Domestic markets are expected to open on a weak note on Wednesday, amid gloom sentiment across global markets. Geopolitical tensions further precipitated an already surcharged atmosphere.

Overnight, the US stocks plunged on fears that higher interest rates are likely to last long. The S&P 500 fell 2 per cent while the Dow Jones Industrial Average lost 2.1 per cent, and the tech-heavy Nasdaq composite sank 2.5 per cent.

Following suit, Asian stocks are reeling under pressure, falling between 0.3 per cent and 1.6 per cent in early deal on Wednesday.

“US stocks are declining after retail earnings suggest margin worries are here and it will only get worse as the Fed is likely to deliver more tightening into early summer. Treasury yields are surging here as a tight labor market will force the Fed to do more tightening. Retailer earnings are suggesting it is going to be a tough year ahead and that should keep the pressure on stocks,” said Edward Moya, Senior Market Analyst, The Americas OANDA.

Nifty at SGX market is ruling at 17,765, indicating a gap-down opening of about 100 points as Nifty futures (March) closed at 17,946 and February futures at 17,840.

“Breadth continued to remain a concern for the markets, as the Advance decline ratio stood at 0.73 on BSE. Cash market turnover continued to remain lackluster. Three months of 2022 than expected,” said Devarsh Vakil, Deputy Head Retail Research, HDFC Securities.

Bounce back possible

According to analysts, the market will remain volatile ahead of the monthly F&O expiry on Thursday. Despite gap-down opening, one could see a pull back due to rollovers, they further said and added stock-specific action will continue.

FIIs who became net buyers last week after a long time, again turned net sellers this week, denting sentiments, analysts said.

“Investors are cautiously awaiting US Fed’s monetary policy meeting minutes due on Wednesday to gauge its hawkishness. This along with PMI data due today and GDP data later this week would provide cues on interest rate cycle,” said Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services Ltd.

Recent CPI data points towards inflation stickiness and thus the need for prolonged high rates by US Fed. Even RBI’s MPC minutes would be released tomorrow and would be keenly eyed.

Ajit Mishra, VP, Technical Research, Religare Broking Ltd, said the recent price action shows indecisiveness among the participants amid mixed cues and the move is largely in sync with global peers. “Amid all, it’s critical for Nifty to hold 17700 levels, to keep the recovery hopes alive. Meanwhile, we feel it’s prudent to restrict positions in the current scenario and wait for clarity,” he added.

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