Bears are likely to have the upper hand on Wednesday as well. Though the US stocks closed in positive territory overnight, most Asian stocks are weak in early deals on Wednesday. SGX Nifty futures is also indicating a dull opening for domestic markets. SGX Nifty at 17,936 indicates that Indian markets are expected to open 0.4 per cent lower, as Nifty futures on Tuesday closed at 18,004.

Analysts said Fitch Ratings affirming a negative outlook on India is likely to weigh on Indian markets. On Tuesday, global rating major Fitch said: India's rating balances a still-strong medium-term growth outlook and external resilience from solid foreign-reserve buffers against high public debt, a weak financial sector and some lagging structural issues. The country's rapid economic recovery from the Covid-19 pandemic and easing financial sector pressures are narrowing risks to the medium-term growth outlook.

"However, the Negative Outlook on the rating reflects lingering uncertainty around the medium-term debt trajectory, particularly given India's limited fiscal headroom relative to rating peers," it added.

Ajit Mishra, VP - Research, Religare Broking, said: Mixed global cues keep the participants on edge and we expect the trend to continue, at least in the near future. Among the sectors, the continuous underperformance of the banking pack is dragging the benchmark lower while others help the index to cap the damage. In the current scenario, it’s prudent to stay light and wait for clarity, he added.

As institutions, both domestic and FPIs remain on the sidelines, stock markets are likely to remain under pressure with mild volatility, experts said.

The market is expected to remain in a downward trend, said Rahul Sharma, Co-Founder, Equity99, and added: "We expect some movement in auto stocks considering the recent improvements in chip shortage crises. Other than autos we don`t see other moves in the current scenario".

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