STOCKS
Asians are trading mixed as further developments on the US-China trade talks remain uncertain. However, the domestic indices, the Sensex and Nifty are set to open with a wide gap-up. Exit polls which are in favour of the ruling party to retain the power can boost the Indian markets today. The SGX Nifty (11701, +2.33%) is up over 2 per cent.
Sensex (37930.77, +537.29, +1.44%) and Nifty (11407.15, 150.05, 1.33%) can add on to their Friday’s gains and can breach their respective resistances at 38500 and 11600. While the momentum sustains Nifty and Sensex can revisit 11800 and 39500 levels ahead of the Lok Sabha election results on Thursday (23-May-19).
Dow (25764.00, -98.68, -0.38%) is struggling to breach 26000 which is much needed for it to gain strength and move up to 26250 and higher levels. But while below 26000 the outlook is negative for it to test 25000 in the short term.
DAX (12238.94, -71.43, -0.58%) can test 12400 while it sustains above 12100.
Nikkei (21303.72, +53.63, +0.25%) has immediate support at 21250. While this support hold, a rise to 21500-21750 can be seen in the coming days.
Shanghai (2850.34, -31.95, -1.11%) is under pressure. It looks vulnerable to break the current 2850-2950 range below 2850 and fall to 2800.
COMMODITIES
Recovery in equities coupled with the strength in dollar has dragged gold and silver lower. They can dip further in the near term. Copper remains bearish. Oil is moving up in line with our expectation. But a crucial resistance is coming up which will need a close watch to see if the current upmove will sustain or not.
Gold (1276.7) can test 1270-1266 again. The broader bearish outlook intact for it to fall to 1260 and even lower levels in the coming weeks. Immediate resistance is at 1280 and the next significant near-term resistance is in between 1290-1292.
Silver (14.40) remains bearish for a fall to 14.15-14.0
Copper (2.74) has come-off after testing 2.78 last week and remains bearish for a fall to 2.70-2.68. Immediate support is at 2.72, a break below which can trigger a fresh fall.
Brent (73.20) heading towards 74 in line with our expectation. What happens after testing 74 will be crucial to watch. A strong break above 74 will pave way for 76 or even 78. But a pull-back from 74 can drag it to 72-71.
Similarly, Nymex (63.68) can rise in the near-term test its crucial resistance level of 65.
FOREX
Overall the US Dollar is strong and could move up in the near term. Aussie and Dollar-Yen looks strong for the coming sessions while Euro, and Yuan could witness some weakness against the US Dollar. Rupee may be impacted by the election poll results for the next few sessions.
Australia witnessed surprise victory of the ruling liberal National Coalition on Saturday that boosted a rise in Aussie (0.6915). Aussie jumped up from levels near 0.6864 and now while the rise continues, Aussie could move up towards 0.70.
Dollar Index (97.99) has moved up as expected and could well test immediate resistance near 98.50 on the upside. Near term looks bullish.
Euro (1.1159) is trading lower on fresh rise in the US dollar and while the dollar index continues to move higher towards 98.50, Euro could be bearish towards 1.11 or even lower in the near term.
Euro-Yen (123) has moved up slightly in an attempt to move higher while above immediate support at 122. A break above 123.30/50 would make the pair bullish for the near term towards 125.
Dollar Yen (110.23) is up along with the US Dollar and while the Dollar strengthens further, Dollar-Yen could also move higher towards 111.
USDCNY (6.9067) is trading higher but it would be crucial to see if the pair manages to break above 6.91 or comes off from here back towards 6.87/85 in the near term. A rise above 6.91 could gradually take it higher to 6.95.
Although strength in Dollar Index and Brent crude is visible on the global front, we could possibly see a gap down opening on Dollar Rupee as the Exit polls are in favor of the ruling BJP-led NDA in the Lok Sabha Elections. Dollar Rupee (70.23) could likely open near 70.00 and could test support at 69.75. Movement in Dollar-Rupee could be impacted by Election poll results this week although global factors may indicate a possible weakness in the Rupee. We would continue to watch movement in Brent Crude and US Dollar in the near term.
INTEREST RATES
The US yields are stable. The 30Yr (2.83%), 10Yr (2.40%) and 5Yr (2.19%) are down by 1bps and could turn to move down in the near term. The 30-10Yr (0.43%) and the 30-5Yr (0.64%) are moving down and look bearish in the near term towards 0.40% and 0.35% respectively.
The Indian 10Yr GOI (7.4782%) could open gap down today. Supports are seen at 7.40% and 7.355 respectively.
EU’s Parliamentary elections are to take place this week that could possibly keep the yields low.
The UK yields are down sharply. The 5Yr (0.75%), 10Yr (1.04%) and 20Yr (1.50%) are trading lower and could head towards 0.70%, 1% and 1.45% respectively. Near term looks weak.
The German 10Yr (-0.102%) could also move down a bit during the week towards -0.2%.
