STOCKS
The price action in the global equity indices indicates lack strength and lack of confidence in the market. Dow has come-off sharply from the day’s high giving back all the gains indicating the absence of strong follow-through buying. Nikkei and Shanghai sustains higher but lacks momentum. DAX has broken its range on the upside but need to see if it can sustain higher. Sensex and Nifty have risen sharply but have key resistances coming up that can cap the upside.
Dow (22653.86, −26.13, -0.12%) has come-off sharply from the high of 23617.24 giving back all the gains made yesterday. It has to sustain above 22000 in order to see the near-term rise to 24200-24500 that we had mentioned yesterday. Also, the Dow needs to hold above 21000 to avoid any fresh fall. We will have to wait and watch.
As expected, DAX (10356.70, +281.53, +2.79%) has broken its 9500-10150 range on the upside and surged well beyond our expected level of 10500 before coming off again. It will now have to be seen if it sustains the range breakout or not. 10150-10100 will now be a good support zone. While above 10100, a rise to 11000 is likely in the near-term.
Nikkei (19039.91, +89.73, +0.47%) is managing to hold higher but seems to lack strength. As mentioned yesterday, a strong rise past 19500 is needed to turn the outlook bullish to test 20300-20500. While 19500 holds, Nikkei can fall-back to 18000-17500 and can remain in a sideways range of 17500-19500 for some time.
Shanghai (2807.64, −13.12, -0.47%) is stuck in a narrow range above 2800. While above 2800, the bullish bias is intact to test 2850-2870 initially and then 3000-3100 levels eventually over the medium-term. A fall below 2800 can see a test of 2750-2730 again which in turn would delay our above mentioned rise.
Nifty (8792.20, +708.40, +8.76%) has risen sharply yesterday and can test its 9000-9250 resistance now. For now we expect the Nifty to reverse lower again from the 9000-9250 resistance zone and could consolidate between 8000 and 9000/9250 for some time.
Sensex (30067.21, +2476.26, +8.97%) on the other hand has room to test 31000-31100 from where it can reverse lower again. Sensex can remain in the broad range of 27000-31100.
COMMODITIES
The expectation of inventory crude oil builds by API and crude forecast cut by EIA has taken crude prices slightly lower. Gold has fallen sharply as resistance near 1740 holds well. A dip towards 1600 could be a possibility. Silver has also dipped but while above 15, there could be some chances of rising again towards 15.50. Copper is down too but while above 2.25 it could re-attempt to rise towards 2.35/40.
The American Petroleum Institute (API) estimated a huge crude oil inventory build of 11.938mln barrels for the week ending 4th April. EIA in its monthly energy report released yesterday, lowered WTI and Brent forecast to $29.34 and $33.04 a barrel for 2020, down about 23% and 24% respectively from its March forecast. Additionally, the report projects a reduction in US crude production by 9.5% in 2020 compared to 2019.
Brent (32.57) and Nymex WTI (24.88) have dipped with the WTI falling more than the Brent price. We may expect near term upside to be limited to $35 and $30-32 for Brent and WTI respectively while the prices may continue to trade lower for the near term.
Gold (1680.30) tested weekly resistance on the candle charts near 1740 but fell sharply from there as resistance has held well pushing price back to levels below 1700. While we cannot rule out another rise above 1700, we may initially expect a dip towards 1600 before Gold attempts to rise again. Near term is bearish while below 1750. A test of 1800 would come into the picture only if immediate resistance at 1740/50 breaks.
Silver (15.28) has dipped too but continues to trade above 15. Testing 16 yesterday, the price has come off sharply and a fall below 15 would be needed to take it further down towards 14 or lower in the near term. Watch price action for a possible rise while above 15.
Copper (2.2630) has dipped slightly but has interim near term support near current levels which if holds could take prices back towards our expected 2.35/40 levels in the near term. Watch price action near 2.25 just now.
FOREX
Dollar Index (100.17) has dipped slightly but could have scope to test 101-102 in the near term while above 100. Only a break below 100 if seen in the next few sessions would negate immediate upside and we may look for a fall towards 99-98 in the near term. Near term is bullish while above 100.
Euro (1.0864) has risen and could test 1.09-1.0950 in the near term. View is bullish while above 1.07.
Dollar-Yen (108.77) is trading above support near 107 and while that holds, there could be scope for a rise towards 109-110 in the near term as mentioned yesterday.
EURJPY (118.21) is likely to trade in the broad 116-121.50 region for the near term. We may see a rise in the next few sessions towards 119-120 within the broad mentioned range.
Aussie (0.6132) has risen but could face rejection from 0.62-0.6250. Sideways trade in the 0.60-0.62 region continues to hold for the near term unless a break on either side is seen.
Pound (1.2316) is holding below immediate resistance near 1.25/27 and while that holds, near term could see a dip towards 1.21-1.19.
USDCNY (7.0667) has fallen sharply from levels above 7.10 and if the fall sustains, we may expect a decline towards 7.05 or even lower towards 7 in the near term.
USDINR (75.63) could test support near 75.40 over today or tomorrow from where a bounce back towards 75.80/90 is possible.
INTEREST RATES
The US Treasury yields remain higher but seem to lack momentum. The yields have to breach their key immediate resistances in order to gain strength and move further higher. The German yields have risen sharply across tenors and can move further higher in the near-term. The 10Yr GoI has come closer to its crucial resistance which we expect to hold and drag it lower.
The US 2Yr (0.25%), 5Yr (0.46%), 10Yr (0.71%) and 30Yr (1.30%) sustains higher but seems to lack momentum. The 10Yr has to breach 0.80% in order to move strongly higher towards 1% levels. While below 0.80%, the chances of revisiting 0.40% on the downside are still alive. Similarly, the 30Yr has immediate resistance at current levels and at 1.40% which needs to be broken to see 1.50% and 1.60% on the upside. While below 1.4% the 30Yr can test 1.1% on the downside again.
The German 2Yr (-0.66%), 5Yr (-0.54%), 10Yr (-0.32%) and 30Yr (0.08%) yields have risen sharply across tenors. The 10Yr has risen above -0.40% and can now test -0.20% while it sustains above -0.40%. The 30Yr on the other hand can rise to 0.17% while it sustains above 0%.
The 10Yr GOI (6.4151%) has risen further in line with our expectation and is coming closer to the key resistance level of 6.45%. Cluster of resistances are poised in the 6.45%-6.50% region which we expect to hold and drag the 10Yr GoI lower to 6.35%-6.30% initially and then further lower eventually.
