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Thanks to positive global cues, domestic markets are likely to see bullish momentum in early part of the day on Wednesday. However, analysts see the rally lack convictions and anticipate that the market could succumb to selling at higher levels.
Though FPIs on Tuesday sold shares worth ₹1,209.82 crore, experts believe the continuous selling may end soon, as they increased thier net long positions in stock futures, index futures and index calls. Their net (long) positions in index puts have reduced. According to them, this is a clear signal of their changing stance.
Analysts expect the market to move in a narrow range on Wednesday after a strong recovery on Tuesday. SGX Nifty at 16,866 indicates, a gap-up opening about 66 points as Nifty futures on Tuesday closed at 16,800.95. Though most Asian stocks are up mildly, Japan's Nikkei and Australia's ASX are in the red, albeit marginally. Overnight, the US stocks jumped sharply, led by tech-focussed Nasdaq, which climbed 2.4 per cent. Dow Jones and S&P 500 closed 1.6 per cent and 1.78 per cent higher respectively.
Bearishness continues
"In a few weeks we’ve gone from caution to skepticism, to panic and back to optimism. Digging deeper, emotions are likely to be the name of the game, and this should continue to swing wildly and quickly," said Prashant Tapse, Vice-President (Research) at Mehta Equities Ltd
According to Rahul Sharma, Co-Owner, Equity 99, the markets made a good recovery on Tuesday after the mayhem on Monday. "However, the correction at the end is a clear indication of bears yet ruling the market."
Ajit Mishra, VP - Research, Religare Broking, said: "The updates on the new variant are keeping the choppiness high globally and we expect this trend to continue in the near future. Among the sectors, only the IT pack has been showing a steady uptrend while others are trading mixed. In case of a further rebound, Nifty would face a hurdle around the 17,000-17,150 zone. Participants should limit leveraged positions until we see some stability."
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