Domestic stocks are likely to open in a narrow range on Thursday with a downward bias, as the global markets have stabilised. With today being the settlement day for F&O on the NSE, analysts expect the market to remain volatile.

As investors across the globe expect the US Federal Reserve to begin reducing its massive monthly asset purchases in November and hiking interest rates soon, analysts expect domestic market will also struggle to sustain the current bullish momentum. According to them, though the overall undertone remains bullish, in the short-term, the phase of the rally will slowdown, which is healthy.

Markets are likely to continue with its consolidation given the sharp run-up in the past few weeks and weak global cues, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Sensex down 254 points at closing, Nifty above 17,700

Markets are likely to open on flat-to-negative note, as indicated by SGX Nifty, which is currently ruling at 17,690 as against Nifty futures close of 17,708.

"All eyes would be on US treasury yields, global energy prices and the ongoing debt ceiling debate in US which would provide market direction in near term. Monthly F&O expiry could also keep the market volatile," he said and added "Markets are increasingly witnessing rotation from outperforming sectors to under-valued stocks. A lot of stock specific and sector specific action is being witnessed in the market, thus traders should trade accordingly."

Asia-Pacific markets are mixed in early deal on Thursday. While Australia, Korea and China markets are up, equities across Japan, Hong Kong and Taiwan are down. Overnight, the US stocks too closed mixed with Dow and S&P 500 gaining marginally and Nasdaq maintaining its downtrend.

Meanwhile, China’s factory output unexpectedly shrank in September as high raw material prices and power cuts continued to pressure manufacturers in the world’s second-largest economy. The official manufacturing Purchasing Manager’s Index (PMI) was at 49.6 in September versus 50.1 in August, data from the National Bureau of Statistics (NBS) showed on Thursday, slipping into contraction for the first time since February 2020.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said, “Markets witnessed a highly volatile trading session on Wednesday, which was marked by weak global cues but benchmark Nifty once again took support near the 10 days SMA or at 17,600 and reversed sharply. After Tuesday's sharp intraday fall, the index has formed an inside candle pattern which indicates indecisiveness between bulls and bears. In the run-up to monthly F&O expiry, the market may continue with the narrow range activity”.

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