STOCKS
The recovery in the US Crude Oil prices has given some relief to the equity segment. The major indices have bounced-back from their respective crucial supports mentioned yesterday. This has eased the danger of seeing a fresh fall from here itself and keeps alive the possibility of seeing a near-term rise before the fall happens. We also see a possibility of some narrow sideways consolidation on the indices for some time in the near-term. Dow can remain in the range of 23000-24000 and DAX can trade between 10100 and 10800. Nikkei can trade in the range of 19000-20000. Sensex and Nifty can trade in between 30000-32000 and 9000-9400 respectively. Shanghai is trading at the upper end of its 2800-2850 range and continues remain stronger among the lot to break the range and rise further.
Dow (23475.82, +456.94, +1.99%) is managing to hold above 23000 and has bounced yesterday. However, we still have to see a decisive rise past 24000 in order negate the danger seeing a fall below 23000 and strengthen the bullish case of seeing a rise to 24500-25000. A narrow sideways move between 23000 and 24000/24200 is also a possibility. We will have to wait and watch.
DAX (10415.03, +165.18, +1.61%) is holding well above its 10200-10100 support zone and the index can remain in the sideways range of 10200/100 and 10700/800. A breakout of this range will then determine the next move. While above 10100, we retain our bias bullish to see an upside break above 10700-1800 and a rise to 11000-11300 before we see a fresh leg of fall.
Nikkei (19265.95, +128, +0.67%) did not sustain the break below 19000 and has risen back well from the low of 18858. While above19000, the index can consolidate between 19000 and 20000 and will keep alive the chances of seeing 20300-20500 on the upside. Only a strong break below 19000 will bring in the danger of seeing 17800 on the downside that we had mentioned yesterday.
Shanghai (2844.53, +0.55, +0.02%) is holding well above 2800 as expected and has risen within our preferred 2800-2850 range. We keep our bullish view intact to see a break above 2850 and a rise to 2870-2880 and 2900 in the near-term. Also as we had mentioned earlier, the medium-term outlook is also bullish for Shanghai to test 3050-3100 on the upside eventually while it remains above 2800-2750.
Nifty (9187.30, 205.85, 2.29%) has risen back well above 9000 and can move further higher to 9400 on a strong break above 9200. Only a strong fall below 9000 again will bring back the danger of seeing 8800-8750 on the downside. Broadly as mentioned in the Evening Comments yesterday we will be looking for a range of 8750-9400 on the Nifty.
Sensex (31379.55, +742.84, +2.42%) on the other hand can test 32000 again while it sustains above 31000. The index can trade in the range of 30000-32000 for some time and a break out of this range will then decide the next move.
COMMODITIES
Crude prices have bounced back from lows seen yesterday despite EIA’s report that showed a crude inventory build of 15mln barrels for the week ended 17th April. With lower demand for crude, this rise in inventory levels could be concerning. However, crude trades higher today and could possibly expect an upmove in the next few sessions. Gold and Silver look bullish for the very near term. Copper has risen but still looks weak for the medium term; any rise from current levels if seen is likely to be short lived.
Brent (20.83, June futures) and Nymex WTI (14.07, June futures) both have moved up from lows seen yesterday. The prices tested lows of almost $15 and $6 respectively but we may expect some stability for the near term with direction pointed to the upside.
Gold (1735) bounced back from 1668 on Tuesday and is holding higher for now. Note that 1680-1640 are important support levels which is likely to hold in the near to medium term and take prices higher towards 1780-1800. While above 1680/40, view for Gold is bullish.
Silver (15.41) rose contrary to our expectation of a dip towards 14.50-14.00 and has instead risen back towards 16. Note that 16 continue to hold as important resistance for the near term and while below 16, silver looks bearish towards 14 for the near term.
Copper (2.2875) fell to test 2.2105 but bounced back sharply from there instead of falling lower. It would be important to see if 2.20/21 holds for now to push back Copper prices higher towards 2.30/35 again or sees another dip towards 2.20, to re-trigger a bearish scenario for the medium term. While below resistance of 2.35/40, Copper looks weak.
