STOCKS
All Equity Indices continue to rise, making up the ground lost to the coronaviruses in March, after which all can take some well-earned rest. The indices look bullish for the near to medium term.
The Dow (26287.03, +459.67, +1.78%) has moved up to the upper end of the 25000-26500 range mentioned yesterday. Now we would watch price action near 26500 for an eventual break on the upside targeting 27000-28000 in the coming sessions. View is strongly bullish.
Continued rally is seen in the DAX (12733.45, +205.27, +1.64%) which also rose to close in the positive and now seems gearing up to test 13200 in the near term and then 13600-800 in the medium term. View remains bullish for the near term.
Further strong rise is seen in the Shanghai (3369.62, +36.74, +1.10%). Look for a test of 34250-500, where it could see some profit-taking. A break past 3400, if seen, would be very bullish indeed.
The Nikkei (22587.73, -126.71, -0.56%) has dipped slightly but needs a break above 23000 to test 24000 soon enough. A rise past 23000 is needed to confirm further bullishness.
As expected, the Nifty (10763.65, +156.30, +1.47%) has moved up into the 10750-800 region. It remains overall bullish for 11000-11250, but there are equal chances of it continuing to either march ahead today or to take some rest at 10800.
As mentioned yesterday, Sensex (36487.28, +465.86, +1.29%) continues to look bullish towards 38000, but needs to close above immediate hurdle at 36800. It might run into profit-taking near 38000.
COMMODITIES
Weak Dollar is keeping the metal prices higher and while the US Dollar is likely to remain weak (refer to currencies section below) upward pressure on metals may remain intact. Crude prices rose in the second half of the session yesterday but has dipped back from there. Gold and Silver looks bullish for the near term within the broad sideways range. Copper looks bullish too. We may expect a short corrective dip in crude prices in the near term but overall sideways trade may continue for some more time while below immediate resistances.
Brent (42.89) and WTI (40.44) are closing in on their targets of 45 and 41 respectively. They cannot be grudged a rest if they happen to take a pause here within their overall uptrends that target 50 and 45 respectively.
Gold(1794.90) has moved up sharply as near term trend support at 1770 is holding well. 1800-1810 is crucial to watch just now. A sustained break above 1800-1810 can take Gold higher towards 1840/50 or even higher in the medium term. The sharp rise in Gold prices are accompanied by the weakness in US Dollar which if remains week in the near term could keep the upward pressure on Gold intact.
Silver(18.61) has risen too as support near 18.30 is holding well. A test of 19 looks possible before we see a fall towards 18-17 again. A strong break above the resistance region of 19-19.5 can confirm further bullishness going forward.
Copper (2.7830) is continuing to move up towards 2.80, maybe even 2.90. Some profit-taking is quite possible at that level, which might bring Copper down towards 2.50.
FOREX
Dollar Index looks weak for a test of 96 while Euro, Pound, Yuan, EURJPY and Rupee may remain strong against the Dollar today. No major movement expected while strength in currencies could be seen over the next few sessions.
Dollar Index (96.79) has moved up slightly after testing 96.60 on the downside but overall the index looks weak for a possible test of 96 in the near term.
Euro (1.1308) has broken above 1.13 and may continue to rise towards 1.1340/50 in the near term. On the upside there is scope for a test of 1.1406 which could be tested on a break above 1.1350. Overall while above 1.13, view is bullish for Euro.
EURJPY(121.48) has strong immediate trend support near 120.94 which if holds could limit the downside and keep the pair higher in the near term. EURJPY may break the intermediate resistance at 121.65 mentioned yesterday and head towards 122 in the near term. View is bullish above 120.94.
Dollar-Yen (107.36) is down in line with the fall in Dollar index. But while below 108.20, we may expect a dip towards 107.24-107.10 on the downside before a bounce is seen later on. Near term looks sideways to bearish.
Aussie (0.6958) gained momentum to test 0.70 but has dipped back from there. 0.70/71 could be a decent immediate resistance which needs to break on the upside to take the currency further up in the near term. Else a dip back towards 0.68 could be seen.
Pound (1.2493) is trading stable below 1.2523 and while that holds, we may expect some sideways consolidation between 1.2523 and 1.2432 before a sharp rise towards 1.2600-1.2730 is seen. Overall near to medium term is sideways to bullish.
The PBOC has set reference rate for the day ay 7.0310 against 7.0663 yesterday. But USDCNY (7.0109) is trading lower and could test immediate support near 7.0-6.9930 which needs to hold and produce a sharp bounce to push back the pair towards 7.04/05 again. Else, a break below 7 if seen today would force us to look further down and to revise our near to medium term projections. News states 110bln Yuan liquidity is drained from the market due to reverse repo expires today.
USDINR (74.6750) bounced back sharply from 74.50 as RBI bought dollars preventing a further fall in the pair. If RBI protects 74.50, we may have to look for a higher USDINR in the near term towards 74.85-75.00 again but on the charts there is scope for a test of 74.25 at least before a fresh rise is seen. With weakness in US Dollar and strength in Euro, Yuan, EM currencies and Nifty (refer to equities section above), Rupee is likely to trade strong in the near term.
INTEREST RATES
The US Treasury yields remain stable but could dip slightly from current levels before seeing a fresh rally. The German yields on the other hand trade above immediate trend supports and could be bullish for the near term contrary to our bearish view mentiioned yesterday which could come into the picture a little later. The resistance on the 10Yr GoI is holding well as expected and keeps the bearish view intact.
The US 2Yr (0.16%), 5Yr (0.30%), 10Yr (0.67%) and the 30Yr (1.43%) trade in a stable fashion. We retain our view of seeing a dip to test the supports at 0.60%-0.58% on the 10Yr and 1.30%-1.25% on the 30Yr first before we see a fresh leg of rally. A strong rise past 1.5% (30Yr) and 0.75% (10Yr) is needed to move up from here itself without seeing the above mentioned dip.
The German 2Yr (-0.685%), 5Yr (-0.679%), 10Yr (-0.433%) and the 30Yr (0.028%) yields trade above immediate near term trend supports and look sideways to bullish for the near term. A rise towards 0.05% on the 30Yr and -0.40% on the 10Yr may be seen in the near term. But we would wait to see if the yield manages to rise past 0.05% (30Yr) and -0.40% as that may trigger further upside for the medium term taking the yields higher towards 0.20% (30Yr) and -0.30%/-0.25% (10Yr) respectively.
The 10Yr GOI (5.8360%) is bearish towards 5.80/78% while below 5.85%. The upside is likely to be capped at 5.90% even if we see a break above 5.85/87% in the near-term.
