STOCKS
Equities continue to trade strong. The Dow has risen past 26000 and will have room to move further higher. At the moment, the market seems to be ignoring the on-going protests in the US. We will have to wait and watch if this sentiment continues. The other indices like the DAX, Nikkei and Shanghai have intermediate resistances ahead. While these resistances hold the indices (DAX, Nikkei and Shanghai) can see a near-term corrective dip before a fresh leg of rally begins. Sensex and Nifty also have intermediate resistances which will have to be broken to see the rally extending without a corrective dip.
As expected the Dow (26269.89, +527.24, +2.05%) has risen past 26000 and keeps our bullish view intact. As mentioned yesterday, a test of 27000 is likely in the coming days.from where a corrective dip to 26000 is possible. Also, if the current momentum sustains, the Dow has potential to target 28000 in the coming months. Dow has to sustain above 25000 necessarily for this though.
DAX (12487.36, +466.08, +3.88%) has surged breaking above 12100 to test the 12400-12500 resistance zone as expected. From a broader picture the index looks strong to target 13000-13500 in the coming months. However, for now 12500 could be a good resistance and we expect a corrective fall to 12200-12000 and even lower before a fresh leg of the uptrend begins.
Nikkei (22631.01, +17.25, +0.08%) remains strong above 22500 and keeps our bullish view intact of seeing 24000 on the upside. Immediate resistance is at 23000. While it may hold on its first test, a corrective dip to 22000-21500 is possible before the Nikkei targets 24000 on the upside.
Shanghai (2916.34, −7.03, -0.24%) seems to lack momentum to extend the rally. As such a dip to 2900 now and a consolidation between 2900-2950 is a possibility before our preferred rise to 2975 happens.
Nifty (10061.55, +82.45, +0.83%) has come-off from the high of 10176 yesterday. While the broader picture remains bullish to target 10500-10750 on the upside, an intermediate corrective fall to 9800 is possible before we see a fresh rise. 10160 is an intermediate resistance that will have to be broken to trigger further rise and avoid the above mentioned corrective fall.
Sensex (34109.54, +284.01, +0.84%) has risen past 34000 and is bullish to target 36000 on the upside. 35000 is an intermediate resistance. While 35000 holds, a consolidation between 34000 and 35000 or a corrective dip to 33000 is possible before the preferred rise to 36000 happens.
COMMODITIES
Precious metals are under correction phase falling sharply as expected but could get some support from a weaker Dollar in the coming sessions. Gold has come down to test near term support levels and a bounce from here or slightly lower is on the cards. Silver too could move up after a brief correction. Copper has dipped a bit too but overall looks bullish for the coming week. Crude prices trade weak after doubts emerged on OPEC+ meeting scheduled today. Some short correction is possible for the near term before a bounce back is seen.
Brent (39.32) and Nymex WTI (36.59) have both fallen from higher levels seen yesterday especially as doubts over today’s expected meeting hits the OPEC headlines. This is concerning as it is indicative of a possible negative intension to extend further production cuts. However, we will have to see if the OPEC+ proposes a confirmation of the meeting on a later date in June. Crude prices may continue to fall as expected technical levels of $40 and $37 is holding for now. A short corrective phase of 2-3 sessions is likely before prices start to rebound. Overall near term dip is likely for now.
Gold (1705.70) and Silver (17.93) have both dipped from higher levels as expected. Gold could test immediate support near 1700 but whether it will bounce back towards 1730 and higher from here or fall towards 1680 would have to be seen. A bounce from current levels or slightly lower looks more likely. Silver has come off from 19 and could trade lower for 1-2 sessions more before a recovery is seen.
Copper (2.4720) has also dipped slightly but overall looks bullish towards 2.50/55 in the medium term after a short interim period of corrective fall.
FOREX
Dollar index has bounced slightly pulling down other currency pairs for a short correction. Euro, Aussie, Pound, EURJPY trades lower while Dollar Yen trades higher. Yuan has weakened on news that Trump may impose restrictions on Chinese media outlets. This could be negative for Rupee as well today possibly keeping the currency weak against the US Dollar.
Dollar Index (97.47) has risen slightly but could be limited to 97.90-98.00 before again falling towards 97 or lower. Small corrective bounce is in place but our overall medium term bearish view remains intact for a target of 96.27 on the downside.
Euro (1.1213) tested 1.1258 yesterday before coming off to current levels. The downside is likely to be limited to 1.1150 while there is room till 1.1350 on the upside. We will watch price action of a fall to 1.1150 is seen. Bullish view remains intact for the medium term.
Dollar-Yen (108.88) has moved up further and could target 109.39 in the coming sessions as mentioned yesterday.
EURJPY (122.11) has also dipped a bit after testing 122.62 on the upside. While we do not fully negate a rise to our expected 123.0-123.4 mentioned yesterday, we may expect some dip in the next few sessions to continue before rebounding.
Pound (1.2538) has come off from just below our mentioned resistance near 1.2650 and while that holds, we may expect a dip towards 1.2430 before a bounce is seen in the medium term.
Aussie (0.6897) almost tested 0.70 yesterday before falling off from there. But while Copper looks bullish for the medium term (refer commodities section above), Aussie could have some scope of moving higher too in the coming week. However, a corrective fall towards 0.6820 is on the cards for the next few sessions.
USDCNY (7.1264) weakened as Trump announced to impose restrictions on at least 4-Chinese media outlets. While the Yuan weakens further, we may have to look for a re-test of 7.15.
USDINR (75.47) surprisingly rose to close at 75.47 contrary to our expectation of seeing a range trade within 75.00-75.30 for some time indicating that the support at 75 is holding very strong. Preference is to see a fall from 75.50 to again head towards 75.30 or lower but the fresh US-China tensions and weakness in Yuan could possible keep the Rupee weak today. On the upside we continue to look at interim resistance at 75.65 to hold.
INTEREST RATES
Strong rally in equities continue to support in pushing the yields higher. The US Treasury yields have risen further across tenors and keep our bullish view intact. The Treasury yields can move further higher from current levels. The German Yields have risen well above their key resistances that we had expected to hold. Our bearish view of seeing a reversal is negated and the outlook is now bullish to see further rise. The 10Yr GoI can remain sideways in the near-term before moving higher eventually.
The US 2Yr (0.17%), 5Yr (0.36%), 10Yr (0.74%) and 30Yr (1.53%) Treasury yields have risen further across tenors thereby keeping our bullish outlook intact. The 30Yr is heading towards 0.60% as expected where it can pause for a while. The 10Yr has broken the 0.58%-0.71% range on the upside as expected and can now test 0.80% in the coming days.
The German 2Yr (-0.65%), 5Yr (-0.59%), 10Yr (-0.36%) and 30Yr (0.12%) yields have risen further across tenors breaking above their key resistance which we had expected to hold. Our bearish has got completely negated now and we turn our view bullish. While above 0%, the 30Yr has the potential to test 0.20% and even higher levels in the coming weeks. The 10Yr has risen past -0.40%. A further break above -0.35% will confirm the bullishness and take it higher to -0.20%.
The 10Yr GoI (6.0309%) is managing to hold above 6% and looks mixed in the near-term. We prefer it to remain in the range of 5.95%-6.10% in the near-term. Within this range, it has equal chances to move on either side (to 5.95% or 6.10%) from current levels. Broadly we retain our bullish view of seeing an eventual break above 6.10% and a rise to 6.15%-6.20% in the coming weeks.
