Domestic markets are expected to remain volatile with negative bias on Thursday amid mixed global cues. F&O monthly settlement on NSE will add further pressure on the market, said analysts.

With foreign portfolio investors turning sellers once again, albeit with less intensity, experts fear the recovery may take time. This is despite the fact that the market is now technically in the “oversold” territory.

The minutes of the US Federal Reserve meeting gave a confused signal but the fear of further increase in interest rate hike largely remains. The US stocks ended on a mixed note with Nasdaq edging up marginally, while S&P 500 and Dow Jones closing in red.

Rate-hike priced in?

According to Edward Moya, Senior Market Analyst, The Americas OANDA, the US stocks turned positive after Fed’s Bullard stated that markets might be over-pricing US recession risk.

“Bullard said rates are projected to touch 5.375 per cent, implying a further 75 bps rate hike. If Bullard, known for his hawkish stance, says that we only have a little way to go there, the peak in rates might be properly priced in. The disagreement between the Fed and markets on how high rates to go might be over and that could provide a tentative boost for stocks,” Moya said.

Shares fell in Australia, while trading in Japanese equities was closed due to a local holiday. SGX Nifty on the other hand remain flat at 17,615 against Nifty (March) futures Wednesday’s close of 17,662.05 and spot close of 17,554.30.

According to Ruchit Jain of 5Paisa.com, both BankNifty and Nifty 50 entered their respective corrective zones.

VIX above 15

India VIX increased by 11 per cent to surpass the 15-levels ahead of the F&O expiry day.

“The readings on the hourly charts have reached the oversold zone for Nifty as well as BankNifty where we have seen a cut of about 2,000 points in last five trading sessions. Hence, to relieve these oversold set-ups, a pullback move could not be ruled out in next couple of trading sessions,” said Jain.

FIIs’ have been on the short side in the index futures segment throughout the February series and whether they rollover these positions needs to be seen.

“We believe that the short-term momentum is negative for the markets but oversold on lower time frame. So one should avoid forming shorts at current juncture and look for a pullback move to relieve the oversold set ups,” he advised.

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