Gold prices to rise further towards Rs 50900, says ICICI Securities, highlights key pointers of Rupee and Equity Markets

Gold Prices have been rallying strongly in the last few sessions and are on track to post their third consecutive weekly gain on growing expectations for additional stimulus measures in the US. Hence, ICICI Securities expect gold prices to rise further towards Rs 50900 level in the short-term.
 
Despite the weakening dollar, the US$INR found support near its highest Put base of 73.50. We believe these levels will be tough for the pair to breach on downsides and buying can be seen from here. The dollar-rupee December contract on the NSE was at 73.66 in the last session. The open interest increased sharply by another 15% in the December series contract.
 
Equity benchmarks concluded the weekly expiry week on a positive note tracking firm global cues. The Nifty ended Thursday’s session at 13741, up 58 points or 0.4%. The market breadth turned slightly in favour of decline with A/D ratio of 1:1.2. Sectorally, financials (ex-PSU banks) and pharma outshone metal, auto and FMCG underperformed. Daily price action formed a bull candle with small shadows on either side carrying higher high-low, indicating continuance of positive bias as the index witnessed follow through strength to recent consolidation breakout. In the process, the index maintained its record making spree and clocked a fresh all-time high of 13773.
 
The index has been forming a higher peak and trough despite intraday volatility, indicating inherent strength. This makes us confident of reiterating a positive stance. ICICI Securities expects Nifty to extend an ongoing up move towards earmarked target of 13900 in coming sessions as it is the 161.8% extension of the consolidation range (13200-12800), projected from breakout area of 13200, at 13847. Further, rotation in sectoral leadership signifies that the leadership is broadening, which augurs well for durability of the ongoing up trend.
 
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Key point to highlight is that the Dollar index has breached the key support threshold of 90 for the first time since April 2018, auguring well for emerging markets. ICICI Securities believes this buoyant development would help the Nifty to resolve higher and head towards 13900 in coming sessions. The index witnessed a sharp rally of 2240 points over the past seven weeks that hauled daily and weekly stochastic oscillator in overbought territory at 91 and 97, respectively). Therefore, ICICI Securities believe subsequent rally from here on would be in zig-zag formation wherein intermittent episodes of profit booking at higher levels cannot be ruled out. However, such a temporary breather should be capitalised on to accumulate quality stocks as the broader positive structure remains intact.
 
Broader markets continued to outshine with the broader markets maintaining their winning streak over seven consecutive weeks, which has been backed by sturdy market breadth. Currently, 97% components of midcap and small cap indices are trading above their 200 days SMA compared to November reading of 90, signifying inherent strength.