STOCKS
Global indices are managing to stay afloat. This keeps the chances alive of seeing one more leg of upmove in the major indices before we see a fresh leg of fall. Dow is holding above 23000 and can revisit 24700-25000 levels before coming down again. DAX has bounced above 10700 again and can move up further if it manages to hold higher. Shanghai looks bullish. Sensex and Nifty are closer to their crucial supports which will need a close watch. The indices have to sustain above their supports to avoid further fall. .
Dow (23883.09, +133.33, +0.56%) is managing hold well above 23000 and has moved up further. As we had been mentioning over the last couple of days, while the Dow sustains above 23000, one move leg of rise to 24700-25000 is possible before we see a fresh leg of fall to 22000-21500. A strong rise past 24000 can accelerate the upmove.
DAX (10729.46, +262.66, +2.51%) has bounced back above 10700 again and need to see if it can sustain above it or not. The chances of seeing 10200 on the downside immediately stands reduced now. While above 10700 a revisit of 11000-11350 is possible again. Only a strong break below 10400 will bring back the danger of seeing 10200 on the downside that we had mentioned yesterday.
Nikkei (19619.35) is closed today.
Shanghai (2853.03, −7.06, -0.25%) has bounced back after opening with a gap-down today. The view is bullish to see a rise to 2900-2910 in the coming days. Strong support is at 2800-2780 region which can limit the downside in case if the index moves down from current levels.
Nifty (9205.60, -87.90, -0.95%) has declined and closed just above the crucial support level of 9200. The daily candles look weak and the index might break below 9200 contrary to our expectation for a bounce from here that we had been mentioning for some time. Such a break can drag the index lower to 9000 in the coming days.
Sensex (31453.51, -261.84, -0.83%) has support near current levels and then at 31000. Sensex has to sustain above 31000 to avoid a further fall to 30000-29000 and keep alive the chances of seeing a bounce-back to 32000-33000 levels. We will have to watch closely the price action around 31000 today.
COMMODITIES
Easing of lockdown measures in some parts of the US and European countries as well as India may bring back action in respective economies possibly bringing back some demand for crude in the near term. Crude prices trade higher just now and looks bullish for the near term. Gold and Silver look bearish while Copper could rise from support just below current levels.
Brent (31.03) and Nymex WTI (24.52) continue to rise towards $32.50-35 and $26-30 as expected. We may look at interim resistance near $35 and $30 on Brent and WTI respectively which needs to break first to head towards higher levels and continue the upmove. Next few sessions could see a rise in prices.
Gold (1712.90) trades below 1740 and could trade within 1740-1680 in the near term as mentioned yesterday. A break on either side would be needed to decide on further direction. On the charts, Gold prices look more likely to fall from here and eventually break below 1680.
Silver (15.22) has risen above 15 again but is tilted to the downside for a possible test of 14.50-14.00 in the near term.
Copper (2.3405) has immediate support at 2.30 which if holds could keep price higher and take it up towards 2.40 in the near term.
FOREX
News of court decision challenging the participation of Germany in Europe’s stimulus program pulled down Euro in yesterday’s session while the Dollar Index moved up. USDJPY has dipped too but has important support below current levels. EURJPY, Pound looks weak just now. Aussie may remain stable or see a slight dip but medium term looks bullish. Yuan and Rupee could trade weak against the Dollar today. Overall, weakness in major currencies could be seen globally.
Dollar Index (99.77) has risen to test immediate resistance near 100 and it would be important to see if 100 holds and pushes the index back towards 99-98 in the medium term or not. 100 is important level to watch at just now. Preference would be to see a fall from here.
Euro (1.0838) fell below our expected support at 1.0850 but could be limited to 1.08. A fall below 1.08 is not expected to be seen at the moment and we would prefer a rise back towards 1.09 or higher in the near term. The court has given 3-mnths time to the ECB to justify its purchases under the bond buying programme. We may not expect a prolonged impact on the currency following the news and may expect a bounce soon.
Dollar-Yen (106.30) is trading lower but is holding onto levels above 106. Trading in a very narrow range, we need to see some pick up in volatility within the next few sessions to either see a bounce back towards 107 and higher or to fall below 106 targeting 104 on the downside. Watch price action near 106.
EURJPY (115.22) fell again on Euro weakness. Broad range of 118-114 remains intact with immediate bearish view towards 115 and lower.
Aussie (0.6432) is stuck around 0.64. Immediate downside is limited to 0.6350 while there is enough room for a rise from here towards 0.67-0.68 in the long term. Some stability could be seen in the next few sessions before Aussie attempts to move up. Overall trend looks bullish for the near to medium term.
Pound (1.2437) has been trading within 1.23-1.27 region and is likely to hold on to this range for some more time. In the longer term, we may expect a dip towards 1.21 before a rise back to 1.27-1.30-1.31 is seen in the next 3-4 weeks.
USDCNY (7.0869) opened higher as expected after a 2-session holiday. A rise to 7.10/12 is on the cards and the Yuan looks weak for the near term.
USDINR (75.63) closed at 75.63 yesterday but rose to test 75.85 and 75.93 soon thereafter in the offshore markets. We would continue to see resistance at 75.80 and 76 for now. On the onshore, we may expect a rise in USDINR towards 75.75/80 or even higher while downside could be limited to 75.50. Broader trade range of 75.50-76.00 seems to hold good for now. Narrower range of 75.60-75.85 could see maximum movement during the day.
INTEREST RATES
The US Treasury yields have moved up. Our preferred fall seems to be not happening. Instead we might see further rise for the rest of the week and then a reversal next week. The German yields remain lower and keep our bearish view intact. Any intermediate bounce seen could be short-lived. The 10Yr GoI sustains lower and is heading to test its crucial support from where it can bounce-back again.
The US 2Yr (0.19%) and 5Yr (0.37%) Treasury yields have inched up slightly while those at the far end, the 10Yr (0.66%) and 30Yr (1.33%) have risen sharply. The 30Yr has risen above 1.30%. While it sustains above 1.30%, the chances of seeing 1.10% on the downside stands negated and a rise to 1.43% can be seen first in the near-term. Thereafter the 30Yr can reverse lower again. The 10Yr on the other hand is holding well above 0.60% and has room to test 0.80% on the upside. A strong break below 0.58% is needed to bring back the bearish view of seeing 0.50%-0.40% into the picture.
The German 2Yr (-0.82%) and 5Yr (-0.78%) yields have declined further while those at the far-end. the 10Yr (-0.58%) and 30Yr (-0.14%) remain lower but stable. We retain our bearish view of seeing -0.70% on the 10Yr and -0.30% on the 30Yr in the coming weeks. Any intermediate bounce in the yields could be short-lived.
The 10Yr GOI (6.0727%) remains lower and keeps our bearish view intact of seeing 6.00% and 5.95% on the downside. An intermediate support is at 6.03% (revised lower from 6.05% mentioned in the Evening comments yesterday) which will also need a close watch today to see if the expected bounce can happen from here itself without seeing 6%-5.95% on the downside.
