Domestic markets are likely to rebound in early deal on Thursday, amid a sea of red among Asian stocks.

Analysts expects volatility to continue and market may see value-buying at lower levels keeping the market in a narrow range. “A sharp rebound in the second-half is not ruled out,” said a Chennai-based market expert, who has been tracking the market for the last 25 years.

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Despite a strong recovery in closing hours, the US market closed on a mixed note Wednesday. While the Dow Jones and S&P 500 closed weak about 0.9 per cent and 0.7 per cent respectively, after slipping over 2 per cent in early deal. The tech-focussed Nasdaq managed to end in the green.

According to Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, It’s been another remarkable day in financial markets and it, unfortunately, doesn’t feel like the worst is behind us.

“Fear has once again gripped the markets, concerned about a repeat of past crises - one in particular, for obvious reasons - and the implications for the financial system and the global economy. Of course, this is natural when so little is known about the situation and what it ultimately means for the health of the rest of the system,” he added.

Meanwhile SGX at 17,020 indicates a flat opening for Indian markets, as Nifty futures on Wednesday closed at 17,037.

Among the Asian stocks, Japan, Australia and Hong Kong are down in excess of 1 per cent.

FII’s short positions are the highest in the recent times as they have more than 85 per cent positions on the short side in the index futures. Thus, the data and the chart structure remains negative but it needs to be seen if any short covering takes place as positions are short heavy. One should keep a wait-and-watch approach and avoid aggressive trading for time being,” said Ruchit Jain of 5Paisa.Capital.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, said: Globally, investors remain cautious ahead of upcoming central bank meeting, although some relief was seen after US government’s intervention to ease fears regarding ongoing banking crisis, coupled with the inline CPI inflation numbers.

“On Domestic front, Nifty closed below 17k zones after gap of five months, indicating the weak structure for the market. We expect market to remain in negative territory for next few days,” he said.