STOCKS
The recovery in the Dow seems to be gaining strength. But it will very important to see if this recovery rally can rise past 28000 or not. We will be watching it closely. DAX can break its intermediate resistance and move higher in the near-term. Shanghai has risen sharply and can move up further. But a crucial resistance is coming up for it at 3100 which will need a watch. Nikkei can consolidate above its crucial support for some time before moving higher eventually. Sensex and Nifty are range-bound and holding well above their crucial support. Though we prefer them to break their range on the upside and move higher, it will be important to see how the recent increase in the corona virus cases in India is going weigh on the markets. We will have to wait and watch.
Dow (27090.86, +1173.45, +4.53%) has risen-back sharply recovering all the loss made on Tuesday. A test of 28000 looks possible now while it manages to sustain higher. However, as mentioned yesterday, a strong rise past 28000 is needed to turn the outlook completely bullish. So we will be watching closely the price action around 28000 in the coming days.
DAX (12127.69, +142.30, +1.19%) failed again to breach 12200 yesterday. But on the charts it looks like the index is gathering momentum and a break above 12200 is possible. Such a break can take it higher to 12600 in the coming days which in turn would delay the fall to 11500-11000 that we had been mentioning for some time. We will have to wait and watch.
Nikkei (21271.26, +171.20, +0.81%) is consolidating above its crucial support level of 20800. As mentioned yesterday, a strong close above 21200 is needed to ease the downside pressure which in turn can take the Nikkei higher to 22000 and 22400 thereafter (most preferred). For now we expect Nikkei to continue its consolidation above 20800 for some more time.
Contrary to our expectation for a fall to 2950-2900 Shanghai (3052.66, +41, +1.36%) has surged above 3000. The crucial resistance level of 3100 is likely to be tested now while it remains above 3000. The price action around 3100 will need a close watch.
Nifty (11251, -52.30, -0.46%) is consolidating above the crucial 11100-11000 support zone in line with our expectation in a range of 11000-11400. We prefer the index to sustain above 11000 and break 11400 to target 11600-11700 on the upside. We will have to wait and see how the market reacts for the increasing case of corona virus in India
Sensex (38409.48, -214.22, -0.55%) is getting support near 37800 and can remain in the range of 37800-39100 for some time. Eventually we expect the Sensex to breach 39100 and move up to 39750 and 40000 again.
COMMODITIES
Crude prices trade lower while Gold, Copper and Silver look stable and could possibly see some sideways consolidation in the near term.
Brent (51.90) and WTI (47.44) have dipped slightly ahead of the 1st session of the OPEC meeting. Markets expect a rise in crude prices if OPEC decides on a production cut. WE would watch support at 50 on Brent and 44 on WTI over the next 2-sessions to get more clarity on further movement from here. Preference would be to see a sharp pick up from here.
Gold (1639) has dipped a bit but while above support near 1560, could re-test 1660/70 before coming off from there. We may see some consolidation in the broad range of 1560-1660 for the near term.
Silver (17.21) is stable. Support on the near term charts are seen at 16 and while the price trades higher there is scope for a test of 18.0-18.5 in the coming sessions.
Copper (2.5955) is consolidating below 2.65 and is likely to trade in the earlier mentioned range of 2.65-2.52 in the near term.
FOREX
Most currency pairs are stable today. Dollar Index trades above 97 and Euro could see a fall towards 1.11 or lower if the index rises from here towards 98. Dollar Yen and EURJPY look stable for the next few sessions. Rupee is likely to strengthen too over today and tomorrow. Yuan, Aussie and Pound looks stable just now but could possibly rise in the near term.
Dollar Index (97.31) is almost stable and could attempt to rise again towards 98 or higher while above 97.
Euro (1.1142) has dipped a bit. While below resistance near 1.12, we may see a fall towards 1.11-1.1070 in the near term.
Dollar-Yen (107.28) has interim support at 107 and while that holds, we may see some trade in the 107-107.50 region for now. Note that below 107, 106.50 is an important support that is likely to hold in the medium term pushing the currency pair back to 108+ levels.
EURJPY (119.55) is likely to trade in the 121.50-118 region for the near term within which we may expect 120.8 to hold just now and keep prices lower. Watch for a break on either side of the mentioned range to expect a sharp pick up in volatility.
Aussie (0.6623) has sustained to trade above 0.66 and could test 0.6650-0.6700 in the near term before pausing there. Very near term could see a rise within the medium term bearishness.
Pound (1.2871) has risen fairly and while the rise holds, we may see a test of 1.30/32 in the medium term. Bullish view remains intact only while Pound trades above 1.28.
USDCNY (6.9381) trades above immediate support near 6.90 and while that holds we may expect a gradual bounce back towards 6.95/96. Near term trade in the 6.90-6.96 region looks likely.
USDINR (73.2250) came off sharply from 73.65 during the second half of the session yesterday and if it continues to decline further we may expect a test of 72.95 (immediate support) before bouncing back from there. Overall broader view is bullish towards 73.88-74.15 in the medium term.
INTEREST RATES
The US Treasury yields have bounced yesterday after the government announced a $8 billion spending package to tackle corona virus. However, the upside is likely to be capped and the bounce back move is likely to be short-lived. The German yields continue to trade lower and keep our bearish view intact. The 10Yr GoI has declined sharply yesterday and can dip further to test an important support from where it can see an intermediate bounce.
US 2Yr (0.65%), 5Yr (0.75%), 10Yr (1.02%) and 30Yr (1.67%) Treasury yields have risen back after dipping on early trades yesterday. While this bounce sustains for the next couple of days, the 2Yr can move up further to test 0.85% in a week or two. The 10Yr can rise to 1.25%-1.30% while above 1% and the 30Yr can test 1.90% over the same period. However, thereafter the yields are likely to reverse lower and keep the broader downtrend intact.
The German 2Yr (-0.86%), 5Yr (-0.84%), 10Yr (-0. 64%) and 30Yr (-0.17%) yields have dipped further and keep our bearish view intact. As we have been mentioning for some time, the 10Yr can fall to -0.80% and -0.83%. The 30Yr can test -0.20% initially in the near-term and can fall further to -0.30% on a break below -0.20%. An intermediate bounce if seen could be short-lived.
The 10Yr GoI (6.2270%) has declined sharply breaking the 6.31%-6.41% range on the downside decisively. A test of 6.20%-6.19% is possible now from where a bounce to 6.25%-6.27% is possible before resuming the downmove. Broadly the outlook remains bearish.
