Gold, Currency, Bank Nifty view by Ashish Kyal in Economic Times Section of Navbharat Times

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Indian currency worse performing among BRIC nations

Wishing you all a very Happy New Year 2014!

The below is the English transcript of article by Ashish Kyal, CMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.

Rupee outlook: Indian Currency is one of the worst performing as it is trading way beyond the top of 2009 made near 51.50 levels. Many of the other Asian currencies still have managed to protect the highs of 2009 where as USDINR made life time high near 69 in August 2013.

If we see from the bottom of 2008, then Indian currency has depreciated almost 58% from the lows of 39 to current levels. Brazilian Real has depreciated 34% from the lows of 1.55, RussianRouble depreciated by almost 30% from the lows of the 23 made in 2008.

Our outlook on currency is that Indian rupee can continue to deprecate and move towards 65 – 66 levels over next few months with 59 as very important level on downside.

Outlook on Gold: Introduction of Philadelphia Gold/Silver Index:It is the index which is made up of 16 mining companies worldwide that are into the business of mining of Gold and Silver. When this index moves higher, it shows that these companies are doing well and generating profits. However since 2010 onwards the index showed strong down performance and has now reached near the levels of 2009. As Equity indices lead Commodity prices we can conclude that the prices of Gold and Silver should continue to move lower atleast over next few months before we can see any meaningful bounce back.

Over short term, Indian Gold has an important support of 28200 and strong resistance of 28800 levels. Range bound movement can be expected in this week and break below 28000 will continue the downtrend.

Bank Nifty direction: Bank Nifty made a very important high at 12200 on 9^th December 2013. On18^th December RBI announced no hike in repo rates and Bank Nifty made a high of 11570 on same day. An interesting thing is that even after 6 trading sessions after RBI announcement of no rate hike Bank Nifty has failed to move above the highs made on that day and is still trading at 11460 levels as of Friday’s close. This is indicating inherent weakness in this sector. One should avoid going long on Banking sector this week as long as 12000 level is intact on upside.

Sensex past week: In last week Sensex moved up exactly as expected. However the movement was very less in Indian markets. Sensex moved between 21000 and 21235 levels. This is a movement of only 235 points in entire week. Many would argue for the vacation effect on Indian markets but during this same period we have seen strong uptrend has continued in developed equity markets with DJIA hitting life time highs, Nikkei hitting 6 year high. So Indian markets are relatively underperforming and looks to be on a vacation mode.

Current outlook: This week Sensex can have a consolidation between 20900 and 21400 levels. Since the low of 20600 we are seeing sectors or stocks contributing to the up move are changing daily. This is reflecting a day trading environment right now rather than positional trading. One should accordingly trade and avoid positional trading till clear trend emerges confirmation of which will be obtained only above 21500 with strong momentum! 

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