Domestic markets are expected to open steady on Thursday amid mixed global cues. While the Nasdaq suffered sharply on Wednesday following underwhelming performance from Microsoft and Google, global markets are oscillating between gains and losses in early deal on Thursday.
However, SGX NIfty at 17,900 indicates one more attempt to breach the psychologica 18,000-mark. Nifty futures on Tuesday closed at 17,652, signalling a gain of about 250 points for Nifty.
Today being the settlement day for F&O monthly contracts on the NSE, analysts expect the markets to remain volatile at micro level.
Canada’s dovish stance
Domestic will take cue from US markets Experts believe that the US Fed may go slow on its steep interest rate hikes following surprise Bank of Canada's d dovish stance.
"This bear market might last a little while longer, but traders can't forget about what will drive the data-dependent Fed, said Edward Moya Senior Market Analyst, The Americas OANDA.
"Big-tech earnings are showing alot; margins are pressures have arrived. Cracks in the economy are here. Tighter financial conditions are not going away. Meanwhile, inflation and labor stats are not declining fast enough to support a Fed downshift just yet. The Fed won’t have clear signals that they can downshift tightening until next year, which means the risks of overtightening are still on the table," he cautioned.
Intra-sectoral divergence
Back home, analysts expect a stock-specific action. "A significant trend in the market now is the intra-sectoral divergence in performance, that is some stocks within a sector marching ahead while others lagging behind," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services
For instance during the last Samvat in autos TVS Motors, M & M and Eicher did exceedingly well while Tata Motors and Hero Motors lagged. Similarly in pharma, Cipla & Sun Pharma far outperformed laggards like Lupin, IPCA and Aurobindo. In IT even though the sector was a laggard, Wipro performed poorly with a cut of near 40 per cent. There are similar cases in other sections too.
"The takeaway from this intra-sectoral divergence is that investors should adopt a bottom-up approach focusing on specific stocks rather than taking a top-down sectoral call," he added.
Open interest data, according to Choice International, indicates, on the call side the highest accumulation witnessed at 17800 followed by 17900 strike prices while on the put side, 17500-strike saw heavy accumulation. Broadly, the price action on the charts indicate that the market is largely to be in a broad range. A breakout of the range will give a clear cue on the next direction of move, it added.
India VIX declined by 3.10 percent to 16.88 level.