STOCKS

Nifty and Dow looks potentially bullish for the near term. Nikkei and Dax may remain stable for sometime before deciding on further direction.

Dow (20052.42, -0.09%) was almost stable above 20000 yesterday and could possibly try and move up in the near term. Immediate target for the coming sessions would be 20200-20400 levels.

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The daily horizontal resistance at 11700 has held well on the Dax (11509.84, -1.22%), pushing down the index towards 11500. The index may remain trapped within the 11700-11400 resistance and support levels for a few more sessions before deciding on further directions. Overall the medium term trend is up.

Nikkei (18876.93, -0.53%) continues to remain in the 18651-19258 region and could possibly test support near 18650 before bouncing back from there. However, the 3-day and weekly charts show support at current levels which if hold may take the index higher in the near term.

Shanghai (3158.22, +0.04%) is trading just at resistance levels and could possibly see a rejection towards 3125 and lower in the coming sessions. The index is currently at inflection point as seen on the weekly line charts and a sharp movement from here could be the trend decider for the medium term. We need to keep a close watch on the price action at current levels.

Nifty (8801.05, +0.69%) looks like a strong performer amongst other indices mentioned above. Continuous rally breaking all immediate resistances is seen for quite sometime now. While the index is inching up along the daily channel resistance, in case we do not see any immediate correction, we may target 8900-8930 (crucial resistance) levels in the near term.

COMMODITIES

With the political risk outweighing the benefits expected from the US president, the demand for safe havens has increased and strengthened Gold (1232.11), which has reached our target zone of 1230-40. While the trend remains firmly up, a bout of profit booking can be expected if Gold fails to rise and sustain above 1240 soon.

Silver (17.68) remains strong on the back of a stable Gold-Silver ratio (69.63). Repeat – it may rise to 18.00 or even 18.40 in the near term but any weakness in Gold may affect this precious metal too.

Both Brent (55.91) and WTI (53.14) remain stuck in the 6-week ranges of 53-58 and 50-55 respectively. Immediate support comes at 54.25 for Brent and 51.50 for WTI above which the possibility of an upside breakout from their ranges remain strong.

Copper (2.64) is holding above the interim support at 2.61 so far but as discussed yesterday, a break below 2.60 may drag it down to 2.55-50. Repeat – the technical structure is damaged from a larger perspective and the resistance of 2.75 may not be tested soon.

FOREX

Safe haven demand has boosted Yen but Dollar hasn’t weakened anymore. The chances of an upside reversal for Dollar must be considered now though it still requires confirmation.

Dollar Index (100.03) is wandering just below our resistance of 100.25 after testing it yesterday but the chances of a breakout on the higher side for 101.00 and beyond has increased. Repeat – while the chance of a retest of the long term support at 99.00 can’t be ruled out yet, the bulls may try for a rally in the next few sessions.

Euro (1.0724) has corrected in line with expectations and a break below 1.0700-1.0680, if materializes in the next couple of sessions, may confirm a near term reversal to the downside.

Dollar-Yen (111.83) has broken the 4-day range of 112-114 to the downside as the demand for safe haven is driving money into Yen but the chances of a quick recovery above 112.00-35 can’t be ruled out yet as long as it stays above 111.30 levels. The downtrend remains in play but a sudden rally towards 114-115 may surprise the market in the next few sessions. Wait and watch.

Pound (1.2473) has managed to stay above the support of 1.2400 till now but the trend remains firmly down. The best case for the bulls would be sideways consolidation in 1.2400-1.2700 for the next few days.

Aussie (0.7654) is waiting for the RBA policy announcement due in the next hour where the rates are expected to remain unchanged. The target remains unchanged at 0.7750 where profit booking may be seen.

In the eve of the RBI meet, Dollar Rupee (67.22) remains weak but the chances of a Dollar demand re-emerging near 67.00-66.90 in the next 2-3 sessions must be kept in consideration now.

INTEREST RATES

RBI policy meet is due tomorrow and the market sentiments indicate that the RBI may cut 25bps tomorrow. The Indian 10Yr GOI (6.5499%) has increased slightly from levels near 6.5273% seen on last Thursday.

The US yields are coming off from resistance levels and could head lower this week. The 5YR (1.83%), 10YR (2.40%) and the 30Yr (3.04%) may fall towards 1.80%, 2.35% and 3.0% before bouncing back in the near term.

The US 30-10 (0.65%) and 30-5 (1.21%) have bounced slightly from horizontal support levels and could move higher in the near term.

The German yields are sharply falling and could move lower in the near term. The 10YR (0.37%) could head towards 0.30-0.25% before pausing.

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