The steep fall in Gold and Silver witnessed today, may tempt you to rush for buying these precious metals, however experts are strictly advising to avoid buying at this level as further correction is imminent.
The steep fall in gold and silver witnessed today, may tempt you to rush for buying these precious metals. However, experts are strictly advising to avoid buying at this level as further correction is imminent.
"This is not a good time to accumulate gold and silver. It is just beginning of a decline. We have broken significant support levels. A bear market has started," Sudarshan Sukhani of s2analytics.com stressed.
Gold futures prices today fell by 2.95 percent to trade at over one-year low of Rs 27,100 per 10 grams. The yellow metal has entered into bear market territory for the first time in 12 years. Gold prices recorded the biggest ever fall of Rs 1,250 per 10 grams to hit one-year low of Rs 28,350 on Saturday.
Sukhani said that decline in gold prices has been a surprise. He said it was difficult to predict at what level buying will return in the yellow metal, it could be at Rs 26,000, at Rs 24,000 or even at Rs 21,000. He, however, believes that silver most definitely should be avoided at this level.
"Silver's downside target could easily be Rs 30,000 per kilogram in India. That’s a good 40 percent from where we are now. Silver is something that you avoid completely,” he said.
SP Tulsian of sptulsian.com also believes that weakness in Gold will continue for sometime. "Coming on gold the kind of technical levels which is being talked about are anywhere between USD 1200-1250 per ounce. One can look to see the level of Rs 25000."
But for the white metal Tulsian is not as bearish as Sukhani. “I am not too bearish on silver going from here on. It may not fall below Rs 42000,” he said.
Along with gold, silver today declined 7.2 percent to Rs 45,385 lowest level since November 2010.
Inflation data today hit a fresh 40-month low of 5.96 percent and core inflation also came below 4 percent, giving hopes of rate cut by the central bank in next monetary policy scheduled on May 3. Positive macro data along with little betterment in corporate earnings is likely to help Nifty to sustain 5500 level, experts said.
"Today's inflation has given lot of comfort and in fact for past two days as we have discussed a while back that the softening of the gold and crude will definitely help the current account deficit and the lower inflation will definitely be seen positive overall which will also persuade or tempt the Reserve Bank of India (RBI) to go for a rate cut," Tulsian said.
He said that given these positive signs Nifty is likely to hold on to 5650-5700 range in April. "I was holding 5450 as a good support for last one week but now the support can move to the level of 5500 but I will keep my upside resistance at 5700 only," he said.
Raamdeo Agrawal of Motilal Oswal Financial Services also believes that Nifty will fall significantly below 5500 level. He said that current year earnings are likely to be 7-8 percent higher than last year. “So earnings are holding out well and in a way it is growing also. So at 15 price-earning (PE) multiple around 5500 should be a good case to hold onto,” he explained.
RIL earnings eyed
Post the dismal fourth quarter results of Infosys and following carnage on indices, all eyes will be on the index heavyweight Reliance Industries who will be reporting January-March results, post market hours. Tulsian expects RIL earnings to be identical to its Q3 earnings, but Sukhani advises to stay away from the stock as it has rallied around Rs 15- 20 rupees today.
Reliance Industries is seen posting revenues of Rs 91,673 crore , down 2.4 percent sequentially, but up 7.6 percent from year ago quarter. Its net profit is seen at Rs 5, 540 crores, flat sequentially, but up 30.8 percent from year ago.
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