STOCKS
Equities look mixed. While the Dow sustains above 23000 it has to breach 24000 to move further higher. Broadly we prefer it to remain in the range of 23000-24500 (narrow) or 22500-25000 (wider) range for a few weeks. DAX has strong resistances ahead while below which it looks vulnerable to break its 10200-11000/11200 range on the downside. Nikkei is holding above its key support and can move up while it sustains higher. Shanghai though has bounced today, can still see a corrective dip before resuming its overall uptrend. Sensex and Nifty will have to sustain above their crucial support levels of 31000 and 9000 respectively in order to prevent a fresh fall.
Dow (23685.42, +60.08, +0.25%) is managing to sustain higher above 23000. As mentioned on Friday, it needs to be seen if it can breach 24000 now or not to move further higher towards 24500. Broadly as mentioned last week, we will be looking for a sideways move in the range of 23000-24500 (narrow) or 22500-25000 (wider) for some time.
DAX (10465.17 +128.15, +1.24%) is holding above 10400 but might face resistance in the 10700-10800 region. A strong break above 10800 is needed to take it higher towards 11000-11200. While below 11800, the bias is negative to see a break below 10200. Such a break can drag the DAX lower to 10000 initially and even 9600-9500 eventually.
Nikkei (20166.92, +129.45, +0.65%) has bounced-back above 20000 thereby easing the danger of seeing a fall to 19500-19000 that we had mentioned on Friday. . While above 20000, a rise to 20500 and even 20800 (on a break above 20500) is possible this week. A strong close below 19900 is needed to bring back the danger of seeing 19500-19000 on the downside.
Shanghai (2880.86, +12.40, +0.43%) has bounced back above 2875 again and need to be seen if it can sustain above it. However, while below 2900, we continue to prefer seeing a corrective fall to 2850-2825 and then a fresh leg of upmove to resume the overall uptrend and target 2950 on the upside. For the medium-term, we retain the target of 3050.
Nifty (9136.85, -5.90, -0.06%) fell further on Friday in line with our expectation. The crucial support level of 9000 is holding well as of now. While above 9000, we keep our view of seeing a rise back to 9300-9400 immediately and to see a sideways range of 9000-9500/9600 intact. Our view will go wrong on a strong break below 9000 (less preferred) which will then pave way for a fall to 8800 and 8500. We will be watching closely the price action around 9000.
Similarly, Sensex (31097.73, -25.16, -0.08%) will have to sustain above 31000 in order to move up towards 32000-33000 again. While we prefer it to sustain above 31000, a break below this key support will prove our view wrong and will drag the Sensex lower to 30000-29000 in the coming days.
COMMODITIES
Overall all commodities trade higher today and signals bullishness for the near term. Sign of further demand recovery and along with deepening production cuts from the non-OPEC+ countries seem to be helping well to boost a rise in crude prices. Data release on Friday showed that China numbers for daily crude use rose for April as refineries started their operations. Watch for immediate and interim resistances on crude prices which if breaks on the upside could trigger sharp upmove in the coming weeks. Gold and Silver are clearly in an uptrend and are potentially bullish. Copper is trading below 2.40 and could remain in a sideways range below the crucial resistance at 2.40 for the near term.
Brent (33.75) and Nymex WTI (30.73) have both risen sharply in line with our expectations. If WTI sustains a rise above $30 and Brent manages to rise past $35, we may expect the recovery to continue and expect a further rise in the coming weeks.
Gold (1772.50) seems to have broken on the upside after a triangle pattern formation on the daily candles and signals further bullishness in the near term towards 1800 initially and maybe higher towards 1840 in the medium to longer term.
Silver (17.67) rose above our mentioned 16.50 on Friday and moved up sharply breaking out from the narrow sideways consolidation. A rise towards 19 could be on the cards for the near term. View is bullish.
Copper (2.3615) is trading in the green but finding difficulty in moving up above 2.40 and sustaining higher. While below 2.40, trade within 2.40-2.25 looks more likely.
FOREX
Dollar Index and Euro trade stable while USDJPY trades just above important support at 107. EURJPY looks stable too for the near term. Aussie may fall while Pound has support below current levels. Yuan looks weak which could impact Rupee weakness too in the very near term.
Dollar Index (100.30) has been in a sideways range and could trade in the 98.70-100.82 region for the near term. A break on either side would be needed to decide further direction in the longer run.
Euro (1.0822) is stable near levels seen on Friday. We may continue to look at important support in the 1.0750 or 1.07 region which could keep the currency higher and lead to eventual rise towards 1.09 and higher in the medium term. Near term view is bullish.
Dollar-Yen (107.11) is trading slightly lower. But while above support at 107, the pair can have room to rise towards 108-109 or even higher. Watch support at 107.
EURJPY (115.94) is stable too and as mentioned on Friday, we may expect a test of 114 while below 117. Thereafter a sharp bounce could be possible.
Aussie (0.6445) continues to trade below immediate resistance near 0.65 and while the currency trades lower, we may expect a fall in the near term. Also while Copper trades below 2.40, Aussie may not get a boost from the commodity price. Expected range for the near term is likely to be 0.65-0.6350.
Pound (1.2105) has fallen as expected but could face interim support from 1.2050-1.2100 just now to see a corrective rise in the near term. In the medium to long term, the direction still points to the downside and is potentially bearish.
USDCNY (7.1023) has moved up and looks bullish for the near term towards 7.12.
USDINR (75.58) has immediate resistance at 75.60 which looks likely to break on the upside to test 75.80 before falling from there. Watch price action near 75.60 and higher near 75.80 before a fall from there is seen towards 75.30/25.
INTEREST RATES
The US Treasury yields have inched slightly higher on Friday compared to the levels seen on Thursday. However, the broader picture remains negative and we expect the yields to come down further in the coming days in line with our expectation. The German yields continue to trade lower and keep our bearish view intact to test their key near-term supports. The 10Yr GoI can find support in the 6.05%-6% region now and is likely to move higher this week.
The US 2Yr (0.14%) and 5Yr (0.31%), 10Yr (0.64%) and 30Yr (1.33%) have inched slightly higher on Friday last week compared to the levels seen on Thursday. However, we retain our near-term bearish view. The 10Yr can dip to 0.60%-0.58% – a key support zone. As we had mentioned last week, a break below 0.58% can drag the 10Yr lower to 0.40% eventually. The 30Yr can dip to 1.23%-1.20% in the near-term. A break below 1.20% will see the fall extending to 1.10%.
The German 2Yr (-0.76%), 5Yr (-0.74%), 10Yr (-0.54%) and 30Yr (-0.10%) yields continue to trade lower and stable. We retain our bearish view. We expect the 10Yr to test -0.60% and the 30Yr to dip to -0.20% from current levels. As mentioned on Friday, whether the yields break below -0.60% (10Yr) and -0.20% (30Yr) or not will determine the next leg of move. Our preference is to see a break below -0.60% on the 10Yr and -0.20% on the 30Yr eventually.
The 10Yr GoI (6.0812%) is likely to find support in the 6.05%-6.0% region this week. We expect the yield to sustain above 6% and move up towards 6.20% in the coming days.
