Market Bizzz

The US dollar fell to a one-week low against major currencies, potentially ending its weakest week since late March, raising the possibility that the Federal Reserve will cancel June’s interest rate hike. Consequently, the dollar lost vital support when it became apparent a bill to halt the US’s debt ceiling and prevent the country falling in default could soon be made law. The US dollar index, which measures the dollar against six rivals, had lost 0.63% by 2 June and if that trend continues, it will register its worst performance since the week ending 26 March.

Oil prices inched up in early Asian trade as markets weigh the possibility of price-supportive production cuts by OPEC+ members over the weekend. The Brent crude futures rose by 0.18%, to $74.41 a barrel, while the West Texas Intermediate crude rose by 0.21%, to $70.25 a barrel following two days of declining crude prices. Investor attention is now focused on the OPEC+ June 4 meeting, where the ministers from key oil-producing countries will determine whether to reduce further output to support government revenues. The U.S. monetary policy and the debt ceiling bill boosted market sentiment.

Gold prices are heading for their biggest weekly gain in almost two months due to the US Federal Reserve’s pause in the tightening of its policies, which has supported bullion’s appeal. The precious metal has gained around 1.5% this week, with a potential to increase up to its biggest rise since the week ended on April 7th. Markets are now suggesting that there is a 79.6% probability that interest rates will remain unchanged in June, which is motivating investors to invest in gold.

Benchmark indices, S&P BSE Sensex and Nifty50, rose on Tuesday, supported by foreign institutional investor inflows and firm Asian markets. The financial services, services, teck, capital goods, bankex, IT and industrials sectors rallied, while commodities, energy, telecommunication, auto and consumer durables pulled back. Hikal gained 8.5%, while M&M rose 4.08%, though shares in ONGC fell nearly 5%. Technical analyst Viral Chheda recommends investors should buy Hikal at the current price, buy JSW Energy above INR270 ($3.63), and buy RVNL above INR123 when considering limited downside risk and upward potential of 6-8 months.

From price correction perspective, I would say that broadly, yes, the correction is behind. I would think that, of course, price is a leading indication which takes the lead before the order pipeline visibility or numbers come in, but still I would not see a runaway rise in the IT pack still.