STOCKS
Dow remains stable and need to sustain above 23000 to avoid a fresh fall and also see one more leg of upmove. DAX has declined sharply and is bearish to fall further. Sensex and Nifty have tumbled yesterday but have key supports coming up which will need a close watch today. We expect the supports on the Sensex and Nifty to hold and see a bounce in these indices. SGX Nifty (9384, +144, +1.56%) is trading higher and could give some relief for the Sensex and Nifty today. Nikkei and Shanghai are closed today.
Dow (23749.76, +26.07, +0.11%) remained stable yesterday. As mentioned yesterday, the Dow has to sustain above 23000 and rise past 24000 decisively again in order to see one more leg of upmove to test 24700-25000. A strong break below 23000 will negate that chance and in turn will drag the Dow to 22000-21500. We will have to wait and watch.
DAX (10466.80, −394.84, -3.64%) has tumbled below 10700 – a key support level that we had mentioned yesterday. It is now bearish to test 10250-10200 on the downside. A break below 10200 can drag it to 10000 – an important support to watch that can halt the current fall.
Nikkei (19619.35) is closed today and tomorrow and will resume trading from Thursday.
Shanghai (2860.08) is closed today.
Nifty (9293.50, -566.40, -5.74%) had tumbled yesterday but might support in the 9250-9200 region today. While this support zone holds, a bounce to 9600-9700 is possible on a subsequent break above 9400. But a break below 9200 can drag the Nifty lower to 9000 – the next important support level. For today we will be watching closely the price action around 9250-9200.
Similarly, Sensex (31715.35, -2002.27, -5.94%) can find support at 31000. While 31000 holds, we can see a bounce-back move to 32000-33000 again in the near-term.
COMMODITIES
Crude oil futures traded higher yesterday as announcements came in from various US oil firms of voluntary production cuts as the global storage capacity concerns loom along with weak demand. The earlier agreed OPEC+ cuts have also now gone into effect and could gradually help crude prices to recover as lockdown gets relaxed and lifted slowly in some parts of the world. Gold looks ranged while Silver could fall from current levels. Copper is bullish for the near term to test crucial resistance from where a fall could be possible in the medium term.
Brent (28.42) and Nymex WTI (21.82) have risen well and could continue to rise in the near term. Brent needs to remain above 27.50 to target further upside towards $32.50-35 and WTI needs to trade above $20 to eventually target $26-30 in the medium term. Overall view is bullish for crude prices in the near term.
Gold (1704.30) trades lower but is stuck above 1700. A gradual break below 1700 could be expected in the next few sessions to pull price down to 1680. Immediate range of 1740-1680 looks likely both being immediate resistance and support levels. A break on either side would be important to set a fresh direction for the medium to long term.
Silver (14.89) is trading below 15 but we need to watch price action closely to see if the fall sustains to take it lower towards 14.50-14.00 in the near term. A break below 14.65/70 would trigger a fall towards 14.50/00 in the near term. While below 16, the broader outlook for Silver is bearish.
Copper (2.3330) has risen from levels near 2.29 seen yesterday and if the rise sustains, it could re-target to test 2.35/40 in the near term. Note that the crucial resistance at 2.40 still holds and could produce a strong rejection.
FOREX
Dollar Index trades strong pulling down Euro a bit but watch support near 1.09-1.0850 on Euro which could hold in the near term and produce a bounce. USDJPY looks stable just now but could fall in the near term. Aussie and Pound look bullish. USDCNY may rise tomorrow when the Chinese markets open. USDINR could trade higher today but could face stiff resistances above current levels.
Dollar Index (99.42) has risen a bit but could face rejection from immediate resistance near 99.60/80 which could produce a rejection to 98.50 or lower in the coming sessions. Overall medium term view looks bearish. However, we would wait for confirmation of a price break below 98.50.
Euro (1.0908) has dipped on Dollar strength. Support zone of 1.0900-1.0850 looks strong just now and could possibly produce a bounce in the near term. Immediate view is bearish within a broader view of a rise from support levels.
Dollar-Yen (106.62) looks bearish while below 107.50 and could fall towards 106 slowly. In the very near term 106 may hold just now and we may expect trade in the 106-107.50 region for some more time. Overall a gradual fall towards 104 could be on the cards for the medium to long term.
EURJPY (116.28) has held well below 118 and looks bearish for the near term towards 116.0-115.5.
Aussie (0.6447) has risen towards 0.64-0.65 as expected. While support near 0.6350-0.6360 holds, we may expect the upside to continue for Aussie going forward. While above 0.64, Aussie may rise towards 0.66-0.67 or even 0.68 in the medium to long term.
Pound (1.2463) could get support at 1.24 just now and attempt to bounce back towards 1.25/1.27 in the near term.
USDCNY (7.0601) is closed today but would be interesting to see where the market opens tomorrow. A possible gap up opening could be expected. 6.10/12 would be crucial levels to watch for the near term.
USDINR (75.7150) rose sharply to close higher mainly on US-China conflict concerns. Important resistances are seen at 75.80 and 76.00 respectively which if hold could produce a fall towards 75.50 or lower in the near term. We may not look for a rise above 76 just now.
INTEREST RATES
The US Treasury yields remains have inched higher within its narrow sideways range. We expect the sideways range to continue. The Treasury yields can break the range on the downside and dip first before seeing a sustained bounce. The German yields have bounced but might not sustain higher. We expect them to reverse lower again and keep the bearish view intact. The 10Yr GoI keeps our bearish view intact. The 10Yr GoI can dip to test its key support zone and then can reverse higher in the coming days.
The US 2Yr (0.18%), 5Yr (0.36%), 10Yr (0.63%) and 30Yr (1.28%) Treasury yields have inched up slightly across tenors within their narrow range in which they have been trading over the last couple of weeks. Out view remains the same. We expect the the 10Yr to test 0.50%-0.40% (10Yr) on the downside before bouncing back again. A break below 0.58% can accelerate the fall. The 30Yr can fall to 1.10% first and then reverse higher. We reiterate that the 10Yr and 30Yr has to rise past 0.75% and 1.30% decisively to negate our near-term bearish view and move higher from here itself.
The German 2Yr (-0.78%), 5Yr (-0.76%), 10Yr (-0.57%) and 30Yr (-0.14%) have bounced-back slightly yesterday across tenors. However, the broader view remains bearish and this bounce-back move is likely to be short-lived. We retain our bearish view of seeing a fall to -0.70% on the 10Yr and -0.30% on the 30Yr in the coming weeks.
The 10Yr GoI (6.0846%) had declined below 6.10% and keeps our near-term bearish view of seeing 6%-5.95% on the downside. 6%-5.95% is a strong support zone which is likely to hold and produce a bounce towards 6.20% and 6.30% again eventually.
