After a period of high volatility, markets have settled in a short-term range – be it equity markets, gold prices, silver prices or dollar to rupee equation. In India, Q2 earnings season is almost half way through and markets are more likely to arrive at a decisive move around the end of October.

As for Euro zone crisis, while share markets and safe-haven gold have almost factored in a Greek default or restructuring of debt, a final outcome is still awaited as strike-hit Greece enters the decisive week to determine whether future course of debt plan from the stronger euro zone members and regulatory authorities.

Even as the Greece crisis remains unresolved, more concerns have emanated from the Europe’s third and fourth largest economies in form of Italy and Spain respectively. Recently, S&P had downgraded Spain’s long-term credit rating by one notch to “AA-”, from double A rating, on renewed concerns of Spain’s banking system.

Earlier, Fitch Ratings had also downgraded Spain’s creditworthiness by two notches to AA-, from AA rating. Further, rating agency Moody’s had downgraded Italy credit rating by three notches to A2 from Aa2, citing material increase in funding risks and negative outlook.

Thus, any further upside in global equity markets, including India, remained capped by negativity emanating from the macroeconomic concerns out of Europe. Moreover, the downward pressure on Gold prices , which is likely in bubble zone, has also eased out on account of renewed euro zone strains. Gold has ranged in Rs.25000-28000 per 10 grams range.

Rupee-Dollar equation has settled down in 48-50 zone on RBI intervention to curb excessive volatility in the currency movement to shield importers from forex losses.

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