The recovery phase is likely to continue for domestic markets on Thursday as well, amid positive global cues. SGX Nifty at 17,135 indicates Nifty is likely to cross the psychological 17,000-mark quite easily. Nifty futures on Wednesday on the NSE closed at 16,973.35.

While Nasdaq and S&P 500 climbed over one per cent overnight, the Dow Jones Industrial Average rose 0.74 per cent. Following the US stocks, Asian stocks edged up in the range of 0.1-0.5 per cent.

According to analysts, it’s a relief rally that helped indices to recover some losses. They caution investors that the rally may peter out due to various headwinds such as Omicron Covid variant spread, tight liquidity regime and rising inflation.

“Looking at the increasing Omicron cases and news about night curfew may lead to downside trend in markets in coming days,” said Rahul Sharma, Co-owner, Equity 99.

‘Buy on dips’

The relief rally might continue for some time as the market enters into a holiday mood, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd. However, volatility cannot be ruled out on account of potential risk from Omicron variant and fragile global cues, he said and added, “We suggest long term investors to take benefit of such volatility in the market and add on to their portfolios gradually at lower levels.”

Also read: Day Trading Guide for December 23, 2021

Ruchit Jain, Trading Strategist, 5paisa.com, said, Nifty has seen a relief move in the last couple of sessions and has recouped much of the early week’s losses. The data indicate that much of the recently developed short positions in the index have been covered which has led to this up move. In the options segment, the put writers have built up positions at 16,800 strikes indicating that the support is shifting higher and cool-off in VIX should also be a relief for short term traders.

“We expect the volatility to settle down as we head towards the year-end and the Nifty could see some more pullback towards 17,150-17,200 in next couple of sessions. Traders are advised to look for stock-specific opportunities as stocks which are trading near their respective supports and have corrected sharply recently could witness some sharp pullbacks,” he added.

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