STOCKS
Equities have dipped slightly but remain bullish in the near-term to see a rise before beginning a fresh leg of down move. The hopes of the economic activities to pick-up as the global nations begin to re-open their economies are weighing on the equities. Dow has good support in the 2400-23500 region and has room to move up in the near-term. DAX is also holding well above its support and keeps our near-term bullish view intact. Nikkei can dip before bouncing back again. Shanghai has come-off from a key resistance and could see a corrective fall in the coming days. Sensex and Nifty also have room to dip first in the near-term and then reverse higher.
Dow (24221.99, −109.33, -0.45%) has come-off slightly but remains stable above 24000. Cluster of supports are in between 24000-23500. While this supports hold, we retain our near-term bullish view of seeing 24700-25000 on the upside before a fresh leg of fall begins.
The support at 10700 mentioned yesterday is holding well on theDAX (10,824.99, −79.49, -0.73%) as expected. Our near-term bullish view of seeing 11000-11350 on the upside remains intact after which we expect the index to come down again. 10400 is a slightly deeper support available below 10700. Only a strong break below 10400 will negate our near-term bullish view mentioned above.
Nikkei (20349.21, −41.45, -0.20%) is facing intermediate resistance at 20500 just now. While this resistance holds, a dip to 20000 cannot be ruled out in the near-term. However, the bullish outlook of seeing 21500 and 22000 will remain intact as long as the index stays above 20000.
The 2910-2915 resistance zone on Shanghai (2891.54, −3.27, -0.11%) is holding well. As mentioned yesterday, while below 2915, we can now expect a corrective fall to 2875-2850 or even lower first. This will now delay our medium-term bullish view of seeing 3050 on the upside.
Sensex (31561.22, -81.48, -0.26%) and Nifty (9239.20, -12.30, -0.13%) continues their struggle to breach 32000 and 9400 respectively. We see chances of a near-term dip to test 31000 on the Sensex and 9000 on the Nifty (on a break below 9200). But thereafter we expect the indices to reverse higher again and begin a fresh leg of rally targeting 33000-34000 (Sensex) and 9700-9800 (Nifty). 31000 and 9000 are crucial supports on the Sensex and Nifty.
COMMODITIES
Crude prices are stable and are likely to continue so for some more time. Gold looks bearish within the broad range of 1660-1740 while Silver could rise towards 16.5 in the near term. Copper trades lower but could soon bounce back from near term trend support.
Brent (29.80) continues to trade below $30 and could see some stability in the $30.0-29.0 region fo now with a possible extension to $32.5. Nymex WTI (24.48) is also likely to trade within the narrow $23-27 region for the near term. Overall stability in crude prices could continue for the week.
Gold (1699.20) continues to trade within 1740-1680/60 region and has dipped below 1700 within the mentioned range. Initial break below current levels would be needed to see a fall towards 1680/60 in the near term else the prices could bounce back towards 1720 in the coming sessions. Preference is for a test of 1680/60 in the coming sessions.
Silver (15.65) is bullish towards 16.5 which could be a decent resistance for the near term and could push prices back towards 15.5. Near term is bullish within the range of 16.5-15.5.
Copper (2.3775) has fallen below 2.40 after trading higher for a brief period. Immediate support is seen near 2.37-2.36 region which if holds could take the price back again to 2.40+ levels in the near term. A break below 2.36 would be needed to negate an upmove from here.
FOREX
Dollar Index has risen above 100 and trades higher but could face resistance above current levels. Euro could test 1.0750 before bouncing back from there. Dollar Yen looks bullish while Aussie and Pound could fall some more in the very near term. Yuan trades weak and Rupee is also likely to open weaker against the Dollar today.
Dollar Index (100.29) has risen well bit could face rejection from 100.50 from where the index could fall back towards 99. Upside is likely to be limited just now.
Euro (1.0798) has surprisingly broken below 1.08 contrary to our expectation of trading higher. There is scope of re-testing 1.0750 in the near term before bouncing back from there.
Dollar-Yen (107.37) has risen breaking above the 106-107 region mentioned yesterday and while the pair trades higher, Dollar Yen could head towards 107.50-108 again. There could be a short dip from 107.50 before the pair attempts a rise to 108.
EURJPY (115.99) has room to rise towards 117 which is a decent resistance for the near term from where a rejection looks possible. Immediate view looks bullish for the next 2-3 sessions.
Aussie (0.6443) has dipped after testing an intra-day high of 0.6561 yesterday. 0.66 and 0.67 are important resistances above current levels and while they hold, Aussie could come off towards 0.64 in the near term. We may expect a bounce back from 0.64 in the near term. A break below 0.6350-0.6300 would be needed to prove our bullish sentiment wrong.
Pound (1.2315) is holding below immediate resistance at 1.25 and while that holds, movement in Pound is likely to be bearish with a possible dip towards 1.22/21.
USDCNY (7.0947) has support near 7.06/07 and while the pair trades higher, it may re-attempt to rise towards 7.10/12 in the near term.
Fresh weakness in Euro and Yuan may take USDINR (75.7550) higher today. Our mentioned fall towards 75.20/00 has been negated by a rise in USDINR yesterday and s re-test of 76 looks possible. Trade between 75.55-76.00 could be possible within the next couple of sessions.
INTEREST RATES
The US Treasury yields sustain higher and have room to move further up in the near-term. However, key resistances are ahead that can cap the upside and trigger a reversal again to keep the broader downtrend intact. The German yields can also move up in the near-term to test their resistances before resuming their downtrend. The 10Yr GoI has moved up sharply and has turned bullish now to see further rise.
The US 2Yr (0.17%), 5Yr (0.35%), 10Yr (0.70%) and 30Yr (1.40%) Treasury yields remain higher and have room to move up in the near-term However, key resistances are coming up that can cap the upside. As mentioned yesterday, the 30Yr has resistance in the 1.43%-1.45% region and the 10Yr has at 0.75%-0.80% (wrongly mentioned yesterday as 1.75%-1.80%) that can be tested in the near-term. But thereafter we expect the yields to reverse lower again and resume their overall downtrend.
German 2Yr (-0.77%), 5Yr (-0.73%), 10Yr (-0.52%) and 30Yr (-0.06%) have moved up in line with our expectation across tenors. We reiterate that the German yields can move up in the near-term to test 0%-0.05% (30Yr) and -0.45%/0.40% (10Yr) in the near-term. But thereafter the yields are likely reverse lower again and keep the long-term downtrend intact.
The 10Yr GoI (6.1669%) opened with a wide gap-up yesterday and made a high of 6.2427% before coming-off from there. 6.15% is an important immediate support to watch. A break below it can drag the yield lower to 6.10%-6.05% and then a bounce is possible again. But while 6.15% holds, the 10Yr GoI can move up from here itself. Overall the outlook has turned bullish now and we will be looking for a rise to 6.35%-6.40%.
