STOCKS
Equities are gaining momentum as the global economies open up gradually from the lock-down. Unless there is a fresh/surprise escalation on the US-China dispute, the strength in the equities is likely to sustain and further rise can be seen in the coming weeks. May be that, the US-China tensions can emanate after the preferred rise in equities happen. We will have to wait and watch. Dow, DAX and Nikkei have room to move up further. Shanghai can consolidate before moving up. It is important to see whether the Sensex and Nifty gains strength taking cues from the global markets or not which is much needed to avoid the case for a fall that we have been expecting.
Dow (24995.11, +529.95, +2.17%) has begun the week on a strong note after trading stable all through last week. The 3-Day and Weekly Candles look strong. As such we can look for a rise to 26000 in the coming weeks. 24500-24000 will now be a strong support zone.
DAX (11504.65, +113.37, +1%) has moved up further to test 11500 as expected. The outlook is bullish with good support in the 11300-11200 region. While above this support zone, a further rise to 11800-12000 can be seen in the coming days.
Nikkei (21266.23, −4.94, -0.02%) sustains higher but remains stable. The bullish outlook is intact to see 21500 and 22000 in the coming days. As mentioned yesterday 21000 will be the immediate support and 20500 will be a slightly deeper support.
Shanghai (2837.85, −8.69, -0.31%) has tested 2850 as expected and has come-off slightly. The outlook is bullish to test 2900. But while 2850 holds, the index can remain stuck in between 2800-2850 for a few sessions before moving up to 2900 eventually.
Nifty (9029.05, -10.20, -0.11%) remains stuck in between the narrow 9000-9250 range mentioned yesterday. While below 9250, the index looks vulnerable in the near-term to break 9000 and fall to 8800 again. Only a strong break above 9250 will bring the bullishness.
Sensex (30609.30, −63.29, -0.21%) continues to oscillate around 31000. and remains within the preferred 30000-32000 range. The bias is negative to see dip to 30000 and even a break below it to test 29500-29000 on the downside in the coming days. A strong rise past 32000 is needed to turn the sentiment positive.
COMMODITIES
Crude prices trade slightly lower today while interim resistances above current levels hold. Only a break above that would make crude prices further bullish in the longer run. Strong rise in equities especially Dow (refer to equity section above) has dragged down Gold which has some more room to fall in the near term before rebounding from there. Silver looks stable and has some chances to rise towards $19. Copper has risen above 2.40 but need to see if it manages to rise further from here.
Brent (35.85) and Nymex WTI (33.94) has dipped from levels seen yesterday. 37.5 seems to be holding well on Brent just now while similar resistance near $35 is keeping the WTI price lower. Brent and WTI needs to necessarily break above 37.50 and 35 respectively to head towards 45 and 41 respectively in the coming sessions. Failure to break above immediate interim resistances could keep the price lower for at least the next 1-week.
Gold (1703) has come off sharply breaking below our mentioned 1720, to test 1700 now. The selling pressure is building up on stronger equities and Gold is expected to succumb to the downside, targeting levels of 1680/60 in the near term. Overall there could still be some chances of bullish possibility while above 1660.
Silver (17.54) has not been able to rise above 18 and has instead fallen from there. There could be some chances of the current sideways trade to continue within 17.30-18.20 region before a potential rise to 19 is seen.
Copper (2.4115) has risen above 2.40 again. A sustained trade towards 2.45 and higher is needed to take the price higher towards 2.50/55 in the longer run. Watch price action for a couple of sessions as the price trades around 2.40.
FOREX
Dollar Index has fallen dragging down USDJPY while Euro is attempting to move up. Pound and Aussie needs to break above immediate resistances to turn bullish for the near term. EURJPY too faces immediate resistance above current levels which needs to break to turn bullish for the medium term. However, the Chinese Yuan looks weak and could impact the EM currencies negatively. USDINR looks ranged within 75.50-76.0
Dollar Index (99.14) trades lower. As mentioned in the last couple of editions, 99-98.78 is an important support zone which needs to hold and produce a bounce to take the index higher towards 100.0-100.5 again; else a fall below 98.78 looks more likely while the bearish momentum seems to be gaining force. Overall preference is to see continued fall in Dollar index in the coming sessions.
Euro (1.0961) has moved up and could test 1.10 soon. A break above 1.10 is needed to take the currency higher towards 1.11 in the medium term. But for that Dollar index has to necessarily break below 98.78.
Dollar-Yen (107.49) has dipped from 108 yet again and while below 108, it could fall back towards 106.90 in the near term. A break above 108 is needed to turn bullish for the pair. Else we may expect the broad 108-106 region to hold for now while the currency pair falls in the coming sessions.
EURJPY (117.85) has immediate trend resistance near 118.25 which is likely to hold and push the pair back towards 117. Unless a sustained break above 118.25 is seen, we may not consider bullishness for the cross from current levels.
Pound (1.2321) has risen well but has immediate trend resistance near 1.2350/55 which if holds could again push Pound back towards 1.22/21 in the coming sessions. A break above 1.2355 is needed to take Pound higher towards 1.24/25. Watch price action near current levels.
USDCNY (7.1510) has risen well and could test 7.18 on the upside. Near to medium term looks bullish and could be negative for Rupee in the medium term.
USDINR (75.67) is holding well above support at 75.50 and could trade within 75.85-75.50 region today. 76 continue to hold as important near term resistance keeping the pair intact within 76.0-75.50 for the near term. A break on either side would be crucial to throw some clarity on future direction from here. Till then we may expect sideways 50p range to continue for some more time.
INTEREST RATES
A strong surge in the US equities has taken the Treasury yields higher. A break above the immediate resistances can see the yields moving further higher in the coming days. The German yields have moved up to test their resistances as expected. While these resistances hold, we may now see the broader downtrend resuming in the coming days in line with our expectation. The 10Yr GoI has support near current levels and a bounce is possible in the coming day while it holds.
The US 2Yr (0.17%) and 5Yr (0.35%) Treasury yields remains stable while the far-end the 10Yr (0.69%) is up 3bps and the 30Yr (1.44%) has surged 7bps. 0.71% on the 10Yr and 1.45% on the 30Yr are important resistances to watch. A strong break above them can take the 10Yr to 0.80% and the 30Yr to 1.50% in the coming days. It will also negate the chances of seeing a dip first before a rally that we had mentioned yesterday.
The German 2Yr (-0.67%), 5Yr (-0.63%), 10Yr (-0.43%) and 30Yr (0%) yields have moved up across tenors in line with our expectation. The resistances at 0.05% on the 30Yr and -040% on the 10Yr have been tested in the intraday trades over the last couple of days. As mentioned yesterday, we may now see the yields coming down while they sustain below 0.05% (30Yr) and -0.40% (10Yr). The 30Yr can fall to -0.10% and -0.20% and the 10Yr can fall to -0.60%.
The 10Yr GOI (5.9748%) remained below 6% but is getting support at 5.95%. The region between 5.95%-5.90% can be a good support now. While it holds, a bounce to 6.15%-6.20% is possible in the coming days. A strong break above 6% can trigger this rise. Only a strong break below 5.90% will bring the danger of seeing a fall to 5.80%-5.75% that we had mentioned yesterday into the picture.
