Gold price, Rupee and Equity Markets Outlook I Details explained by ICICI Securities

Gold price started Monday’s trade on a flat note and fell gradually during most of the session till a fresh 11 month low of Rs 44150. Prices have been falling gradually in the last few weeks as a firmer dollar and higher US Treasury yields continued to diminish the metal's appeal. Therefore, ICICI Securities expect gold prices to remain weak towards Rs 44000 level in the short term.
 
The rupee remained above Rs 73.30 levels as the Dollar index moved above 92 levels. We feel the rupee would continue to depreciate and a move towards Rs 73.6 cannot be ruled out. The dollar-rupee March contract on the NSE was at Rs 73.39 in the last session. The open interest increased marginally by 4.6% for the March series. Intra-day strategy is to Buy US$INR in the range of Rs 73.20 – Rs 73.22. 

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The daily price action formed a high wave candle carrying a higher high-low formation, indicating continuance of stock specific action amid elevated volatility.  The lack of faster retracement on either side signifies prolongation of ongoing consolidation (15300-14500) with a positive bias amid stock specific action that will help index to form a higher base above key support threshold of 14500 and gradually pave the way to head towards 15500 in coming weeks. In the process, we expect broader markets to endure its relative outperformance. Hence, any dips from here on should be capitalized to accumulate quality large caps and mid caps stock to ride the next leg of up move.
 
Key point to highlight is that the ongoing broader markets outperformance has been backed by strengthening of market breadth as currently 78% of Nifty midcap and small cap components are sustaining well above their 50 days EMA compared to February reading of 72%. The sustenance above 50 days EMA along with rejuvenation market breadth signifies inherent strength that augurs well for durability of ongoing relative outperformance. The Nifty midcap index is hovering around 52 weeks EMA, meanwhile, small cap index is still 12% away from its life-time highs. Thereby, ICICI Securities expect small caps to witness acceleration in catch up activity within broader market space.