STOCKS
The major global equities are stuck in a narrow range and seem to have entered into a consolidation phase as mentioned yesterday. While the bias remains positive on many indices like the Dow, DAX, Nikkei and Shanghai to break the current narrow range on the upside, we may have to wait for a few days to see how things evolve. India’s Sensex and Nifty also looks mixed and can trade in a broad sideways range.
Dow (21917.16, −410.32, -1.84%) has been stuck in between 21400 and 22600 since last Friday. From a broader picture 21000 will be crucial level to watch for the month of April which needs to hold in order to avoid any fresh fall. While above 21000, we will be looking for a rise to 24200-24500 in the coming weeks.
DAX (9935.84, +119.87, +1.22%) attempted to break the 9500-10150 range on the upside yesterday but failed. The 9500-10150 range remains intact. Our bias is to see the DAX breaking the range above 10150 and rise to 10400-10500 in the near-term.
Nikkei (18739.98, −177.03, -0.94%) is oscillating around the lower end of the 18500-19599 range. The 18500-19500 range can remain intact for sometime. The bias is bullish to see an upside breakout of the range above 19500 and a rise to 19800-20000 eventually.
Shanghai (2771.39, +21.09, +0.77%) oscillates around 2750 and continues to look mixed in the near-term. 2730-2725 is an immediate support zone to watch. While above this support, the bias is bullish to see a strong break above the 2800-2815 resistance zone and rise to 2850-2900 and even higher levels in the coming days.
Nifty (8597.75, +316.65, +3.82%) and Sensex (29468.49, +1028.17, +3.62%) need to be watched closely for a few days to get some clarity on the direction of move. For now we expect them to consolidate in a broad sideways range of 8000-9000 (Nifty) and 27000-31000 (Sensex)
COMMODITIES
Downward pressure on Crude prices continue to remain as refiners seem to be cutting crude oil processing rates in Europe and North America as major economies are under lockdown or under travel restrictions. Analyst expect a 20 mln bpd reduction in oil demand globally for April’20. On the other hand Gold faces liquidity issues as mines close down and Russia central banks halt gold purchases on lower demand and high volatility. Overall commodities are trading lower and look bearish for the near term.
Brent (25.86) and Nymex WTI (20.58) trade lower. While Brent has some scope to fall towards $23-20 on the downside, WTI could turn bearish if it does not manage to sustain above $20 in the near term. Watch for price action near current levels.
Gold (1596.40) has been dragged down sharply possibly because of liquidity pressure and news from Russian central bank to halt purchase of the metal. While below 1600, we may expect a fall to 1580-1560 before bouncing back again.
Silver (14.19) is likely to continue in its range of 14-15 for the next few sessions.
Copper (2.2035) is heading towards immediate resistance at 2.25. As mentioned in previous editions, we may look at important near term resistances at 2.25 and higher at 2.35/40 to hold for now.
FOREX
Some recovery seen in the currency pairs as Dollar Index has risen dragging down Euro to lower levels and pulling up Dollar Yen. Aussie and Pound could see a brief fall before rising back again in the medium term. EURJPY looks bullish while above 118.0-118.5. Yuan and Rupee could also trade weak against the US Dollar for this week.
Dollar Index (99.04) has risen back to levels above 99 and if the direction has now turned to the upside, we may see a rise to 100 or higher again in the near term before another dip towards 98 or lower in the medium term.
Euro (1.1026) has risen back after a short dip to 1.0926 yesterday. If the Dollar Index continues to rise towards 100 in the next couple of sessions, we may expect a fall in Euro to 1.09 before bouncing back from there.
Dollar-Yen (107.65) has support near 106.50-107.00 just now which seems to hold well and produce a bounce back towards 109-110 in the near term before another decline is seen. Near term looks bullish from 106.50-107.00 within an overall medium to long term bearishness.
EURJPY (118.69) trades above support at 118.5 and could rise towards 121.50 on the upside. Near term looks bullish.
Aussie (0.6129) and Pound (1.2380) both seems to be in a pause mode just now and could tilt to the downside in the near term. Failure to rise from here could take Aussie down to 0.60 or lower while Pound could fall towards 1.22-1.20 again. The medium term upmove could remain intact after the mentioned dip is seen for the near term.
USDCNY (7.0809) trades just above support near 7.08 and has lower support at 7.05 on the medium term charts. As mentioned yesterday, we may expect a sideways trade in the 7.08-7.12 region for the near term with possible extension to 7.056 and 7.15 on either side.
USDINR (75.67) is closed today and tomorrow. While above 75.50, there could be scope to test 75.80-76.00 again in the near term before declining from there in the coming weeks.
INTEREST RATES
The US Treasury yields remain lower and keep our bearish view intact. The pace of fall this time could be slow though. The German Yields looks mixed in the near-term. They might consolidate/inch higher slightly before moving lower again. The Indian 10Yr GoI continues to oscillated within the preferred sideways range. The Indian bond market is closed today.
The US 2Yr (0.24%), 5Yr (0.37%) and 30Yr (1.33%) Treasury yields remained lower and stable while the 10Yr (0.66%) has dipped further compared to the levels seen on early Asian trades yesterday. The outlook continues to remain bearish. We expect the 10Yr to test 0.4%-0.3% on the downside while it remains below 0.8%. The 30Yr has resistance at 1.40% and can fall to 1.1% in the coming days.
The German 2Yr (-0.72%), 5Yr (-0.66%), 10Yr (-0.48%) and 30Yr (0.01%) yields have inched slightly higher. While the 10Yr continues to look weak for a fall to -0.60%, the 30Yr will need a close watch. It has been oscillating around 0% over the last few days and is still keeping the chances alive of seeing one more leg of rise to 0.10% or even higher before reversing lower again. As such the chances of seeing -0.20% on the downside that we had been mentioning might be delayed. We will have to wait and watch.
The 10Yr GoI (6.1382%) has bounced-back from the low of 6.075% yesterday. It can dip to 6% in the near-term within the broad 5.98%-6.40%/6.45% sideways range. The Indian markets are closed today.
