STOCKS
Global equities look bullish in the near-term. But we will be watching closely the crucial resistances coming up on the major indices that can cap the upside and trigger one more leg of downmove. Dow can rise to 24200-24500 and even 25000 in the near-term after which it can reverse lower. DAX and Nikkei have risen above their near-term resistance and can move further higher. Shanghai looks more bullish than the others. Sensex and Nifty looks mixed in the near-term and seem to lack strong follow-through buying. They will need a close watch for a few sessions to get some clarity.
Dow (23949.76, +558.99, +2.39%) is holding well above 23000 and is keeping alive the chances of seeing a rise to 24200-24500 and even 25000 in the near-term in line with our expectation. A break above 24000 will accelerate the rally. 22500 will serve as a good support. However, 24700-25000 is a strong resistance zone which can cap the current upmove. We would be looking for the Dow to reverse lower again from this 24700-25000 resistance zone towards 23000-22000 and even lower again.
DAX (10696.56, +131.82, +1.25%) has been inching higher and is trying to gather momentum. Our near-term bullish view remains intact to see a test of 11000 on the upside. The upmove can even extend upto 11200-11250. As we had mentioned earlier a strong rise past 10700 can accelerate the rally. 10400 and 10100 are important supports to watch.
Nikkei (19519.33, −119.48, -0.61%) has risen above 19500 as expected and is likely to sustain higher. While above 19500, our bullish bias remains intact to test 20100 initially and then 20300-20500 eventually in the short-term.
The support at 2775 mentioned on Monday has held very well and Shanghai (2823.18, -4.10, -0.15%) has risen back above 2800 again. The bullish outlook remains intact to see a rise to 2850-2870 in the near-term. Also from a broader picture, while above the 2750-2730 support zone Shanghai is bullish to test 3000-3100 levels over the medium-term.
Sensex (30690.02, -469.60, -1.51%) seems to lack strong follow-through buying above 31000. It will have to rise past 31300 decisively in order to gain strength and target 32000-33000 on the upside. While below 31000, a dip to 30000 and even 29000 again cannot be ruled out.
Nifty (8993.85, -118.05, -1.30%) has been stuck in between 8900 and 9100. The near-term outlook is mixed with equal chances of either seeing a rise to 9250 and 9400-9500 or a fall to 8600 from current levels. We will have to watch the movement for a few sessions to get some clarity.
COMMODITIES
The large build in US crude stock of 13.143mln barrels per day reported by API for the week ended 10th April negated the impact of the OPEC+ production cut announcement on crude prices as prices declined further from previous levels. It would be important now to see if prices take time to bounce back from current levels or continues to trade lower for now. Gold and Silver look bullish for the near term while Copper could test immediate and crucial resistance above current levels.
Brent (29.94) fell sharply after the large build in crude stockpiles. But we may expect the current downside to be limited to $25 with a possible bounce back above 30 by end of the week. Failure to see a weekly close above 30 could be concerning. Nymex WTI (20.47) is trading well below immediate resistance near $28-29 but at the same time, downside could be limited to $20-17 for now with a possible bounce back to 23+ levels in the near term. Watch price action closely for the next few sessions.
Gold (1749.70) has fallen from near term resistance at 1785 and while that holds, we may expect trade in the 1740-1785 region for now. While above 1740, view is bullish towards 1800 or even higher.
Silver (15.95) has immediate support at 15.5 and while Silver trades higher, it is likely to be bullish for the near term towards 16.5-17.00.
Copper (2.3185) is almost stable. As mentioned earlier, 2.35/40 is crucial resistance on the upside and while that holds, we may expect a dip towards 2.25 in the coming sessions. Sustained rise above 2.40 is needed to indicate further bullishness.
FOREX
Lower Dollar Index has pushed Dollar-Yen down and pulled up Euro. Aussie and Pound look bullish just now but could test resistances above current levels. EURJPY trades lower but s likely to bounce back from support below current levels. USDCNY needs to trade below 7.05 to remain lower else the pair could head higher in the near term. USDINR is likely to see some ranged sideways trade for now.
Dollar Index (98.90) has dipped but while above 98, there is scope to see a bounce back towards 99-100 in the near term. Else a break below 98, if seen could make the index vulnerable to a fall towards 97.50-97.00. Watch price action near 98.50-98.00 levels.
Euro (1.0979) is holding above immediate support near 1.0850 and could test 1.1050-1.1100 on the upside before falling off from there. Immediate view for the next few sessions is bullish.
Dollar-Yen (107.13) has fallen in line with our expectation. A bounce from 107 looks likely for now. Failure to bounce from 107 could make the pair vulnerable to a fall towards 106-105-104 on the downside. Watch price action near 107.
EURJPY (117.65) has dipped but downside could be limited to 116.50 from where a bounce back to 118+ looks possible.
Aussie (0.6409) is heading towards resistance near 0.65 on the daily candles from where a possible rejection back towards 0.62 looks likely. A sustained break above 0.65 in the near term would be needed to indicate bullishness for Aussie for the medium to long term.
Pound (1.2610) looks bullish towards 1.29-1.30 from where a rejection could be expected back towards 1.27-1.25.
USDCNY (7.0510) is almost stable and could fall towards 7 in the near term. A break above 7.06 would negate our view of a fall towards 7 and instead turn the view bullish.
USDINR (76.28) dipped back on Monday after trading higher. 76.60 would be the upside limit for the near term and while that holds, we may expect ranged trade in the 75.80-76.60 region. Watch for a possible break on either side of the mentioned range for further directional clarity.
INTEREST RATES
The US Treasury yields at the near-end remain stable while those at the far-end have inched higher. As mentioned earlier, the yields have to break above their key near-term resistances in order to gain strength and move further higher. We will have to wait and watch. The German yields are turning around thereby reducing the chances of further rise. A fall below their immediate supports can increase the downside pressure and drag them lower in the coming days. The 10Yr GoI is hovering around its crucial resistance which will need a close watch today.
The US 2Yr (0.22%), 5Yr (0.41%) and 10Yr (0.75%) Treasury yields remain stable while the 30Yr (1.40%) has risen sharply. It will have to be seen if the 30Yr can breach 1.40% or not. As we have been mentioning for sometime, a strong break above 1.40% will open doors for a further rise to 1.50% and 1.60% on the 30Yr. The 10Yr on the other hand has to rise past 0.80% to gain momentum and move higher towards 1%. We will have to wait and watch.
The German 2Yr (-0.70%), 5Yr (-0.60%), 10Yr (-0.38%) and 30Yr (0.02%) yields have come down further across tenors. The chances of seeing a rise to -0.20% on the 10Yr and 0.20% on the 30Yr that we had been expecting is getting reduced. A fall below -0.40% on the 10Yr and 0% on the 30Yr will negate the chances completely and in turn will drag them lower to -0.60% (10Yr) and -0.10%/-0.20% (30Yr) in the coming days.
The 10Yr GoI (6.4954%) has been hovering around the crucial resistance level of 6.50%. It will have to be seen if the yield can rise past 6.50% or not. A strong rise past 6.50% will take the 10Yr GoI higher to 6.60% and 6.70% and will delay our preferred fall-back move to 6.35%.
