STOCKS
Risk appetite is back into the market as the US and China agree not to levy any more tariffs and also to resume trade talks. Asians indices have risen sharply higher and the Dow Futures (26799.5, +206.5, +0.78%) is up over 200 points indicating a positive open for the US markets as well today. Our broader bullish view on the equities will remain intact. Indices like the Dow which have corrected slightly last week are likely to resume their uptrend in-line with our expectation.
As expected the support at 26450 had held very well on the Dow (26599.96, +73.38, +0.28%) last week. The index can resume its uptrend now targeting 27200 and 27500 in the coming days.
DAX (12398.80, +127.77, +1.04%) had started to reverse higher last week itself and the recent positive developments over the weekend can boost the momentum. DAX can sure to 12600-12800 on a break above the immediate resistance level of 12435. Support for the index is in the 12200-12170 region which has held very well last week as expected.
Nikkei (21655.97, +380.05, +1.79%) has surged breaking above 21500 as expected. The bullish view intact to test 21750 on the upside..
Shanghai (3041.38, +62.50, +2.10%) has risen above its resistance at 3020 and keeps our bullish view intact for a rise to 3050-3100. On a bigger picture, Shanghai could be now gearing up to test 3200 over the medium term.
Sensex (39394.64, -191.77, -0.48%) and Nifty (11788.85, -52.70, -0.45%) lost pace towards the end of last week. If they manage to bounce today taking cues from the Asian markets and breach their resistance levels of 39750 (Sensex) and 11900 (Nifty) there is possibility of seeing fresh rally in the coming days. In that case Sensex can target 40000-40500 and the Nifty can rise to 12000-12150. Else they can remain range bound between 11600-11900 (Nifty) and 38900 and 39800 (Sensex) for some more time.
COMMODITIES
Crude prices trade higher ahead of the OPEC+ policy meet today and the meeting with OPEC producers tomorrow. While the market has factored in a possible extension of supply cuts till end of this year and possibly early 2020, the markets await the outcome from the meeting to derive further information. Gold and Silver trades lower while Copper has moved up sharply after US and China agreed to continue negotiations.
Brent Crude (66) is trading higher but below our mentioned resistance near 67. While 67 holds, Brent could decline towards 63 again. Above 67, crucial resistance is seen at 69.
Nymex WTI (59.62) has also moved up. Note immediate resistance near 60 which is likely to hold in the near term producing a rejection towards 56. There is som possibility of range trade within 60-56 in the next few weeks. We would watch price action near 60 closely as a break on the upside could be an important bullish signal for the longer term.
Gold (1395.60) has dropped sharply after news on Saturday stated that US and China would restart trade talks and till the negotiations are on the fresh imposition of tariffs would remain suspended. Gold has support near 1390/80 and could trade within 1450/60-1390/80 in the medium term. For now, a bounce from 1390/80 looks likely.
Silver (15.25) is trading lower too and could test 15 before bouncing back from there. Very near term is bearish.
Copper (2.7435) rise sharply to make fresh highs within the current move as US-China agreed to resume trade talks. While above 2.70, Copper is bullish towards 2.76/79 in the near term.
FOREX
Dollar Index (96.35) has risen slightly and could test 96.50/70 on the upside from where another short dip is likely.
Euro (1.1352) is stuck between 1.1345 and 1.1415. Euro could test 1.1325 on a break below 1.1345 before bouncing back sharply from there. But if a bounce from here itself takes place, Euro could rally once again towards 1.1400 and higher in the medium term.
Dollar-Yen (108.22) has risen sharply and is trading above 108 just now. While the currency pair sustains above 108, it could test 108.50-108.80 on the upside. Very near term looks bullish.
Euro-Yen (122.88) has risen as expected but has immediate resistance above current levels near 123 which is likely to push the pair back to lower levels near 121.50-121.00.
Aussie (0.7006) is likely to test 0.7050 before coming off from there. Very near term looks bullish.
Pound (1.2699) has room to rise towards 1.2784 before coming back from there in the near term. Near term looks bullish.
USDCNY (6.8382) could test 6.83 from where a rise towards 6.85 again looks likely. A break below 6.83, if seen would make the pair bearish for the medium term towards 6.81. Preference is for a bounce from current levels towards 6.90.
USDINR (69.02) tested immediate support near 68.87 on Friday from where it bounced to close near 69. Another attempt to test 69.80/90 is on the cards but the current bounce has scope to extend towards 69.20/25 before resuming the fall in the medium term. On a sustained break below 68.80, we would bring in 68.60/50 into the picture.
INTEREST RATES
The positive outcome of the US and China meeting over the weekend may give a breather to the yields which have been on a strong downtrend. A sideways consolidation or a mild corrective rally is possible in the near-term before the broader downtrend resumes.
The US Yields have bounces across tenors. The 2Yr (1.78%) and 5Yr (1.80%) are up 3 bps while the 10Yr (2.03%) and 30Yr (2.55%) are up 2 bps each. The yields have been consolidating sideways for more than a week now. The can continue to trade sideways for some more time within their overall downtrend. The 30Yr yield can trade between 2.53% and 2.60% in the coming days before a fresh fall to 2.50% and 2.48%. The 10Yr can remain range bound between 2% and 2.10%.
The German Yields remains subdued. The 2Yr (-0.77%) has dipped more than other and can test -0.80% in the near term after which a bounce is possible. The 5Yr (-0.67%) and 10Yr (-0.33%) have dipped slightly. The 5Yr can move further lower towards -0.73% in the coming days. The 30Yr (0.26%) remains stable and can consolidate between 0.24% and 0.30%.
The 10Yr GOI (7.00%) was stuck in a narrow range on Friday. The near-term outlook is mixed. However, we expect the yield to fall within its 6.90%-7.10% sideways range towards 6.90% in the coming days. The broader view also remains bearish for the 10Yr to break the range below 6.90% and fall to 6.80% and 6.75% in the coming weeks.
