Gold, Rupee and Equity Markets: Price, trends to support levels, all you need to know

Prices have corrected sharply in the last session as encouraging Covid-19 vaccine news dimmed bullion’s safe-haven appeal while investors kept a close watch on developments around a US fiscal stimulus deal. Hence, ICICI Securities expect gold prices to remain in the range of Rs 49100-49900 levels in the short-term.
 
US$INR December futures remained almost flat during the day despite positive domestic equities. ICICI Securities feel the US$INR will trade in a range with support now pegged at 73.5 levels. The dollar-rupee December contract on the NSE was at 73.72 in the last session. The open interest increased marginally by 0.5% for the December series contract.
 
Market Outlook:
 
Equity benchmarks extended the record setting spree amid firm global cues that propelled the Nifty to end above 13500 mark for the first time ever. The Nifty rose 136 points to settle at a fresh record closing high of 13529. The market breadth turned positive with Advance/Decline ratio of 1.5:1. Sectorally, financials, IT and FMCG outshone metal, auto and PSU Banks took a breather.
 
The ongoing rally in the index continued for a seventh day in a row where the Nifty made new life-time highs and continued to trade higher. Bulls remained in charge throughout the day with 33 advances in Nifty stocks. However, maximum Call OI is at 13600 strike. This should be an immediate hurdle on upsides. Nifty futures ended at a premium of 39 points while IV rose by 1.6%. The major Put base is at 13400 strike with almost 35 lakh shares while the major Call base is at the 13600 strike with almost 36 lakh shares.
 
The banking index tested 30800 in the last session and extended its gains beyond 1200 points for the ongoing week. Private sector heavyweights remained at the forefront where HDFC Bank and Kotak Mahindra Bank took the lead in the last session. On the options front, 31000 Call has significant OI.  This is likely to act as an immediate hurdle for the Bank Nifty.
 
Technical Outlook:
 
ICICI Securities expects slowdown in ongoing strong momentum as we approach our target of 13600 amid overbought placement of daily and weekly stochastic oscillator (currently at 94 and 95, respectively). However, only a decisive close below the previous session’s low (13450) will indicate temporary breather in ongoing momentum. Key point to highlight is that, over the past 6 weeks index has rallied 2000 points that hauled stochastic oscillator in the overbought territory, indicating possibility of minor profit booking at higher levels cannot be ruled out.
 
Meanwhile, ICICI Securities expect stock specific action to remain in focus and expect midcap and small caps to relatively outperform. The Nifty midcap index extended gains over the ninth session in a row and closed at two years high. The rejuvenation of the broader market rally has been supported by strengthening of market breadth, as currently 98% components of Nifty midcap and small cap indices are trading above their long term 200 days SMA compared to past two week’s reading of 90%, that augurs well for durability of the ongoing rally.