STOCKS
Dow has risen furtehr and is heading towards 28000 from where we expect a corrective fall. DAX and Nikkei sustain higher but seem to lose momentum. The outlook however continues to remain bullish for both the Nikkei and DAX. Shanghai continues to consolidate below 2950. Sensex and Nifty need to sustain above their near-term supports in order to move up from here straight away. Else a corrective dip is possible first before the rally resumes.
Dow (27572.44, +461.46, +1.70%) has moved up further and is heading towards 28000 in line with our expectation. As mentioned yesterday, the level of 28000 is an important resistance which can hold on its first test. We expect to see a corrective fall from 28000 towards 26500-26000 going forward.
DAX (12819.59, −28.09, -0.22%) remains higher and continue to look bullish though it seems to lack momentum. We retain our bullish view of seeing a rise to 13500-13800 in the coming weeks from where a corrective fall is possible. 12700-12500 can be a good support zone now.
Nikkei (23065.21, −112.89, -0.49%) sustains above 23000 but is not showing momentum to move up further. While above 23000, our bullish view is intact to see a test of 24000 and then a corrective fall from there in the coming days.
Shanghai (2947.42, +9.65, +0.33%) continues to trade below 2950. As mentioned yesterday, a strong break above 2950 is needed to take the index further higher to 2975. While below 2950, the Shanghai can trade in a range of 2925-2950 (narrow) or 2900-2950 (wider) for some time before a breakout above 2950 happens.
Nifty (10167.45, +25.30, +0.25%) broke above the resistance level of 10160 as expected but had come-off from the high of 10328.50 yesterday. The broader picture is bullish to see a rise to 10500-10750 in the coming days. A strong break/close above 10200 can trigger this rise. Also, the index has to sustain above 10000 in order to avoid a corrective fall to 9800.
Sensex (34370.58, +83.34, +0.24%) on the other hand remains bullish while above 34000 to test 36000 on the upside. In case of a break below 34000, the chances of seeing a dip to 33000 will come into picture again before the rally to 36000 happens.
COMMODITIES
Crude prices dipped back yesterday after Saudi Arabia said that an extension of output by OPEC+ nations will not include the additional voluntary cuts by the kingdom and the other Gulf nations (including Kuwait and UAE). This indicates that although the OPEC+ agreed to extend the agreed cut through July, the Gulf nations may restrict from further voluntary cuts. Crude prices have dipped slightly but continue to keep the upside possibilities intact for now. Gold has risen back to 1700+ and could test resistance at 1720 before falling again. Silver could move up slightly while support near 17.25/50 holds. Copper could face rejection from resistance zone above current levels but the fall could be limited with bullish view intact for the longer run.
Brent (41.25) has dipped slightly after testing 43.41 but is continuing to keep the medium term uptrend intact for a rise towards $45, filling the gap seen in the first week of March’20 where the price opened with a gap down. We may expect some rejection from 45 before the price rallies further towards 50 or higher in the longer run.
Nymex WTI (38.61) fell after briefly testing 40.41 on the upside, in line with our mentioned target of 41. A rise towards 41-44 could be on the cards for the medium term with some possible interim dips towards 38-36.
Gold (1703.30) was again pushed back to higher levels by support at 1680, not letting the price weaken further. This 1680-1660 levels are important and needs to break to let the price fall towards lower levels in the medium term. For the very near term we may expect a test of 1720 on the upside before another dip is seen towards 1680 again. A straight fall in Gold just now would be difficult while above 1660/80.
Silver (17.88) tested 17.55, the trend support on the 3-day chart and while that holds, we may expect a bounce back towards 18.5-19.0. Note that 19 is a crucial resistance just now. Movement in the 17.25-18.5 looks possible for the near term.
Copper (2.5825) is stable below 2.60 just now. As mentioned yesterday, 2.60-2.65 is an important resistance zone which could hold and keep price low for some time. However, in the longer run, Copper looks bullish from here.
FOREX
Dollar Index trades stable while Euro attempted to rise again above 1.13. Dollar Yen has fallen sharply after a test of 110 seen a couple of days ago and continues to look bearish just now before another attempt to bounce back. EURJPY and Pound also look bearish. Aussie has immediate resistance at current levels and we wait to see if it manages to break to the upside or falls back from here. Yuan is strong above 7.08 and could pull down USDINR below 75.50 towards 75.30/40.
Dollar Index (96.70) is down slightly. Note that 96.27 is an important support below current levels and while that holds, a gradual bounce is more likely towards 97.65 at least.
Euro (1.1288) is again falling after a test of 1.1315 in the early morning trade today. Supports are seen at 1.1250 and lower at 1.1150. Watch if 1.1250 holds just now to push the exchange back to higher levels, else a fall towards 1.1150 could be likely before another rally sets in.
EURJPY (122.06) is in a correction phase and we may expect a test of 121.40 on the downside before a bounce is seen.
Dollar-Yen (108.12) has fallen after almost testing 110 on Friday. We may now expect a dip to 108.50 before a bounce looks possible in the longer run.
Pound (1.2720) is falling from 1.2726 and could see some corrective dip in the near term towards 1.2648 or slightly lower.
Aussie (0.6999) seems to be breaking above the immediate resistance at 0.70 and while the currency manages to rise further from here, we may expect the rally to continue towards 0.72-0.75 in the medium term. However, we would be cautious to see any sharp dip from current levels before the rally resumes later.
USDCNY (7.0750) has fallen below 7.08, contrary to our expectation of a bounce back to 7.10. Now while the pair trades below 7.08, we may open up chances of further fall towards 7.06/05 in the near term.
USDINR (75.5375) closed above 75.5375 despite 75.60/75 resistance holding well for now. The strength in Euro, Yuan and Nifty is unable to impact the Rupee positively. While we may still keep some hopes of seeing a fall towards 75.40/30 at least during the day, preference is for a fall to 75 in the medium term. While RBI continues to buy around 75, we may have to see ranged USDINR within 75.40/30-75.75 in the near to medium term.
INTEREST RATES
The Treasury yields have reversed lower across tenors. The trend remains up. But a near-term correction looks likely to be seen now before a fresh leg of upmove begins. The US Federal Reserve has modified its lending programme by lowering the minimum and increasing the maximum amount that can be lent. The German yields can also see a near-term corrective dip before resuming its overall uptrend. The 10Yr GoI looks mixed and can consolidate sideways for some time.
The US 2Yr (0.22%), 5Yr (0.43%), 10Yr (0.85%) and 30Yr (1.62%) Treasury yields have come-off across tenors. The trend is up and the bullish view is intact. However, an intermediate dip to 1.55%-1.50% on the 30Yr and 0.80%-0.75% on the 10Yr cannot be ruled out before the uptrend resumes. The broader view remains bullish to test 1% (10Yr) and 1.80% (30Yr) on the upside in the coming weeks.
The German 2Yr (-0.64%), 5Yr (-0.58%), 10Yr (-0.32%) and 30Yr (0.20%) reversed lower across tenors. A near-term corrective dip to 0.15%-0.10% on the 30Yr and -0.40% on the 10Yr is possible before a fresh leg of upmove begins. The broader view remains bullish to see a test of 0.35% (30Yr) and -0.20% (10Yr) on the upside in the coming days.
The 10Yr GoI (6.0234%) is still stuck in between 6% and 6.05%. and keeps the near-term view mixed. As mentioned yesterday 5.95%-6.10% can be the range that can be expected in the coming days and within this range a dip to 5.95% can be seen first and then a bounce-back is possible from there.
