Domestic markets are expected to stay positive at open on Wednesday, indicating trading of Gift Nifty, even as analysts expect volatility later in the day ahead of F&O expiry on Thursday. Overall, the market will remain in a narrow range, and the consolidation phase will continue.

Gift Nfity is ruling at 21,546 against the Nifty Dec futures value of 21,472.30 and NIfty Jan futures price of 21,472.3 and 21633.10. This indicates a flat-to-positive opening for Nifty.

Meanwhile, economic data of the current account deficit surprises marketmen positively.

The sequential narrowing of the current account deficit (CAD) to $8.3 billion (1 per cent of GDP) in Q2-FY24 was despite a higher trade deficit, as net invisibles improved. However, the reversal of FPI and FDI flows led to a sharp fall in capital account surplus, with a small BoP surplus ($2.5 billion) for the quarter, said Madhavi Arora of Emkay Global Financial Services.

“For FY24E, we maintain CAD/GDP at 1.4 per cent, led by incrementally improving goods trade deficit vs. FY23 and solid services trade surplus. Risks from higher crude oil prices have receded. We see no risk to CAD funding currently and see FY24 BoP surplus at USD9-10bn vs. (-)USD9bn in FY23. INR will stay range-bound amid low volatility due to the RBI’s two-way FX management strategy,” she cautioned.

Technical analysts expect the market to remain in a narrow range as benchmarks are near the resistance level.

Ajit Mishra, SVP - Technical Research, Religare Broking Ltd, said: “We have reached closer to the hurdle of 21,500 in Nifty and need support from the banking index to make a serious attempt for trend resumption else profit taking would resume. Amid all, traders should avoid aggressive trades in the index and stay focused on identifying opportunities on stock-specific front. We reiterate our preference for defensive viz. Pharma and FMCG for long trades and suggest picking selectively from others.”

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