The domestic stock markets are expected open on a strong note on Thursday, thanks to positive global cues. However, analysts advise traders to remain cautious on volatility, as today will be the settlement day for F&O contracts.
The FIIs selling in recent sessions, upcoming RBI MPC meeting and monthly derivatives expiry is keeping investors on edge, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd. Traders will be looking for global cues in the short term, analysts said.
‘Support at lower levels’
Investors believe that there will be some support to markets at lower levels. The SGX Nifty at 17,047 indicates a sharp bounce back of nearly 200 points for Nifty. Equities across Asia-Pacific region have also stabilised with most of them gaining around 1.5 per cent. However, amidst buoyance, Japan's Nikkei has gained just 0.32 per cent.
"In the near term, market is expected to remain under pressure due to global uncertainty. However mixed trends across sectors would continue to offer stock specific opportunities especially in auto, consumption with ongoing festive season," added Khemka.
US stocks rally
Overnight, the US stocks bounced back, ending days of negative closing.
Edward Moya, Senior Market Analyst, The Americas OANDA, said the US stocks are rallying after the BOE’s intervention tentatively halted the bond market selloff.
"The theme on Wall Street is rising risks for a hard landing next year, while we are hearing a steady chorus of Fed speak that mostly confirmed the market’s expectation that rates will rise to 4.25-4.50 per cent by the end of the year. Some traders are growing confident that we are close to seeing the end of the Fed's tightening cycle, but that is still too early to say," he added.
Focus on RBI stance
Meanwhile all eyes will be on RBI's monetary policy meet on Friday. Though most analysts predict a 50 basis points increase in interest rate, some say focus will be on RBI's statement.
Rohin Agarwal, Vice President at Avener Capital,said: "With Fed leading the pack in hiking rates and other central following suit this month, the stage seems set for RBI to hike rates in upcoming MPC by 35+ bps to protect the rupee as well as contain inflation. While the rate hikes have been aimed at demand side, inflation is now threatening to regain it's upward trajectory due to supple side constraints. RBI will have to evaluate the impact of rate hikes going forward and play a balancing act."