Gold prices started Wednesday’s trade on a weak note opening lower with a gap and fell further during the first half of the session till a low of Rs 48511. Later, prices recovered strongly for the remaining session till a high of  Rs 48980.  Prices have been falling gradually in the last few sessions as the dollar climbed, with investors looking forward to a US Federal Reserve policy statement for clues on approach to monetary policy the central bank is likely to adopt.  Overall, ICICI Securities expect gold prices to remain in the range of Rs 48500-49400 levels in the short-term. 

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USD vs INR pair reverted in the last session but closed almost flat amid strength in the dollar index. For the February series, the Call base is placed at Rs 73.50, which should be an immediate hurdle for the pair. The dollar-rupee February contract on the NSE was at Rs 73.23 in the last session. The open interest increased by 69% as the new series started. 

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Equity benchmarks extended the corrective phase over the fourth consecutive session and settled below the psychological mark of 14000. The Nifty ended Wednesday’s session at 13968, down 271 points or 1.9%. Market breadth remained weak with A/D ratio of 1:2. Barring FMCG, all other indices ended in red weighed by financials, metal, auto and pharma.
 
Technical Outlook on Nifty:
 
The daily price action formed a sizable bear candle carrying lower high-low formation, indicating prolonged correction as selling pressure accelerated on the breach of 14100 mark
 
Key point to highlight since March 2020 is that, intermediate decline has not lasted for more than a week with average correction is in the tune of 8-10%. In the current scenario, as the index has already corrected over past four consecutive sessions which has led the daily stochastic oscillator at an oversold territory with a reading of 10. The index is also approaching a major support area of 13800, which we expect it to hold.

Hence, ICICI Securities believes, ongoing breather has helped the index to work off the overbought condition and is seen as a healthy correction ahead of key major events of Union Budget, and consequently pave the way for the next leg of the rally towards 14900 in coming months. Meanwhile, 14500 would act as immediate resistance. ICICI Securities expects the broader market to endure its relative outperformance post Union budget. Currently Nifty midcap and small cap indices are undergoing a slower pace of retracement as over the past two weeks both indices have merely retraced 38% of the preceding three weeks rally, indicating healthy consolidation.
 
The Nifty midcap index has been consolidating after clocking new life-time highs, whereas the small cap index is still 30% away from all-time high. Thus, ICICI Securities expect small caps to witness catch up activity. Structurally, ICICI Securities expects an ongoing corrective phase to find its feet around 13800 as it is confluence of 61.8% retracement of current up move (13131-14754) at 13751 coincided with January low of 13954.