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

Gold prices opened sharply lower with a gap on Friday and recovered gradually during most of the session till a high of Rs 46490. Prices have been under pressure in the last few weeks as US treasury yields continued their march higher, souring the non-interest bearing metal's appeal. Therefore, ICICI Securities expect gold prices to consolidate in the range of Rs 45800 – Rs 46800 levels in the short-term.
 
The US$INR future gained some momentum and ended near Rs 72.63 levels. Looking at the writing in OTM strike Calls we feel upsides are limited and a close below Rs 72.4 levels would open the gates for lower targets. The dollar-rupee February contract on the NSE was at Rs 72.63 in the last session. The open interest declined almost 3% in the February series. Intra-day strategy is to Sell US$INR in the range of Rs 72.78 – Rs 72.82. 

See Zee Business Live TV Streaming Below:

Market Outlook:
 
Equity benchmarks snapped past two weeks winning streak and settled below the psychological mark of 15000 amid subdued global cues. The Nifty ended the week at 14982, down 1.2%. However, broader markets outperformed as the Nifty midcap and small cap indices rose >0.6%, each. Sectorally, PSU, metal and Infra outshone while pharma, auto and IT underperformed.
 
Technical Outlook:
 
The Nifty underwent profit booking after approaching in the vicinity of our earmarked target of 15500 amid overbought condition of weekly stochastic oscillator (currently placed at 87). As a result, index formed a bear candle engulfing last week’s bull candle, indicating healthy retracement of a sharp rally of 13% post Budget. In the process, the broader market endured its relative outperformance wherein the Nifty midcap index scaled a fresh all-time high.
 
Going ahead, ICICI Securities expect the index to extend the ongoing healthy retracement towards strong support of 14600 in coming weeks. Key point to highlight since May 2020 is that the intermediate correction has not lasted for more than a week. Empirically, secondary corrections have been an integral part of the major bull trend. Therefore, ICICI Securities believes, ongoing breather would help stochastic oscillators to cool off the overbought condition further and undergo a base formation at key support threshold of 14600.
 
Hence, buying on dips in quality large cap would be the prudent strategy to adopt. Meanwhile, upside will be capped at 15300 as it is the 80% retracement of ongoing decline (15432-14898), at 15325. On the sectoral front, IT, FMCG, pharma would relatively outperform. ICICI Securities remains constructive on quality stocks like Infosys, Marico, Laurus Lab, Container Corporation, Trent. Structurally, ICICI Securities expect ongoing extended breather to find its feet around 14600 as it is 50% retracement of post Budget rally (13662-15432), at 14545 coinciding with budget week low of 13662.