FOREX
Dollar-Index and USDJPY are stuck in a narrow range unable to decide on further direction. Euro has moved down a bit and could test 1.08 which is to be closely watched to see if it breaks further to the downside. EURJPY is down to re-test crucial support and needs to bounce back to avoid a sharper fall from here. Aussie, Yuan, Rupee and Pound looks weak.
Dollar Index (100.43) is stuck above 100 unable to move sharply on either direction. Currently trading in the middle of the near term range, there are equal chances of moving either towards 99.50 or 101. Immediate view for the next 1-2 sessions looks stable near current levels.
Euro (1.0810) has fallen slightly despite Dollar Index trading stable. A break below 1.08, if seen could take Euro down to 1.0750 in the near term.
Dollar-Yen (107.75) needs to move up sharply from here to establish an upmove from current levels. Near term support at 107 continues to hold for now but the currency pair is stuck in a small sideways range of 107-108. We will have to wait and see which direction it chooses to move from here. Preference is to see a bounce towards 109 or higher eventually.
EURJPY (116.48) has dipped from levels near 117 seen yesterday but trades above important support at 116. While above 116, there are chances to see a rise back towards 117-118 in the medium term. Failure to hold above 116 could trigger a sharp fall below 116 targeting 114 (less likely for now). Watch price action at 116 to decide on further direction.
Aussie (0.6306) has fallen and could be headed towards 0.62 as mentioned yesterday. While below immediate resistance at 0.65, Aussie is likely to remain bearish for the near to medium term.
Pound (1.2332) continues to trade lower and could fall towards 1.22-1.20 in the near term. View remains bearish while below 1.25.
USDCNY (7.0857) has support on the daily candles near 7.08-7.0750 which if holds could slowly push the currency pair higher towards 7.10/12. Watch for a possible break below 7.0750, which could then give some indication of a lower USDCNY. For now Yuan looks weak for the next few sessions.
USDINR (76.68) fell off during the day towards lower support near 76.60. Note that we may consider a trade in the 76.60-76.85 region just now but a test of 77 cannot be negated. Only a sustained fall below 76.60 could give some hope for Rupee strength; else Rupee is likely to weaken in the near term.
INTEREST RATES
The US Treasury yields have bounced yesterday as the recovery in the US Crude Oil prices have given a breather to the market sentiment. However, the bounce is likely to be short-lived as there are key resistances ahead and the broader trend is likely to remain down. The German yields have also bounced and come closer to their key resistances. A break above these resistances will negate our bearish view. The 10Yr GoI can see a near-term bounce and consolidate sideways in a narrow range for some time before it resumes its fall.
The US 2Yr (0.21%), 5Yr (0.36%), 10Yr (0.61%) and 30Yr (1.20%) Treasury yields have bounced across tenors. However, our bearish view remains intact as the upside is likely to be capped. The 10Yr can fall to 0.40% and the 30Yr can test 1.1% in a week or two. The 10Yr and 30Yr has resistances at 0.70%-0.75% and 1.30% respectively which can cap the upside.
The German 2Yr (-0.69%), 5Yr (-0.62%), 10Yr (-0.41%) and 30Yr (-0.04%) yields have risen-back again sharply across tenors. Immediate resistances are at -0.40% on the 10Yr and 0.04% on the 30Yr. A strong rise past these resistances can take the yields higher to -0.20% (10Yr) and 0.15% (30Yr). It will also negate our bearish view of seeing a fall to -0.55% on the 10Yr and -0.20% on the 30Yr.
The 10Yr GoI (6.2241%) is holding above 6.20%. While above 6.20%, an intermediate bounce to 6.30% and a consolidation between 6.20% and 6.30% can be seen for some time. However, our broader view continues to remain bearish to see an eventual break below 6.20% and a fall to 6.10% and 6%-5.95%.
