Domestic markets are expected open on a flat note with a positive bias on Wednesday. Analysts said the selling in small- and mid-cap stocks may moderate. However, they do not expect any quick buying from these segments.

Meanwhile, as the election process kicked in India, the focus shifted entirely to global events for domestic market movement, they said.

Nifty futures at Gift City points at a marginal gain for domestic benchmarks at the open.

According to them, the big event is US Federal Reserve decision on rates later today. Analysts expect hawkish stance given the elevated inflation.

Amit Goel, Co-Founder and Chief Global Strategist at Pace 360, a SEBI registered multi asset PMS, said, “We anticipate the updated dot plot to reveal that the median FOMC participant still expects 75 bps of rate cuts this year, resulting in a mid-point anticipated fed funds rate of 4.6 per cent by year-end. Expectations for 2025 project four rate cuts, bringing the rate to 3.6 per cent, followed by two to three cuts to 2.9 per cent in 2026.”

The Fed remains slightly concerned about upside inflation risks than downside growth risks, with recent high inflation prints influencing their current stance. This is despite growth generally surprising to the downside since the January meeting.

Also read: Stocks that will see action today—March 20, 2024

Madhavi Arora, Lead Economist, Emkay Global Financial Services, said, “We argue if it is time to reassess our faith in central banks’ guidance post-pandemic, and take a fresh look at the underlying trends that suggest a constructive growth outlook, sticky inflation, and limited DM easing. We see a high probability of ‘No Fed cuts’ in 2024, as they struggle to get to the last mile of disinflation. This will soon spill over to EM CBs, including the RBI. But unless it is accompanied by immediate negative growth shocks, we don’t see a crash in EM risk assets, and believe that the cherry-picking theme will work well for Indian assets, specifically INR and Indian bonds.”

Deepak Jasani, Head of Retail Research, HDFC Securities, said the Bank of Japan raised its benchmark interest rate for the first time in 17 years, ending a long negative rate policy.

“The Bank of Japan brought an end to the world’s last negative interest rate policy and stressed that financial conditions will remain easy. In a widely anticipated move, the BOJ raised its overnight call rate to a range of 0 to 0.1 per cent, up from minus 0.1 per cent.”

Global markets are trading in the green, thanks to a strong close at the US markets. All the major benchmarks gained between 0.4 per cent and 0.9 per cent. Equities across the Asia-Pacific region is up in early deal.

Nifty Outlook

However, analysts still advise traders to remain cautious.

According to Rahul Ghose, CEO, Hedged.in, “The short put writers at the 22000 level have gotten stuck with today’s fall and have converted their short put positions into short straddles of 22000. This has given the naked sellers a cushion till the 21700 levels, below which one will see another free fall in the Index of 200 more points.”

For bulls, his advise is “unless we see two bullish candles above the 22000 level, no longs should be initiated’.

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