Indian stock markets are expected open on a flat note on Thursday with downward bias. Though the undertone remain strong, analysts expect the domestic market to witness volatility, amid mixed global cues.

SGX Nifty at 17,940 (715 am) indicates a downward opening for Indian markets, as Nifty futures on Wednesday closed at 17,974.

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Ruchit Jain, Lead Research, 5paisa.com, said: The BSE Sensex reclaimed the 60,000 mark and the Nifty, too, is approaching the milestone of 18,000 again. The index continues to move higher in the overbought zone with no signs of reversal yet. It is generally seen in strong trending phases that markets continue such extended up moves. "The momentum readings are highly overbought, so profit booking shall not be ruled out in the near future," he added.

Mixed global cues

Overnight, the US stocks closed in negative amid growth fears. However, equities across Asia-Pacific are mixed with Japan, Korea, Australian and Taiwan markets trading lower even as Chinese, Hong Kong and Singapore markets are up in early deal on Thursday.

Weaking of crude oil prices and continues inflow from foreign portfolio investors boosted sentiment for domestic markets.

India has been an outperformer over the last 45 days relative to both EM and DM peers, gaining for cooling inflation expectations as a commodity importer as well as reducing equity risk premia, as a growth market.

'Momentum to continue'

FII flows over the last 45 days have totalled $1.5 billion, more than double the inflows from domestic institutions. "Domestic retail investors have not participated in the recent rally as evidenced in their single stock futures net long position having contracted to $8.5 bn – for perspective, when Nifty was at 18,000 in early April, Retail net long in stock futures was at $12 billion," said Hariharan, Head- Sales Trading, Emkay Global Financial Services.

"This suggests that there may still be further room for participation as well as dry powder to cushion any falls caused by global macro factors," he added.

Technically too, analysts said, though the market is in overbought zone, the uptrend is likely to sustain.

Rupak De, Senior Technical Analyst at LKP Securities, said: "Nifty has remained above the falling trend line, confirming the continuation of the ongoing bull run. The up trend remains intact as the barometer index has not shown any weakness. The popular momentum oscillator is in a deep overbought zone but has no bearish crossover, suggesting a continuation of bullish momentum. On the higher end, resistance is seen at 18,000-18,100. On the lower end, support is visible at 17,700."

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