Gold, Rupee and Equity Markets outlook I Explained by ICICI Securities

Gold price has been falling gradually for the last few sessions as rising economic expectations and inflation concerns vaulted benchmark US Treasury yields to their highest levels since the pandemic began, helping lift the dollar. Gold prices opened slightly lower on Thursday and fell further during most of the session to a low of Rs 46060. Hence, Sharekhan expects gold prices to remain weak towards Rs 45900 level in the short-term.
 
The US$INR March futures closed at Rs 72.75 levels. However, considering the significant Call base at Rs 73, we do not expect a major up move from current levels with upsides remaining shorting opportunities. The dollar-rupee March contract on the NSE was at Rs 72.75 in the last session. The open interest increased almost 4% in the March series. Intra-day strategy is to sell US$INR in the range of Rs 72.78 – Rs 72.82.
 

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Market Outlook:
 
ICICI Securities says that Equity benchmarks extended gains over the third consecutive session amid buoyant global cues. The Nifty ended Thursday’s session at 15097, up 115 points or 0.8%. The market breadth improved further with Advance / Decline ratio of 2:1. Sectorally, metal, auto and financials outshone while FMCG underperformed yesterday.
 
Technical Outlook:
 
The Nifty opened the derivative expiry session with a positive gap (14982-15080) and traded above the same throughout the session, indicating inherent strength. As a result, index formed a bull candle carrying higher high-low, indicating continuation of positive bias. Over the past two sessions index has retraced 61% of preceding six sessions decline (15432-14635), signifying rejuvenation of upward momentum. In the process, Nifty midcap index clocked a fresh all-time high, signifying relative outperformance.
 
The profit booking is being seen across global equity due to rise in bond yields. Going ahead, bond yields will be key monitorable, as that would lead to rise in volatility. Therefore, we believe, Nifty sustaining above the psychological mark of 15000 (on a closing basis) would keep positive momentum intact, else extended breather amid stock specific action. However, ICICI Securities do not expect the index to breach the key support threshold of 14600, hence dips should be capitalised to accumulate quality large cap stocks as ICICI Securities expect Nifty to gradually retest all-time high of 15432 in coming weeks.
 
ICICI Securities says that the key point to highlight is that, broader market continued to outshine the benchmark as both Nifty midcap and small cap indices surpassed their last week’s high, showcasing broader market resilience. In the process, the Midcap index scaled a fresh all-time high. Going ahead, ICICI Securities expect broader market to endure its relative outperformance, wherein catch up activity would be seen in small caps, as it is still 16% away from its life-time highs.
 
Structurally, the formation of higher peak and trough signifies robust price structure. ICICI Securities believes the recent healthy retracement has helped index to form a higher base around 14600 and paved the way for the next leg of up move. Therefore, any decline toward 14600 should be capitalised on as incremental buying opportunity.