Domestic markets are likely to recover in early trade Wednesday, as global stocks bounced back. The US stocks gained strength despite inflation number came on the higher side. Major US indices Dow Jones Industrial Average gained 1 per cent, S&P 500 1.65 per cent and Nasdaq 2.14 per cent.
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Edward Moya, Senior Market Analyst, The Americas OANDA, said: “Banking contagion risks are evaporating and Wall Street is ready to pile back into risky assets. The US stocks are gaining as the regional bank stocks bounce back after the eight straight deceleration with the annual inflation pace supports the case for some that the Fed’s tightening work is almost done.”
SGX Nifty at 17,210 indicates a gap up opening of 85 points for Nifty futures. Equities across Asia region jumped between 0.4 per cent and 2.4 per cent lead by Hong Kong.
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Analysts, however, said they are still cautious, as the market may turn the direction quickly if the global sentiment turns weak. Further, selling by foreign portfolio investors has been consistent and heavy, they added. Unless, FPI change their strategy, domestic markets will remain under pressure, they added
The FII’s continue with their short positions in the index futures segment where they have about 84 per cent on short side, said Ruchit Jain, Lead Research, 5paisa.com
IFA Global Research Academy, in a report, said: “There has been a dramatic shift in market’s expectations of the Fed rate trajectory. “From a 80 per cent chance of a 50bps hike in the upcoming March policy, markets are now pricing in merely a 60 per cent chance of a 25bps hike. Terminal rate expectations which stood at 5.60 per cent on Thursday are at 4.75 per cet now.”
Goldman Sachs and PIMCO are expecting the Fed to keep rates on hold in the March policy, it added.
According to Choice International, the market is concerned about the outcome of the US Fed’s FOMC meeting on rate hikes. “If the Federal Reserve of the United States decides to pause interest rate hikes, the market may recover. However, if Fed officials continue to talk hawkish about raising interest rates to tame inflation, the mood of Indian and global markets will deteriorate further,” it added.
The Put Call Ratio of Nifty remains close to oversold level at 0.68 and volume profile indicates Index has a strong support around 16,700-16,800 zone. Coming to the open interest data, on the call side, the highest OI observed is at 17,200 followed by 17,400 strike prices while on the put side, the highest OI is at 17,000 strike price, it further said.