Domestic benchmarks NSE Nifty and BSE Sensex are likely to open weak amid cloudy global sentiment. Fears of further rate hikes and a prolonged higher rate regime as indicated by the US Federal chief spooked the US stock markets overnight.

US stocks tumble

While the Dow Jones Industrial Average lost 1.72 per cent, S&P 500 and tech-focussed Nasdaq shed 1.25 per cent each.

Fed chief Powell said the central bank needed to raise interest rates more than expected due to the recent strong data. The Federal Reserve is prepared to move in larger steps if the “totality” of incoming information suggests more needs to be done to bring down inflation, he added.

Edward Moya, Senior Market Analyst, The Americas OANDA, said: “US stocks did not stand a chance after Fed Chair Powell convinced markets that policymakers are comfortable taking this rate hiking campaign much higher. Powell is not taking any chances and wants to send home a clear message that the Fed will do whatever it takes to bring down inflation.”

SGX Nifty down 50 points

Though SGX Nifty at 17,725 (against Nifty futures close of 17,775) indicates a flat-to-negative opening for Nifty, analysts expect pressure on broader markets. Asian stocks, except in Japan, are largely down.

Ruchit Jain, Lead Research,, said the major concern in the recent corrective phase was the FII’s short positions in the index futures segment where they had around 85 per cent of positions on the short side during last week.

“However, they covered some of their short positions on Friday and their ‘Long Short Ratio’ improved to around 23 percent. This indicates that the stronger hand have started covering their short positions and other data such as upmove in global markets and appreciation in INR indicated positive biases for the equities,” he added.

Word of caution

Analysts expect volume to remain low as some part of the country is celebrating Holi festival today. Profit booking at every small rise is likely to keep market under pressure.

According to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, there is some amount of bargain buying seen after the recent sell off but the overall sentiment remains cautious to negative as concerns related to macro-economy and geo-political tensions still pose significant threat to markets.

“Technically, 17800-17900 could be the immediate profit booking zone for the bulls, while 17650-17600 would be the sacrosanct support zone for the traders. However, below 17600, uptrend would be vulnerable,” he warned.