Stock markets are expected to open firm, albeit moderately on Friday, thanks to firm global cues. Volatile US stocks recovered sharply to end in positive territory on Thursday.

US stocks rallied after recession risks eased following better-than-expected GDP data. ​

Also read: S&P 500, Nasdaq gain on US growth data

Today’s data was good news that was able to send stocks a little bit higher- but not all the way- as rate cut bets were pared back, said Edward Moya, Senior Market Analyst, The Americas OANDA.

Rate cycle

“For stocks to have a sustained rally, we still need a recession and this data is delaying hopes of that happening before the middle of the year. ​ A recession will help get the job done with bringing inflation all the way down, otherwise, a tentative soft landing will just keep Fed keep policy restrictive,” he added.

SGX Nifty at 18,035 indicates a gap up opening of over 50 points for Nifty, as analysts expect traders and investors to keep position light due to rollover of T+1 settlement for all stocks. With the Budget around the corner and the US Fed set to announce the policy decision, analysts expect a narrow movement.

Asian stocks are mixed, with Japan’s Nikkei down even as others moved up moderately. Most stocks opened for trading today only after a gap of a few days on account of Chinese New Year.

T+1 settlement

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said markets went into a tailspin on Wednesday as investors wound up their positions on the last day of F&O expiry. “Traders also liquidated their position ahead of the Adani Enterprises FPO, while migration from T2 to T1 settlement starting Friday also led to some offloading,” he said.

While the trading sentiment may remain volatile, the upcoming Budget and US Fed meet next week could fuel sharp sideways movement in coming sessions, he added.

According to Samco Securities, Nifty futures rollover stood at 79.23 per cent, which is in line compared to last month’s expiry rollover of 79.21 per cent, but lower than its three-month average of 80.16 per cent.

Wait-and-watch mode

Nifty will start the February series with an open interest (OI) of 1.04 crore shares compared to an OI of 1.14 crore shares at the beginning of the January series. Nifty saw an in-line rollover along with a decline in open interest compared to its previous month’s data.

“This indicates some reduction in long positions as markets were trading in a narrow band for the entire January series and fell sharply on the last day of the expiry. Data suggests traders are in a wait & watch situation ahead of the event,” it added.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said, “We expect market to remain volatile in a broad range until the completion of two major events – Fed Meeting and Union Budget on February 1, which could provide clear direction to the market on either side.”