In yesterday’s trade, gold prices consolidated during most of the session in the range of Rs 49000-Rs 49500 levels. Overall, prices remained supported in the last session as rising Coronavirus cases and dour US jobs data cast doubts over a swift economic recovery, offsetting the pressure from delayed US fiscal stimulus talks. Therefore, ICICI Securities expect gold prices to remain in the range of | 48900-49500 levels in the short term.
Volatility remained high in the forex market due to the Brexit deal. We feel the Dollar index could bounce towards 91 levels if no smooth Brexit deal is seen. This would help the US$INR pair to move towards 74.20 levels in coming days. The dollar-rupee December contract on the NSE was at 73.81 in the last session. The open interest fell marginally by 0.5% for the December series contract.
Nifty futures opened with a lower gap and remained quite volatile throughout the day. Stock specific action continued whereas OTM Put writing was seen in the 13300, 13000 strike, which should be an intermediate support on downsides. However, 13500 and 13600 Call has noteworthy OI that is likely to keep the index under pressure at higher levels. Nifty futures ended at a premium of 46 points while IV fell by 1%. The major Put base is at 13300 strike with almost 11 lakh shares while the major Call base is at the 13500 strike with almost 14 lakh shares.
Post a negative start, the Bank Nifty saw volatile trade but remained firm above 30000 throughout the day. Most private and PSU banks recovered from lower levels. Positions shifted to 31000 strike Call, which is the resistance area whereas support for the Bank Nifty remains intact at 30000.
Equity benchmarks snapped their past seven session’s winning streak amid muted global cues and ended the weekly derivative expiry session on a subdued note at 13478, down 50 points or 0.4%. The market breadth turned negative with an Advance/Decline ratio of 1:1.6. Barring FMCG and metal, all other indices ended in the red weighed by financials and auto.
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The daily price action formed a hammer like candle, as the Nifty recovered 100 points at the fag end of the session. This helped the index to recoup most of intraday losses, indicating supportive efforts, which emerged in the vicinity of 23% retracement of past two week’s rally (13550-12790), at 13370. Going ahead, if it sustains above Thursday’s low of 13399 (on a closing basis) that would keep upward momentum intact and extend the ongoing rally towards our earmarked target of 13600 in coming sessions. Failure to do so would lead to extended breather. After the past two week’s rally, profit booking was seen in recently run up cyclical stocks. Meanwhile, the beaten down consumption stocks saw catch up activity in yesterday’s trading session.
The broader market has taken a breather after six week’s sharp rally amid overbought placement of weekly stochastic oscillators placed at 95 and 96, respectively). However, market breadth (which gauges inherent strength of the market) has remained sturdy, since 97% components of Nifty midcap and small cap indices are currently trading above their long term 200 days SMA compared to past two week’s reading of 90%, that augurs well for durability of rally.