of 9280 opens up on the upside.
Dow (20881.48,-0.10%) is almost stable near current levels. Immediate support near 20750, if holds could take it back towards 21200; else some consolidation could be expected in the near term. A break below 20750 could turn bearish for the coming sessions.
Dax (11990.03, +0.22%) could move higher from current levels towards 12200. In case a break below 11990 is seen, we could possibly expect the fall to extend towards 11800 or lower before bouncing back from there.
Nikkei (19614.24, -0.10%) could come off from immediate resistance near 19620. Note that the US-Japan yield spread is testing crucial medium term resistance and if that holds could push off Nikkei in the coming sessions.
Shanghai (3244.64, +0.24%) looks bearish in the near term while resistance near 3250 holds. A break above 3250 is necessary to confirm any upside reversal.
COMMODITIES
Gold(1204) is trading slightly higher levels from pervious week’s low low of 1193. We continue to look for a bounce from 1200 levels in the near term. It may spend a few sessions within the 1190-1220 region before the FOMC funds rate announcement on 15th March. We will remain bearish until it is trading below 1240.
Silver (16.96) has tested immediate support near 16.65-72 before closing slightly higher. A break below 16.65 could take it down to 15.60. The bias will remain weak until it is trading below 17.45.
Copper (2.63) has also bounced back from 2.55 and may ranged bound between 2.58-65. A close above 2.72 could open up 2.83 as well.
Taking a look at the energy section, a bounce back could be expected for both Brent (51.35) and WTI (48.38). Brent could be headed towards 52-52.50 and WTI towards 49.60-50 in near term. We have US crude inventory data, tomorrow at 8.00 pm and a further increase in weekly stocks is more likely to be already discounted in the price, thus we should be cautious about any further depreciation for both Brent and crude in near term. Immediate supports are poised at 50.50 for Brent and 46.50 for WTI respectively. Only a close below these levels could open up further downside.
FOREX
The BJP sweeping win in UP has unleashed a huge bullish sentiment in the market which has strengthened the Rupee considerably. The global markets wait for the FOMC meet to conclude by tomorrow where a rate hike is fully expected.
Dollar Index (101.39) has tested the major support near 101.00 and bounced back strongly which may push it towards 102.00-30 once again in the rest of the week.
Euro (1.0653) has revisited higher levels of 1.07 contrary to expectations but the jitteriness over the Dutch elections with the rising odds of a populist victory have pushed it down once again and the rest of the week may see it gradually declining towards 1.0550-00 levels.
The immediate resistance of 123.00 may hold for EURJPY (122.33) with the long term resistance looming around 124.00. It may keep Euro below 1.07 this week.
Dollar-Yen (114.85) is held below 115.00-50 as the US-Japan 10Yr struggles around the major resistance at the current levels (See Interest rates section) as discussed last week. The near term bias remains bullish but a firm break of the yield differentials may help it to rise to the higher resistance levels of 116.00 and 117.50.
Pound (1.2199) is shrugging off the Brexit impact as it remains steady even as the UK PM looks set to trigger Article 50 this week. The upside looks capped to 1.23 for the next few days with the downside possibility to 1.20 levels still open. As discussed previously, it remains to be seen if any bottoming price action may take place around the current levels or not.
Aussie (0.7558) has held above the immediate support of 0.75 and bounce back to 0.76 levels just as expected. Now the bias in the range of 0.75-0.76 remains neutral. Only a firm break from this range can give directional clue in the near term.
Dollar-Rupee (66.60) is trading near 66.15 levels in the NDF market today, an 11-month low after the overwhelming win of BJP in UP. Below the long term support of 66.50-35 comes 66.00-65.90 and 65.50. It remains to be seen where Dollar Rupee makes the low for the day.
INTEREST RATES
The US 10-5Yr (0.48%) has moved up from channel support and could be headed towards 0.50% and higher in the near term.
The US yields are headed higher and could move up further in the near term. The 5Yr (2.14%), 10Yr (2.62%) and the 30YR (3.20%) are trading higher than previous levels of 2.08%, 2.56% and 3.15% respectively.
The German 10-2YR (1.2820%) has come off slightly from immediate resistance levels and could test 1.20-1.98% in the near term. The German yields by themselves have paused after a sharp rise in the past few sessions. A short corrective dip could be seen now.
The US-Japan 10YR (2.53%) is testing medium term resistance near current levels. While that holds, a corrective dip towards 2.40% may be expected in the near term. This could possibly limit the upside for Dollar-Yen and Nikkei in the coming sessions.
