STOCKS
Dow struggles to get a strong follow-through rise above 30000. DAX and Nikkei are stuck in a narrow range of 13200-13500 and 26500-27000 respectively. Shanghai can fall within its 3180-3450 range. Sensex and Nifty have come-off below 46000 and 13500 again and are keeping our cautious view of seeing a sharp corrective fall intact. We reiterate that the equities are closer to their major resistances and we retain our cautious stance of seeing a sharp correction going forward.
Dow (29999.26, −69.55, -0.23%) continues to lack momentum to extend the rise strongly above 30000. Our broader view of seeing a corrective fall to 28000 remains intact. But whether this fall will happen from here itself or after an extended rise to 30800-31000 is still not very clear. As mentioned yesterday, while above 29500, we still have to allow for a rise to 30800-31000 before the expected correction happens.
DAX (13295.73, −44.53, -0.33%) sustains above 13200 and oscillates between 13200 and 13500 as expected. The near-term outlook is mixed. From a bigger picture, we expect a sharp corrective fall to 12400 in the coming weeks. The upside is likely to be capped at 13800-13900 in case if DAX breaks above 13500 from here.
Nikkei (26629.31, −126.93, -0.47%) is stuck in between 26500 and 27000. Strong resistance is at 27500 which can cap the upside in case of a break above 27000. Eventually we expect Nikkei to see a corrective fall to 25500-24500 going forward.
Shanghai (3363.38, −9.89, -0.29%) remains below 3400. As mentioned yesterday, a break below 3350 can drag it to 3300 and 3250 going forward. The 3180-3450 range is intact and the index can now fall towards the lower end of this range in the coming days.
Nifty (13478.30, −50.80, -0.38%) and Sensex (45959.88, −143.62, -0.31%) have come-off yesterday below the crucial levels of 13500 and 46000 respectively. This keeps intact our overall cautious view of seeing a corrective fall to 13000 and 12800-12500 on the Nifty and 42000 on the Sensex. As mentioned yesterday, only a strong and sustained break above 13550 (Nifty) and 46500 (Sensex) will negate our view of seeing the above mentioned corrective fall.
COMMODITIES
Copper and crude prices rose sharply as Dollar weakens. Breaking above the initial hurdle of 50, Brent is likely to head towards 52-53 while WTI could test 48-50 in the near term. Copper may rally towards 3.60/65 on the upside before a corrective dip is seen. Gold and Silver trade stable; gold if fails yo bounce from immediate support at 1840 could test 1820 before bouncing back from there while Silver may bounce from 24 towards 25.
Brent (50.44) and Nymex WTI (47.02) have broken above initial hurdles of 50 and 47 respectively and has scope for further upside towards 52-53 and 48-50 respectively for the near to medium term. View is bullish on prices just now.
Gold (1842.20) and Silver (24.16) are almost stable just now. Gold can bounce back from initial support at 1840 failure of which will drag it lower towards 1820. On the upside 1880 could cap the movement A broad range of 1820-1840-1880 is likely to hold for the near term. Silver may test support at 24 and bounce back towards 25.
Copper (3.5645) has risen sharply breaking above the resistance at 3.55. While the rise sustains, we may expect a further rally towards 3.60/65 in the near to medium term.
FOREX
Dollar Index has fallen back pulling up Euro to levels above 1.21 again and dragging down Dollar Yen towards 103.50. EURJPY, USDINR and USDCNY looks ranged for the near term. Pound may head lower to test 1.31-1.30 if resistance near 1.34 holds strong. Aussie has risen sharply boosted by a rise in Copper and demand for the metal from China. A test of 0.75 is possible in the near term which if breaks is bullish for the longer term.
Dollar Index (90.67) fell back in one day of corrective dip indicating the bears are still strong just now and could drag the index lower towards 90-89 in the near to medium term. View is bearish on Dollar Index while below 91.5.
Euro (1.2152) has moved up above 1.21 again and could head towards 1.22 or even higher in the medium term. View is bullish while Dollar Index falls towards 90-89.
EURJPY (126.37) has dipped a bit and could remain stable within 127-125.75 region for sometime before a possible sharp rise is seen towards 128 in the longer run. View is stable to bullish.
Dollar-Yen (103.96) fell sharply as Dollar weakened. The pair failed to sustain above 104.50 and instead fell sharply heading towards 103.50-103.00 now. View is bearish below 104.50.
Aussie (0.7557) has risen sharply boosted by the rise in Copper. While Copper has scope to rise towards 3.60/65, we may expect a rally in Aussie too in the medium term. Watch out for a possible break above 0.76 in the near term.
Pound (1.3310) is holding well below 1.34 and while the fall sustains we may expect a test of 1.30-1.31 on the downside before Pound reverses again.
USDCNY (6.5363) has moved lower again on Dollar weakness. We may expect trade within the 6.55-6.50 region for the near term. View is ranged with bearish bias.
USDINR (73.66) tested 73.77 before falling off to close lower. We may expect a narrow range of 73.50-73.80 and a broad range of 73.50-74.00 to hold for now. While above important support at 73.50, view is ranged on the pair for some more sessions.
INTEREST RATES
The US Treasury yields have dipped further and are likely to fall further. The long-term resistances are holding well and we retain our broader bearish view. The German yields remain lower and keep the bearish view intact. The European Central Bank (ECB) left the rates unchanged as expected. The Pandemic Emergency Purchase Programme (PEPP) stimulus package was increased by 500 billion Euro to 1.85 trillion Euro. The tenor of the same was also extended till March 2022. The 10Yr GoI has bounced back yesterday and keeps the 5.88%-5.95% range intact.
The US 2Yr (0.14%), 5Yr (0.38%) and the 10Yr (0.91%) Treasury yields have dipped 1 bps while the 30Yr (1.63%)is down 4 bps. The resistances at 1% on the 10Yr and 1.75% on the 30Yr have held well as expected recently. This keeps our view of seeing 0.85%-0.80% (10Yr) and 1.55%-1.50% (30Yr) intact. It will have to be seen if the yields break below 0.80% (10Yr) and 1.50% (30Yr) which can increase the pressure and drag them further lower.
German 2Yr (-0.78%), 5Yr (-0.79%), 10Yr (-0.61%) and the 30Yr (-0.19%) yields continue to trade lower. The bearish view is intact. The 10Yr can test -0.70% on the downside. The 30Yr is likely to break the immediate support level of -0.20% and fall to -0.35%/-0.40% (30Yr). Thereafter the yields can see a fresh bounce.
The10Yr GoI (5.9163%) tested 5.89% as expected and has bounced back again. The 5.88%-5.95% range remains intact and the yield can move up to 5.94%-5.95% again on a break above 5.92%. As mentioned yesterday, a breakout on either side of 5.88%-5.95% will determine whether the yield can move up to 6% or fall to 5.80% going forward.
