STOCKS
Global equity indices have moved higher except Shanghai and come closer to the upper end of their respective range. It will have to be seen if they manage to break the range on the upside and move higher or not. Shanghai has to sustain above 2800 to avoid a fall and keep the range intact. Dow has to break above 24200 to target 24500-25000. DAX will need a break above 10800 to test 11000-11300. Nikkei has range resistance at 20000 which has to be broken to see 20500 and 21500 on the upside. Sensex has to break 32000 and Nifty 9400 to gain strength and target 34000-34500 and 9500-9700 respectively. However, we would remain cautious as we expect the upside to be limited after the range breakout and a fresh leg of fall is very much possible.
Dow (24133.78, +358.51, +1.51%) has moved above 24000 and will have to see if it manages to rise further above 24200 or not. Such a break (most preferred) will take the Dow higher to 24500/24700/25000 in the coming days. However, we will remain cautious as the Dow reaches 25000 as we expect it to see a fresh fall from there.
DAX (10659.99, +323.90, +3.13%) has moved up sharply within the preferred range and is coming closer to the upper of the 10100-10700/800 range. Our view remains positive to see a breakout above 10800 and rise to 11000-11300 and then a fall thereafter. Inability to breach 10800 can keep the sideways range intact for some more time.
Nikkei (19661.05, −122.17, -0.62%) retains its 19000-20000 range and has moved up within the range as expected. As we have been mentioning for some time, the bias is bullish to seen an upside break above 20000. Such a break can target 20200-20500 initially and then 21500 eventually on the upside after which a fresh fall is possible.
Shanghai (2806.11, −9.38, -0.33%) spiked down to 2758 and has bounced-back into the 2800-2850 range again. It will have to be seen if it manages to hold above 2800. A close below 2800 will negate our bullish view of seeing 2880-2900 on the upside. In that case a fall to 2750-2730 can be seen first before we see a fresh leg of upmove again. As we had mentioned earlier, 2750-2730 is a strong support zone which can keep the medium-term uptrend intact.
Nifty (9282.30, +127.90, +1.40%) continues its struggle to breach 9400. As mentioned yesterday the index can remain stuck in between 9000 and 9400 for some time. A strong rise past 9400 is needed to gain momentum and rise further to 9500 and 9600-9700 from where a fresh fall is possible.
Similarly, Sensex (31743.08, +415.86, +1.33%) will have to breach 32000 decisively to move further higher to 34000-34500. While 32000 holds, Sensex can remain in a narrow range of 30000-32000.
COMMODITIES
Crude prices fell sharply as government across the world points at extension of the current lockdown period deteriorating the storage concerns for oil globally. Storage is moving closer to reaching its full capacity and if this continues, we may expect further drop in Crude prices in the near term. Gold and Silver could fall from current levels. Copper looks stable.
Brent (19.04, June futures) and Nymex WTI (10.75, June futures) have both fallen sharply on storage concerns and that the lockdown in most countries worldwide could extend. Brent and WTI could have scope to fall towards $7-8 and $15 in the near term.
Gold (1715.30) has dipped slightly and trades below 1720 just now. Trading at immediate support, a break below current levels could take it down further towards 1680. However, we may not negate a rise back towards 1760-1780 in the near to medium term.
Silver (15.10) looks bearish towards 14.50. A further fall towards 14 could also be expected in the sessions to come.
Copper (2.3415) has dipped a bit but has scope for a fall from here while below 2.40. Preference is for near to medium term bearishness while below 2.40. Only a sustained break above 2.40, if seen could bring in some bullish sentiment.
FOREX
Most currency pairs are stable and stuck within near term narrow range. A break out of this range could be important and trigger a medium term trend which we have to keep a watch on. Dollar Index is stable and a break or bounce from 100 could bring in some volatility in Euro and USDJPY as well in the near term. EURJPY looks bearish for the medium term but is yet to give a price confirmation. Aussie and Pound on the other hand seem to be moving on the upside and could remain bullish for the near term.
Dollar Index (100.10) continues to remain stuck in the narrow range above 100 but has been slowly trying to come down towards 100 or lower. A break below 100 could gradually take the index down towards 99-98 in the medium term. Watch price action near 100.
Euro (1.0826) is likely to trade sideways in the 1.0750-1.0875 region just now. Unless a sharp break above 1.09 is seen on the upside, Euro could be stuck in a range without much directional clarity.
Dollar-Yen (107.29) tested interim support at 107 which needs to be watched closely just now. A break below 107 could trigger a sharp fall towards 105-104 in the medium term. A break could possibly come in line with a break below 100 in the Dollar Index. Watch price action near current levels.
EURJPY (116.15) has dipped a bit but trades below our mentioned resistance near 116.50-117. While that holds, a fall towards 115.5-115.0 or even lower looks possible in the near term. View is bearish while below 117/116.50.
Aussie (0.6443) broke above immediate daily trend resistance at 0.64 and while the rise sustains, we could see a further rise towards 0.67 in the medium term. View is bullish while above 0.64.
Pound (1.2416) has risen well breaking above 1.24 but could face immediate resistance at 1.25 from where a dip looks possible back towards 1.22. In the longer run, 1.22-1.27 could be the broad range.
USDCNY (7.0861) could slowly be attempting to rise from current levels targeting 7.10/12 in the near to medium term. While above 7.06, Yuan is likely to remain weak.
USDINR (76.2550) closed higher yesterday breaking below our 76.20-76.55 range. While above important support near 75.90-76.00, USDINR is likely to trade in the broad 50p range of 76.00-76.50.
INTEREST RATES
Increasing talks about re-opening the US and the global economy from the lock-down has given some relief for the yields. The US Treasury yields have bounced well and need to see if they can sustain higher. The yields have to breach their key resistances in order to negate our bearish view. The German yields have inched higher but are likely to turn-down again thereby keeping the bearish view intact. The 10Yr GoI can dip to 6% again and can consolidate sideways between 5.95%/6% and 6.20% for some time.
The US 2Yr (0.21%) Treasury yield remains stable while the 5Yr (0.40%), 10Yr (0.65%) and 30Yr (1.25%) yields have risen sharply yesterday. It will have to be seen if they can sustain higher or not. The 10Yr has to breach 0.75% in order to negate our bearish view of seeing 0.50%-0.40% on the downside. Similarly, the 30Yr has to rise past 1.30% to become bullish to test 1.5% on the upside which in turn will prove our view of seeing 1.10% on the downside wrong. We will have to wait and watch for a few sessions.
The German 2Yr (-0.70%), 5Yr (-0.64%), 10Yr (-0.46%) and 30Yr (-0.07%) yields have inched higher across tenors. However, as mentioned yesterday, the resistances at -0.40% (10Yr) and 0.04% (30Yr) are likely to cap the upside. While below these resistances the outlook is bearish to test -0.70% (10Yr) and -0.30% (30Yr) on the downside.
The 10Yr GoI (6.1527%) remains below 6.20%. A test of 6% on the downside is possible again while it sustains below 6.20%. We can look for a range of 5.95%/6%-6.20% for a few days.
