Bears will continue to gain upper hand at the bourses on Thursday as well. As equities across the globe are down amid fears of more than expected US Fed tightening measures and relentless saber-rattling between Ukraine and Russia.

SGX Nifty at 17,770 (8 am IST) indicates a 100-point gap down opening for Nifty, as Nifty futures on the NSE on Wednesday closed at 17,867. The hawkish statements from the US Federal Reserve kept the pressure on foreign portfolio investors, as they turned net sellers for the first time in six days. According to exchanges provisional data, FPIs have pulled out shares worth ₹2,280 crore.

Fed’s Hawkish stance

Nifty joined the conga-line of sinking stock markets across the globe amidst recession risks that are seen ringing louder, said Prashanth Tapse, Vice President (Research), Mehta Equities Ltd. "Denting sentiments were the ‘panic-like selling’ leads from overnight Wall Street trade after the Federal Reserve governor Lael Brainard said the central bank will reduce its balance sheet soon," he added.

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Equities across Asia-Pacific region are down in early deal on Thursday. Japan’s Nikkei is the worst affected, sliding almost 2 per cent. Australia, Taiwan and Korea are down between 0.4 per cent and 0.5 per cent. Overnight US stocks, especially Nasdaq witnessed, huge sell-off.

‘Mid & small-cap to shine’

Analysts expect the stock market to move in a narrow range with a downward bias. Experts believe the market to find bottom soon and activity will continue to pick up in small- and mid-cap space.

Value buying has emerged in select stocks in the broader market and analysts expect the trend to continue.

The immeidate focus will be on RBI outcome, which will reveal its policy statement on Friday after three days of deliberations. Most experts believe a status-quo stance on the interest rate front but fear RBI's stance on economic growth and inflation projection.

Focus shifts to RBI meeting

According to Emkay Global, the MPC policy conundrums seem to have worsened with material change in macro realities since the Feb'22 meeting.

"Even as the MPC may decide to keep the policy rates and stance unchanged this week, it will be accompanied by material rise in inflation forecast by 50-75 bps from the earlier forecast of 4.5 per cent, albeit still lower than our estimate of 5.8 per cent. But markets will likely (need to) be assuaged over any material tightening of financial conditions," it added.

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Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said, markets have been witnessing some jittery after recent gains and have turned into a consolidative mode. Volatility is likely to be seen in interest sensitive stocks as investors await RBI policy meet outcome.

‘Downward bias seen’

Technically also the market is on a weak footing, analysts said.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, "The intraday texture of the market has turned weak and a fresh pullback rally is possible only after 17900 breakout."

For traders, 17900 would act as an immediate hurdle, and below the same a weak formation is likely to continue till 17700-17650, he added. However, above 17900 the index could move up to 17820-17865. The Nifty is having a strong support between 17650-17700 and hence contra traders can take a long bet near 17650 with strict support stop loss at 17620, he further said.