Domestic markets are expected open on a flat note, as investors turned cautious after strong bounce back in the last four days. Analysts expect the rally to moderate due to profit booking. It is heartening to see the return of foreign portfolio investors. However, fresh covid cases in China and weakening rupee pose big challenges to bulls, they added.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: markets witnessed buying interest over last few sessions on the signs of inflation peaking out and the earnings season progressing well so far. "Q1-FY23 results season has begun on a healthy note, indicating that the companies are managing the raw material inflationary pressure pretty well despite the full blown impact of high commodity prices this quarter," he said and added: "However, given the sharp rally in the last few day, we expect markets may take a pause and consolidate before resuming its upward journey. Investors would pick up cues from the ECB’s MPC on Thursday and the US Fed meeting next week."

Rupee closed at a record low of 80.05 against the dollar for the first time on Wednesday, despite FPIs turn buyers and dollar index sees some moderation.

Global stocks mixed

SGX Nifty at 16,510 (7.45 am) indicates that market may open on a flat note, as Nifty futures on Wednesday closed at 16,519 on Wednesday.

Asian stock markets are mixed despite a strong run-up in the US stocks over night. While Japan, China, Hong Kong and Australian stocks are down, equities across Taiwan and Korea eke out marginal gains. OVernight, the Dow climbed 0.15 per cent, while tech-focussed Nasdaq scored a big gain of 1.6 per cent; S&P 500 gained 0.6 per cent.

Eyes on Fed meet

The market is hoping that the US Fed may not be aggressive in hiking rates in its next meeting, while falling commodity & crude oil prices too have moderated the bearish trend in recent sessions, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.

Deepak Jasani, Head of Retail Research, HDFC Securities, said: "Nifty broke out upwards with an upgap on Wednesday but closed near the intra day lows, suggesting profit taking at highs. While volume expansion is supportive of further upmove, we will have to see whether the up gap made by Nifty at 16359 is filled or not in the next 1-2 days. Nifty could now remain in the 16359-16646 band for the near term."

Analysts expect the market to remain in consolidation phase.

“We may see some consolidation in the index after the recent surge however the bias would remain on the positive side till the Nifty upholds 16,250 levels. Most sectors are now contributing to the move on a rotational basis so the focus should be on stock selection. Needless to say, global cues and earnings would continue to trigger volatile swings in between.”

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