Markets are expected to open on a positive note on Wednesday though retail participation is likely to remain due to Ugadi and Gudi Padwa. Thanks to a strong closing at the US markets overnight and gains in Asian stocks likely to keep the momentum sustain, believe analysts.
Nifty futures at 17160 on the Singapore Stock Exchange, on other hand, indicates a flat opening for domestic markets. Analysts expect the market may sustain the rally thanks to global buoyancy and on technical bounce back.
US stocks firm
US stocks are higher as officials signal they will do whatever it takes to protect the banking system. Treasury Secretary Yellen’s comments at the American Bankers Association conference sparked today’s risk-on mood, said Edward Moya, Senior Market Analyst, The Americas OANDA.
Yellen noted that the US banking system is stabilising after strong actions from regulators but further steps to protect bank depositors may be warranted if smaller institutions suffer deposit runs that threaten more contagion.
Also read: Lessons from global banking crisis
“It is a clear message from multiple officials that they are not taking this banking turmoil lightly and that they will probably be proactive when the next major risk arises,” added Moya.
The Fed will announe its decision later today on Indian time.
FPI selling unabated
However, continuous selling by FPIs, despite holding record short positions, keep market experts and investors on the edge.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Fears of banking contagion hitting equity markets have aggravated FII selling, which has reached a cumulative ₹11,757 crore in the last 11 days. FII’s net short position is at record highs indicating negative expectations.”
“Even though the current texture of the market is sell on rallies, the huge short position may trigger a short-squeeze if the Fed decides to pause in the meeting tomorrow. Tomorrow’s Fed decision and commentary will be crucial,” added Vijayakumar.