Despite a technical bounce back across the global markets, domestic stocks are likely to open on a flat note on Tuesday. Analysts said investors and traders are still cautious despite deep correction. Meanwhile, the focus will be on GDP growth number for the December quarter, which will be out today.

The continuous selling by foreign portfolio investors and lack of buying and participation from domestic investors, especially retail, are pulling down equities, they said. Unless there is big improvement in retail and domestic funds participation, whatever recovery happens will only be fragile, they cautioned.

GDP expectation

“While we await the Q3 FY23 GDP figures, the index trajectory till January 23 indicates that the momentum in the domestic economy is adequate to notch a growth print close to 7 per cent in FY23 with some base factor support,” said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research

SGX Nifty at 17,491 suggests a flat opening for Indian stocks, as Nifty March futures on Monday closed at 17,497. Most stocks have breached support level technically, said analysts and added that could pressure on recovery

Meanwhile, stocks across Asia rose, tracking gains in the US despite the threat of rate hike and firm rates for some more time looming large.

Oversold zone

Ruchit Jain, Lead Research,, said considering the reversal pattern and the oversold set-ups, we could see a pullback move in the short term in the indices. “However, considering the weakness in the broader markets and some sectoral indices, we are likely to see some sector rotation where some of the sector would continue to underperform while certain heavyweights could see an upmove to pull indices out of oversold zone,” he said.

On the derivatives front, the highest Call OI is at 17600 followed by 17500 strike price while on the Put side, highest OI remains at 17200 strike price, said domestic brokerage Choice International. On the other hand, Bank Nifty has support at 39700 levels while resistance is placed at 40900-41000.

“Over the next few days, we anticipate the market to trade with a sell on rise bias, yet this is an excellent opportunity for investors to choose high-quality stocks with a three to six-month time horizon,” it added.