After a continuous fall, the domestic markets are likely to open positive on Thursday, thanks to strong global cues. After the US Federal Reserve on Wednesday said that it would end its pandemic-era bond purchases in March 2022 and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022, the stock markets rebounded strongly.

However, the weakening rupee and unabated selling by foreign portfolio investors will keep the market under pressure. Unless there is a clear indication that FPIs will turn net buyers, Indian stock markets are likely to see downward pressure, said analysts.

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The US stocks, led by tech-focused Nasdaq, scored handsome gains on Wednesday. However, Asian stocks are mixed, with Japan’s Nikkei ruling over one per cent in an early deal on Thursday. While Korean and Taiwan stocks are up marginally, equities in Australia and China are down.

SGX Nifty at 17,319 indicates a 60-point gap-up opening for Nifty futures, which on Wednesday closed at 17,260.80.

Markets are anticipating that the Federal Reserve policymakers will announce a faster pace of tapering response to rising prices, and will do enough rate hikes to take their main policy rate target to 2.5 per cent by the end of 2024. This week brings a flurry of other Central bank decisions, including Bank of England, the European Central Bank and the Bank of Japan. In addition, markets will be focused on Coronavirus headlines.

The rupee breached the 76 to the dollar for the first time since June 2020.

Mitul Shah, Head Of Research at Reliance Securities, said, The government’s focus is clearly on supporting growth through sufficient liquidity and low-interest rates despite street fears over rising inflation, changes in interest rate policy by global economies and high commodity prices. However, India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable and premium valuations might sustain, barring near term hiccups.”

Ruchit Jain, Trading Strategist, 5paisa.com, said, “Technically, we have already seen some correction from the swing high of 17,600 and the index is now approaching the support end. For the coming session, initial support will be seen around 17,170 which is 61.8 per cent of the recent up move followed by trend line support around 17,100-17,050 range.”

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According to him, “If the market manages to show recovery from the mentioned support zones, then we could see short covering which could lead the markets higher. Hence, one should look for some contra bets here as the risk-reward would turn favourable for buy trades. The hypothesis will negate if Nifty breaches the 17,000 level and hence, it should be referred to as a trend changing level. On the higher side, 17,350-17,400 would be the immediate range to watch on pullback move.”

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