STOCKS
Major indices have been moving higher in line with our expectation. As we had mentioned yesterday, there is room on the upside for the indices to test their key resistances in the near-term and then can fall-back again. Dow can test 25000-26000 and then can see a fall. DAX has resistance in the 11300-11350 region which can cap the upside now. Nikkei has resistances at 21500-22000. Sensex and Nifty can test 34000-34500 and 9700 respectively before reversing lower again. Shanghai has broken its sideways range on the upside as expected and can move up to 2880-2900 in the near-term.
Dow (24633.86, +532.31, +2.21%) has moved higher and is heading towards 24700-25000 in line with our expectation. As we have been mentioning for some time, we will be looking for a fresh fall from around 25000 which can drag the Dow lower to 22000-21500 before we see fresh rally again. However, incase if the Dow breaks above 25000 now then we may have to allow for a further rise to 26000 before the above mentioned fall to 22000-21500 happens.
DAX (11107.74, +312.11, +2.89%) has risen past 10800 as mentioned yesterday and can now test 11300-11350 on the upside. As we have been mentioning, we will be looking for a fall again from the 11300-11350 region towards 10800-10500 or even lower in the coming days.
Nikkei (20275.23, +504.04, +2.55%) broken its 19000-20000 range on the upside and is now likely to test 20500. A strong break above 20500 will see the upmove extending to 21500 and even 22000. Thereafter we can expect the Nikkei to come down again towards 21000-20000 again.
Shanghai (2854.86, +32.42, +1.15%) is gaining strength and has risen above 2850. It will have to be seen if it can sustain the break above 2850 or not. Our bias remains bullish to see rise to 2880-2900 in the near-term and also a revisit of 3050-3100 over the medium-term. In case if the index dips below 2850, it can continue to trade in the sideways range of 2800-2850 for some more time before our preferred rally happens.
As expected, Nifty (9553.35, +172.45, +1.84%) broke above 9400 yesterday and tested 9600 in line with our expectation. 9700 is a crucial resistance that can be tested now. We expect 9700 to hold on its first test and a fall to 9500 and even 9200 is possible from there.
Sensex (32720.16, +605.64, +1.89%) sustained well above 32000 and has risen further sharply. As mentioned yesterday, while above 32000, Sensex can test 34000-34500 in the near-term and then can fall-back to 32000-31000 or even lower again.
COMMODITIES
US crude inventories rose 9mln barrels for week ended 24th April, lesser than the expected rise of 10.6mln barrels. This has been taken positive by the markets for crude pulling up prices from lower levels seen in the last 2-sessions. Near term could see some recovery in crude prices. Gold and Silver are stable but have some room on the upside. Copper continues to trade below 2.40. Watch resistance at 2.40 with a near term range of 2.30-2.40 to hold for now.
Brent (25.74, June futures) and Nymex WTI (16.53, June futures) have risen today and trade higher just now. Both Brent and WTI needs to see a rise above $30 and $25 to turn sentiment to bullish for the near to medium term. Gradual recovery could now be seen as some European countries and US cities seem to be relaxing lockdown norms.
Gold (1725.00) is stable. While above 1720, there is scope for re-test of 1760/80 or even 1800 before a sharp fall is seen back towards 1720-1700 or lower in the medium term.
Silver (15.48) has risen a bit and could test 16 before coming off from there towards 15-14.5. Near term looks stable within a longer term downtrend.
For Copper (2.3835), we continue to watch crucial levels of 2.40 to hold. Medium term range of 2.30-2.40 looks likely.
FOREX
Dollar Index continues to trade lower pulling up Euro slightly, but we would watch for a possible rejection in Euro from interim resistance above current levels. Dollar Yen has risen slightly but there could be scope for a fall towards 106. EURJPY and Aussie have also risen but while Aussie looks bullish, EURJPY may have room for a fall from here. Pound, USDCNY and USDINR have all fallen. Strength in Rupee and Yuan came in as a surprise contrary to our expectation but while they remain strong, we may expect strength to continue for some more sessions.
Dollar Index (99.61) has dipped further and while below 100, the index looks potentially weak towards 99.0-98.5. View is bearish for the near term.
Euro (1.0862) has risen slightly but remains below 1.09 just now. While Dollar Index may fall towards 98.5, Euro has scope for a rise towards 1.09-1.10 in the medium term. But we would have to watch interim resistance near 1.09 to see if it produces a rejection from there or allows for a rise beyond. For the very near term watch price action near 1.09 for the next few sessions.
Dollar-Yen (106.70) has risen a bit and could test 106. We would be cautious near 106 to see if it bounces back from there or falls further to test 104 in the near term. 106 being an interim support, we may expect a bounce from there in the next few sessions.
EURJPY (115.89) has risen slightly but while below 116; the currency pair is bearish for a gradual fall towards 115-114 in the medium term. Unless a sustained rise above 116 is seen we keep our view of bearish EURJPY intact.
Aussie (0.6542) has risen well and could continue to move up towards 0.67-0.68 in the near term. View is bullish while above 0.64.
Pound (1.2448) dipped contrary to our expectation of seeing a further rise above 1.25 to head towards 1.27. We may expect a trade range of 1.22-1.25 with a possible rise to 1.27 in the medium term.
USDCNY (7.0594) has dipped below 7.06 but could face some support near 7.05 in the near term which could take it back towards 7.10 again in the coming weeks. A sustained fall below 7.05 is needed for bearish sentiment to return with a possible target of 7.00. Watch price action near 7.05 in the next few sessions.
USDINR (75.6975) broke below crucial levels of 76 (contrary to our expectation of seeing a bounce from 76) mentioned earlier and 75.80 mentioned in yesterday’s edition to indicate that a near term top is likely to have been established and the pair has now turned lower. We may expect a gap down opening today with a possible fall towards 74.60 initially in the coming sessions. For today we may expect a fall towards 75.40-75.15.
INTEREST RATES
No new surprises from the US Federal Reserve yesterday. The Fed left the rates unchanged at 0%-0.25% and indicated that the rates would remain here until the economy recovers from the impact of the corona virus outbreak. The US Treasury yields have bounced at the far-end and will have to see if they can sustain higher to get a cue on whether our bearish view is getting negated or not. The German yields have dipped further in line with our expectation and keep our bearish view intact. The 10Yr GoI can dip in the near-term to test the 6%-5.95% support zone before bouncing-back again..
The US 2Yr (0.19%) and 5Yr (0.36%) Treasury yields have dipped while those at the far-end, the 10Yr (0.62%) and 30Yr (1.24%) yields bounced slightly compared to the levels seen in early Asian session yesterday. It will have to be seen if the 10Yr and 30Yr sustain higher or not. As we had mentioned on Tuesday, the 10Yr has to breach 0.75% to negate the bearish view of seeing 0.50%-0.40% on the downside. Similarly, the 30Yr has to break above 1.30% to negate our bearish view of seeing 1.10% on the downside. We will have to wait and watch.
The German 2Yr (-0.73%), 5Yr (-0.68%), 10Yr (-0.50%) and 30Yr (-0.09%) have dipped across tenors. Our bearish view remains intact. The 10Yr can fall to -0.70% and the 30Yr can test -0.30% on the downside in the coming weeks.
The 10Yr GOI (6.1244%) remains lower below 6.20% and has been stuck in between 6.10% and 6.15%. While below 6.20%, our view of seeing 6% on the downside remains intact. 6%-5.95% is a strong support zone which can hold and trigger a bounce again going forward.
