STOCKS
Equities have risen and are trading higher. The near-term outlook is bullish to move further higher for the rest of April. But beware. Market could “Sell in May and Go Away” as we see crucial resistances coming up on the major indices that can halt the current upmove and trigger a fresh leg of fall. Dow has resistance in the 24500-25000 region. For DAX it is at 11000-11300. Nikkei has an immediate resistance at 20500 and another slightly higher at 21500. Sensex and Nifty have immediate resistances at 32000 and 9400-9500.
Dow (24242.49, +704.81, +2.99%) has risen above 24000 and keeps near-term bullish view intact to test 24500 and even 25000. Important resistances are at 24500, 24700 and 25000 which can cap the current corrective rally. We expect the Dow to reverse lower anywhere from the 24500-25000 region targeting 23000-21000 levels again. We will have to watch closely the price action in the 24500-25000 region.
DAX (10625.78, +324.24, +3.15%) has risen towards the upper end of our preferred 10100-10700 range. As we had mentioned last week, the bias is bullish within the range to see a break above 10700 and rise to test the important resistance levels of 11000 and 11300 (revised higher from the level of 11200 mentioned on Friday) in the near-term. While 11000-11300 holds, a fresh fall to 10000 can be seen again. As such the price action in the 11000-11300 region will need a close watch.
Nikkei (19715.42, −181.84, -0.91%) has closed above 19500 last week and sustains higher in line with our expectations. As we had mentioned earlier, while above 19500 a rise to 20300-20500 can be seen in the coming days. A strong rise past 20500 will see the rally extending to 21500 – a crucial resistance that can cap the upside of the current upmove and trigger a reversal.
Shanghai (2842.76, +4.27, +0.15%) sustains above 2825 but is yet to breach 2850 which is needed to pave way for a test of 2870-2880 and 2900 on the upside. As we had mentioned last week, the bigger picture is bullish and the current leg of upmove has the potential to take the Shanghai to 3000-3100 over the medium-term. 2825-2800 is an immediate support and 2750-2730 is a slightly deeper support on the downside.
Sensex (31588.72, +986.11, +3.22%) and Nifty (9266.75, +273.95, +3.05%) have risen well on Friday contrary to our expectation to dip first before moving higher. 9400-9500 on Nifty and 32000 on Sensex are crucial levels to watch now which if broken can take the indices higher to 9600-9700 (Nifty) and 33000-34000 (Sensex).
COMMODITIES
With concerns of demand reduction in oil still having downward pressure on oil prices, any positive impact from the production cut announcement by OPEC+ last week has been neutralized. We may have to expect crude prices to remain lower for some more time before a possible bounce takes place. Gold and Silver prices have dipped and could see fall in the near term. Copper is trading a bit higher today and could test crucial resistance above current levels from where a rejection looks possible in the medium term.
Brent (27.83) has dipped slightly and could test $25 in the near term before bouncing back from there in the medium term to levels above $30. Nymex WTI (23.70) has fallen more than the fall seen in Brent prices. We may expect a maximum downside of $23-20 on Brent and $19-17 on WTI before attempting to bounce back sharply for a possible reversal. Immediate view for crude prices is stable to bearish with limited scope on the downside.
Gold (1696.30) and Silver (15.38) have both dipped slightly from levels seen on Friday. Gold looks bearish and could fall towards 1640-1620 while below 1720. Silver has come off well from resistance at 16.50 seen on the daily candles and while that holds, a fall towards 15.0-14.50 cannot be negated. Near term is bearish for both Gold and Silver.
Copper (2.3490) is likely to test 2.40, the earlier support turned resistance and could face stiff rejection from there which could take it back towards 2.30-2.25 in the medium term. Watch price action in the 2.35-2.40 region.
FOREX
Dollar Index is likely to remain ranged for sometime with possibility of a rise from current levels, indicating a fall in Euro and a possible rise in Dollar-Yen. Aussie and Pound look stable just now. Yuan also is likely to trade near current levels but we would keep a close watch on Rupee to see if it strengthens further from current levels.
Dollar Index (99.90) has immediate support at 99 and while that holds, we may expect a near term range trade in the 101-99 region with an initial rise to 101before again coming off from there.
Euro (1.0861) is holding above interim support mentioned near 1.0850 and 1.0830 but if the Dollar Index moves up from here we would be cautious of a fall towards 1.08-1.0750 again in the near term.
Dollar-Yen (107.81) has supports near 107.50 and 107 respectively and while they hold, we may expect USDJPY to rise back towards 109.50-110 in the near term.
EURJPY (117.10) has support near 117 and lower near 116 which if hold could see a bounce back towards 118-119 in the near term. View is bullish while above 116.
Aussie (0.6344) is likely to remain bearish while below resistance at 0.65. We may either expect a fall towards 0.62 or a ranged trade in the 0.63-0.65 region in the near term. Only a break above 0.65, if seen and sustains would bring in a rise towards 0.68 in the longer run. Immediate view is bearish while below 0.65.
Pound (1.2480) could see interim support at 1.24 which could hold for some time. Pound may rise towards 1.27 to the upside but a break on either side would be needed to get some more clarity on further direction.
USDCNY (7.0748) has dipped slightly but while above 7.05, chances of seeing further weakness in Yuan persists.
USDINR (76.3950) came down sharply after opening near 76.56 on Friday. Closing below 76.50 for the previous week might keep the currency pair lower today possibly taking it down towards 76.20/00 but a gradual rise back towards 76.50/60 or higher could be seen by the end of the week unless a sharp fall below 76 is seen. Near term looks stable to bullish.
INTEREST RATES
The US Treasury yields remain lower and keep our bearish view intact. We expect the Treasury yields to fall further this week. The German yields have also dipped further and continue to remain bearish. The 10Yr GoI has broken below 6.40% as expected and can fall to 6.20%-6.10% on a break below 6.30% in the coming days.
The US 2Yr (0.20%), 5Yr (0.36%), 10Yr (0.64%) and 30Yr (1.26%) Treasury yields remain lower and have dipped across tenors on Friday. The bearish outlook is intact. The 10Yr can test 0.60%-0.58% initially and then 0.40% eventually. 0.80% is an important resistance on the 10Yr. The 30Yr can dip to 1.2% now and then to 1.1%. The resistance on the 30Yr is at 1.40%.
The German 2Yr (-0.73%), 5Yr (-0.67%), 10Yr (-0.48%) and 30Yr (-0.07%) yields continue to trade lower and keep our bearish view intact. As we had mentioned last week the 10Yr can dip to -0.55% and -0.60% initially and then to even -0.80% on a break below -0.60%. The 30Yr on the other hand can fall to -0.20% and even -0.40% while it remains below 0%.
The 10Yr GoI (6.3479%) has declined below 6.40% on Friday as expected. The outlook is bearish and a further fall to 6.20%-6.10% can be seen on a break below 6.30%. However, while above 6.30%, a sideways move between 6.30%- and 6.45%-6.50% can be seen for sometime before our preferred fall to 6.20%-6.10% happens.
