Domestic markets are expected to open on a flat note, tracking volatile global markets. Analysts expect volatility to increase as the day progresses. Gift Nifty at 9630 indicates a flat-to-negative opening for Nifty and Sensex. Strong retail investors buying will keep market in the range.

The focus has now shifted to G20 meeting where world leaders deliberate on a variety of issues from economic, geopolitical to environment.

A fresh rise in US bond yields and the dollar index is creating uncertainty in global markets and in India, and this has once again led to offloading of local shares by the FIIs, said Shrikant Chouhan, Head of Research (Retail), Kotak Securities Ltd.

Analysts expect cool down in mid and small-cap space.

Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services, said, “The market is showing signs of weakness, driven by weaker monsoon, stronger dollar and put/call ratio breaching 1.4. For the first time in the past few months, we are seeing some rationality coming in amongst mid/small caps. However, consistent inflows in mid/small caps can protect downside in the coming months.”

Both foreign portfolio investors and domestic institutions remained sellers on Wednesday.

“Over the last 3 months, we have seen some very interesting trends in the market – the best performing index in India is the Nifty 250 Microcap Index, and synonymous with this, we have seen a 100% increase in the volume of Index Option contracts over the last 3 months,” said Itus Capital Equity Fund.

“While India continues to be in a sweet spot from a long-term perspective in terms of risk and positioning, we would want marginal risk taken in portfolios only in areas of growth where valuation comfort is of essence,” it added.

“While the sentiment and flows continue to be supportive, positioning of the portfolio today becomes more important today to protect for any volatility,” it further cautioned investors.

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