STOCKS
The increasing spread of corona virus cases continue to weigh on the sentiment and keep the equities under pressure. The major indices have room to test their key supports from where we expect them to reverse higher again. Dow has come down as expected and has supports at 25000 and 24500. DAX has supports at 11900 and 11600, Nikkei has at 22000 and 21500. Shanghai can consolidate sideways before resuming the uptrend. Sensex and Nifty will have to sustain above 35000 and 10200 in order to move up from here itself and avoid a corrective fall.
Dow (25015.55, −730.05, -2.84%) has come down sharply to 25000. As we had mentioned last week 25000 and 24500 are important supports now which we expect to hold and trigger a rise to 27000-28000 and even higher levels before we see a deeper correction eventually. We reiterate that only a strong fall below 24500 will negate the bullishness and bring in the chances of seeing 23500-23000 on the downside.
DAX (12089.39, −88.48, -0.73%) is struggling to breach 12200 and remains vulnerable to see a corrective fall to 11900-11600 first in line with our expectation. Thereafter we expect the DAX to begin a fresh leg of rally targeting 12800 and 13000-13200 in the coming weeks. As we had mentioned last week, while above 11600, the broader uptrend is intact.
Nikkei (22474.65, +214.86, +0.97%) is not gaining momentum to breach 22500 and resume the uptrend. Immediate support is at 22000 and a slightly deeper one is at 21500 which can limit the downside. While above 21500 our bullish view is intact to see 23000-23200 initially and then 23800-24000 eventually over the medium-term.
Shanghai (2962.17, −17.38, -0.58%) can dip to test 2950-2940 in the coming sessions. A sideways consolidation between 2950-2975 (narrow) or 2940-2985 (wider) is possible before our preferred rise to 3025-3050 happens
Nifty (10383, +94.10, +0.91%) sustained higher on Friday but seem to lack strength. It will have to be seen if it can sustain above 10200 in order to move up to 10500-10600 from here itself. A break below 10200 can drag it to 10000 or even lower before we see a fresh leg of rise. Broadly, 10200 will be an important level to watch.
{Sensex (35171.27, +329.17, +0.94%) on the other hand will have to sustain above 35000 to move up from here itself. Else a corrective fall to 34000-33000 can be seen first before the uptrend resumes.
COMMODITIES
Crude prices are in a sideways range and could continue to trade in a narrow range for the near term. Gold bounced back from intra-day low of 1754 seen on Friday and is bullish for the near term. Silver is bullish while above 17.50. Copper needs to sustain a rise past 2.70 to move up further; a small pull back from here could be possible just now before a further rise is seen in the longer run.
Brent (40.32) and Nymex WTI (37.86) are trading in a narrow range and could be seen in a consolidation phase for some more r\sessions. Brent may trade in the 45-37.50 region in the near term while WTI could be seen in the 41-35 zone. Note that a rise above 45 and 41 would be needed to initiate further bullishness from here for in the longer run.
Gold (1781.60) saw an intra-day low of 1754, breaking below the 1760 support but could not sustain lower levels and instead saw a bounce back to current levels. While above 1760, we may not see an immediate fall in the Gold prices for the near term. A test of 1800 could be on the cards for the near term.
Silver (18.20) is likely to trade in the 17.5-18.5 region for the near term. 17.5 is holding well as a support just now and while that holds, we keep upside chances open for a test of 19. Vies is ranged to bullish while above 17.5.
Copper (2.6925) has risen as expected and if it manages to rise above 2.70, it may move up further towards 2.80. Else a short corrective bounce from 2.70 could be possible.
FOREX
Overall currencies are stable. Dollar Index and Euro are likely to remain ranged while Dollar Yen may move up slightly from current levels to test immediate resistance level. Pound and Aussie may be bullish from current levels. Pound needs to sustain above 1.23 to keep bullish view intact else could see a fall towards 1.22/21 in the medium term. Yuan looks weak towards 7.10 while USDINR has to break below 75.50 to see further Rupee strength; else a rise back to 75.75/80 could be on the cards.
Dollar Index (97.32) is finding it difficult to rise past 97.74 and while the index trades lower, we could see a broad range of 97.74-96.80 in the near to medium term.
Euro (1.1240) has immediate support near current levels and could rise from here which could be limited to 1.13. A fall below 1.12 could drag it lower to 1.1150 in the near term. Overall broad trade region of 1.1150-1.1300 is likely to hold for the next few sessions.
EURJPY (120.48) has scope for a fall to 119 or even 118.5 on the daily charts before a rise is seen back towards 120-121 in the medium term. Immediate view is bearish.
Dollar-Yen (107.15) has scope for a near term rise to 107.56/66 within a broad range of 106-108 mentioned last week. A dip from 107.66 could be possible in the near term. Immediate view from current level is bullish.
Aussie (0.6882) has immediate support on the very near term charts and could rise towards 0.70/71 in the near term. View is bullish.
Pound (1.2366) has immediate support near 1.23 which needs to hold to keep the currency pair higher for the near term and eventually take it higher towards 1.24. Failure to bounce from 1.23 would open up chances of seeing a fall towards 1.22 or even 1.21.
USDCNY (7.0786) is bullish while above 7.07/06 and could be headed towards 7.10 in the near term.
USDINR (75.6350) needs to sustain a break below 75.50 to be able to move down further towards 7.25/20.
INTEREST RATES
The surge in corona virus cases keeps the market cautious. As a result, the US Treasury yields remain under pressure. The Treasury yields have come down in line with our expectation. They have room to test their key supports in the coming days from where we expect then to reverse higher again. The German yields have come down in line with our expectation and look bearish to fall further. The 10Yr GoI (06.45 GS 2029) looks mixed in the near-term and can continue to trade sideways.
The US 2Yr (0.17%), 5Yr (0.30%), 10Yr (0.64%) and the 30Yr (1.37%) Treasury yields have come down further in line with our expectation. 1.30%-1.25% (revised lower from 1.40% mentioned on Friday) on the 30Yr and 0.60%-0.58% on the 10Yr are important supports from where we expect the yields to reverse higher again and keep our broader bullish view intact. Our view will go wrong if the yields decline below 1.25% (30Yr) and 0.58% (10Yr). We will have to wait and watch.
The German 2Yr (-0.72%), 5Yr (-0.72%), 10Yr (-0.48%) and the 30Yr (-0.05%) have dipped further as expected. The 10Yr is heading towards -0.50% and the 30Yr is moving down to -0.10% in line with our expectation. The outlook is bearish and the fall can extend to -0.20% (10Yr) and -0.60% (30Yr) in the coming days.
The 10Yr GOI (06.45 GS 2029, 6.0179%) looks mixed and can oscillate within our preferred range of 5.9%-6.05% for some more time. Within this rang, the bias is to see a rise to 6.05% in the coming sessions while the yield sustains above 6%.
The 10Yr (05.79 GS 2030, 5.8916%) yield on the other hand has the potential to test 5.9250% and 5.95% on the upside. A strong rise past 5.9250% can accelerate the upmove.
