STOCKS
DAX and Nikkei have gained momentum and are bullish to see further rise in the coming days. The global economies opening up slowly from the lock-down seems to be improving the sentiment. The US and the Indian markets were closed yesterday and will have to see how they open today after the long weekend. The Dow is stuck in between 24000 and 24700 over the last one week. Sensex and Nifty seems to lack momentum to stage a strong rise. Shanghai has bounced-back well from a key support and can rise further in the coming days
Dow (24465.16) was stuck between 24000 and 24700 all through last week. We retain our view that 24700-25000 will be an important resistance. A strong rise past 25000 will be needed to become more bullish to see further rise to 26000. While below25000, the 22500-25000 range will remain intact. In that case the Dow can break below 24000 and fall within this range to 23000-22500 in the coming weeks again.
DAX (11391.28, +317.41, +2.87%) has risen above the crucial 11200-11350 resistance zone and need to see if it can sustain higher. A strong rise past 11500 will confirm the bullish and will target 12000-12500 in the coming days. 11200 will now be a good resistance-turned-support.
As expected Nikkei (21194.03, +452.38, +2.18%) has risen breaking above 20500 and is now trading above 21000. The bullish view is intact. As we had been mentioning last week, a rise to 21500 and even 22000 looks possible now. 21000 will be the immediate support and 20500 is the next important support.
Shanghai (2835.16, +17.19, +0.61%) broke below the 2825-2820 support zone but had has bounced-back well after testing 2800 yesterday. While above 2800, the outlook is bullish 2850 and 2900 can be seen again in the coming days. Only a break below 2800 will turn the outlook bearish for which the chances are less at the moment.
Nifty (9039.25) though manages to sustain above 9000, is struggling to gain momentum. 9000-9250 could be a possible range that can be seen in the near-term. However, 9200-9250 will continue to remain as a crucial resistance while below which the index will remain vulnerable to break 9000 and fall to 8800 and even lower levels again
Sensex (30672.59) on the other hand will have to rise past 32000 to become bullish and also to avoid a break below 30000 30000-32000 can be the range that is possible in the next few days. Within this range while below 32000, the bias is negative to see a break below 30000 and fall to 29500-29000.
COMMODITIES
Commodities look bullish for the near term. Brent and WTI have some scope to rise in the next few sessions before seeing a possible dip. Copper is hovering around the 2.40 levels and needs to see a sustained move on either side to set a clear direction for the medium term. We would have to wait and watch. Silver and Gold looks bullish for the near term.
Brent (35.93) and Nymex WTI (34.08) have both moved up and seem to be breaking above immediate resistances on the daily charts. We may expect a slight dip from 37.50 and 36 respectively in the near term. A break above the mentioned levels, if seen could be an indication of a sharper upmove to be seen in the coming weeks. Near term view is bullish for crude.
Gold (1732.30) has been sustaining well above 1720 for the last 4-5 sessions before rising a bit to current levels. 1720 continues to remain a crucial level for price in the near term that could keep chances of medium term bullishness intact. A sustained break below 1720-1700 would be the first price confirmation for a possible reversal in trend to look for lower levels. For now, Gold could be ranged in the broad 1700/20-1780/1800 region. Further direction from this range is unclear just now.
Silver (17.92) has bounced well from levels just above 17 and while support near 16.5-17.0 holds, we may expect price to rise further from here. The upside level of 19 remains intact for the medium term. View is bullish.
Copper (2.4075) is trading around 2.40 in a very narrow range of 2.45-2.35 not able to manage a sustained rise above 2.40. We may expect steady rise towards 2.45 and higher in the medium term. View is bullish while above 2.35 just now.
FOREX
Currencies are mixed. Euro is stable in a broad range while the Dollar index could fall towards 99 initially to re-attempt a test of 100+ levels. USDJPY looks bullish while EURJPY could also move up slightly to test resistance before falling off from there. Yuan and Rupee could trade weak for the near term. Aussie looks bullish while Pound could remain ranged.
Dollar Index (99.69) is coming down from 100. Support is seen near 98.78-99.00 which is likely to hold in the near term while upside has scope for a rise to 100.55/75. A fall could be seen initially towards 99 followed by a bounce back in the medium term.
Euro (1.0910) is trading in the middle of the 1.10-1.08 range which is likely to hold for some more time in the near term. A test of 1.0930 looks possible before a fall towards 1.08 again in the near term.
Dollar-Yen (107.82) has scope to rise towards 108.40/50 before coming off from there. Near term looks bullish.
EURJPY (117.64) has immediate trend resistance near 118.25 which could be tested in the near term but while the exchange rate holds below 118.25, we may expect a dip back towards 117 or lower in the medium term. A sustained break above 118.25 would be needed to rise higher towards 119. Watch price action near 118.25.
Aussie (0.6562) has immediate support near 0.65-0.6510 and while that holds, we may expect Aussie to rise towards 0.6615 or even higher in the near term. View is bullish for the near term.
Pound (1.2206) is likely to trade within 1.2320-1.2070 for the near term.
USDCNY (7.1316) has dipped from 7.1434 but while above 7.10, near term view is bullish. For the very near term we may expect a test of 7.10 but unless a sustained fall below 7.10 is seen, there could be chances of rising again to target 7.15/18 in the longer run.
USDINR (75.96) could open near previous close at 75.96. A possible test of 76.25/30 is on the cards before a dip from there is seen in the near term. Downside is limited to 75.60/50 for the near term. Watch crucial resistance at 76 and higher at 76.25/30 in the near term from where a dip is possible.
INTEREST RATES
The US Treasury yields are broadly to remain in a sideways range for a couple of weeks. Within this range, a dip to test the range support is likely to be seen in the near-term and then a bounce is possible towards the upper end of the range. The German yields remain stable and have room to move up in the near-term before resuming their broader downtrend. The 10Yr GoI has broken below the crucial support contrary to our expectation and need to be seen if it bounces back above 6% today or not in order to see if the fall can continue further.
The US 2Yr (0.17%), 5Yr (0.34%), 10Yr (0.66%) and 30Yr (1.37%) Treasury yields little room on the downside to test their key supports from where they can reverse higher again. The 30Yr has good support in the 1.30%-1.25% region which can be tested in the coming days and a bounce-back is possible from there. Similarly, the 10Yr has support int eh 0.60%-0.58% region and a bounce to 0.70% is possible from there. Broadly we can look for a range of 1.25%-1.45% on the 30Yr and 0.58%-0.71% on the 10Yr over the next two-three weeks.
The German 2Yr (-0.70%), 5Yr (-0.68%), 10Yr (-0.50%) and 30Yr (-0.06%) yields remain stable across tenors. The broader trend is down. But there is room to see a rise in the near-term before the downtrend resumes. The 30Yr can test 0% and even 0.05% before reversing lower to target -0.20% on the downside over the medium-term. Similarly, the 10Yr can test -0.40% and then move down again to target -0.60% and even lower levels.
The 10Yr GoI (5.9612%) broke below 5.95% on Friday last week contrary to our expectation but has bounced-back well from the low of 5.8527%. It will have to be seen if it can rise past 6% from here or not. While below 6%, the outlook is negative to see a fresh fall to 5.80%-5.75% in the coming days.
