STOCKS
A strong bounce in the equities all over. The US-Iran tensions fading out after both the countries toned-down their voices and indicating not to escalate the situation has given a breather to the market. Dow has bounced-back sharply but has an important resistance at 29000 which is likely to cap the upside. DAX is oscillating within its sideways range. Nikkei has risen back and can move higher. Shanghai can trade sideways for some time. Sensex and Nifty can move up today taking cues from the global markets.
Contrary to our expectation of breaking below 28250 and falling to 28000, the Dow (28745.09, +161.41, +0.56%) has risen-back sharply yesterday. This keeps alive the chances of testing 29000 on the upside. However, we reiterate that 29000-29050 is a crucial resistance that can cap the upside and trigger a sharp corrective fall thereafter.
Similary, DAX (13320.18, +93.35, +0.71%) has also bounced-back sharply above 13200 again as against our view of falling to 13000. The index retains its 12950-13425 sideways range intact. A strong break above 13425 will be bullish to see 13600 on the upside.
Nikkei (23633.94, +429.18, +1.85%) tumbled to 22950 but has made a strong recovery from there. 23600-23500 will be a good support zone now. While above 23500 a rise to 24000 is possible again. The chances of seeing 22650-22630 mentioned yesterday is less.
Shanghai (3089.13, +22.24, +0.73%) can consolidate in the broad range of 3035-3125 for some time. The bias is bullish while the index sustains above 3035 and we expect it to breach 3125 eventually and rise to 3300-3400 and even higher levels over the medium-term.
Nifty (12025.35, -27.60, -0.23%) broke below 12000 yesterday as expected but has bounced-back from the day’s low of 11929.60. It will have to be seen if it manages to rise past 12100 today and move up to 12200 taking support from the rally in the global markets. However, a strong rise past 12200 is needed to bring back the chances of seeing 12350-12380 on the upside and to completely negate the chances of seeing a fall to 11860-11800 that we had mentioned in our Evening Comments yesterday.
Sensex (40817.74, -51.73, -0.13%) can rise past 41000 today and can test the next important resistance level of 41400. A strong break above 41400 will be needed to negate the chances of seeing 40100-40000 on the downside that we had been mentioning for sometime.
COMMODITIES
News that Iran is not willing to escalate the situation with US has brought back some relief to the otherwise surging commodity prices. Almost all commodities have dipped and may extend the corrective fall for a few more sessions. Gold and Silver could test 1520 and 17.50 while Copper could rise towards 2.90. Crude prices may head lower over the next 1-2 sessions.
Brent (65.90) is down sharply from 71.75 almost testing the previous high in Sep’19. We would wait to see if it spends some time in a sideways consolidation above 64. Nymex WTI (60.08) is also down sharply coming off from the weekly resistance above 65. Some sideways trade is expected for the next 1-2 sessions near current levels.
Gold (1560.40) tested 1613.30 on the upside before coming off from there. 1520 is now an important support below current levels. Silver (18.16) is down from 18.89 and while that holds we may expect a corrective dip that could extend towards 17.5.
Copper (2.8130) is holding above 2.75 just now and has room to extend towards 2.90 on the upside. Trade within the broad 2.90-2.75 is expected in the near to medium term.
FOREX
Currency prices have come back to levels seen before the US-Iran tensions emerged. Dollar-Index has bounced back bringing in strength to Euro, EURJPY, Yuan and Rupee among currencies mentioned below. Aussie may test support and bounce back soon while Pound could be headed higher.
Dollar Index (97.28) has bounced back well from trend support on the daily candles. A rise towards 97.50 looks possible in the near term before a dip is seen from there.
Euro (1.1114) has been dragged sharply but and could test immediate support near 1.1098 in the near term from where a bounce looks possible.
Dollar-Yen (109.20) has bounced back sharply in line with our expectation and could rise back towards crucial resistance near 109.72 which if holds could keep the pair ranged below 109.72 in the medium term. A sustained break above 109.72 is needed for USDJPY to turn bullish in the longer run.
EURJPY (121.38) has risen too and could rise towards 122 in the near term. View is bullish while above 120.15.
Pound (1.3109) continues to trade above 1.30 and has room toward 1.32 for the near term.
Aussie (0.6874) could get some support at 0.6840 which if holds could lead to a bounce towards 0.69 or higher in the near term.
USDCNY (6.9295) is headed towards 6.90/85 which is likely to be tested in the near to medium term. View is bearish for the currency pair while below 6.96.
Dollar-Rupee (71.70) could come down to test 71.50/30 along with strength in most other currencies. Also the fall in Crude prices could help Rupee strengthen over today and tomorrow.
INTEREST RATES
The easing fears of the US-Iran conflict getting worse has taken the US Treasury yields sharply higher yesterday. This has reduced the chances of seeing further fall that we had mentioned yesterday and a further rise is possible. The German Yields are bouncing-back from their key supports and are keeping the broader bullish view intact. The 10Yr GoI is holding higher but needs to gain momentum for move up further.
The US 2Yr (1.57%), 5Yr (1.65%), 10Yr (1.86%) and 30Yr (2.35%) Treasury yields have bounce-back sharply across tenors. The 2.23%-2.20% support on the 30Yr seems to be holding very well. This leaves the outlook bullish for it to test 2.38%-2.40% in the near-term. A strong rise past 2.40% will then pave way for a further rise to 2.50%-2.53%. The 10Yr is getting support near 1.75% and can rise to 1.95% again in the near-term. The chances of seeing 1.67%-1.65% on the downside that we had mentioned yesterday stands reduced now.
The German 2Yr (-0.62%) and 5Yr (-0.53%) yields have inched higher slightly while the 10Yr (-0.21%) and 30Yr (0.30%) have moved up sharply. The 30Yr has held very well above its key support level of 0.20%. The bullish outlook remains intact to see 0.40% and 0.45% on the upside. The 10Yr is also looking bullish to test -0.10% on the upside. A strong break above -0.20% can accelerate the rally.
The 10Yr GoI (6.5613%) is holding well above 6.55% but seems to be not gaining momentum. However, the broader bullish view remains intact while the yield remains above 6.50% and we expect the 10Yr GoI to rise towards 6.60% and even 6.70% in the coming weeks.
