Markets are expected to open on downward spiral on Friday, which will see introduction of new series (December) at the derivatives segment. Amid global turmoil, domestic markets are likely to see a gap down opening of about 0.75 per cent.
However, today’s focus would be on Reserve Bank of India, which is expected to increase rate by another 0.50 percentage point.
The US and Europe are all headed towards a recession, while India in all likelihood to prevent it very well, said Mitul Shah - Head of Research at Reliance Securities.
"The inflation has remained above the upper tolerance band of RBI for the eighth straight month and expected to remain sticky at ~7.5% in FY23, driven by increases in food prices. The rise in repo rate coupled with the inflation is likely to impact the market in the near term. Going forward, the key events for the markets include - inflation forecast, comments on external balance sheet, the tone of the policy statement and path on rate normalisation," he added.
FPIs F&O position
Analysts to bearish trend to continue for some time, as FPIs continue their heavy selling. According to market participants, “FPIs long positions in index futures is just 13 per cent, which is the lowest ever.”
Following a sharp fall in the US stocks overnight, Asia-Pacific stocks opened weak, with most falling about 1 per cent.
Fed’s tough stand
Edward Moya Senior Market Analyst, The Americas OANDA, said: Risky assets don’t stand a chance of a meaningful rally if the economy continues to show resilience while inflation continues to be significantly above the Fed’s Funds rate.
"Fed’s Mester signaled that a recession won’t prevent the Fed from tightening policy further and Bullard reiterated their determination to get rates to a level that can cool inflation," he added.
According to Shrikant Chouhan , Head of Equity Research (Retail), Kotak Securities Ltd, technically, despite a solid start, the benchmark Nifty failed to sustain above the 200-day SMA (Simple Moving Average) or 17000 level. In the intraday time frame, the index has formed a double top formation and conversely it is consistently taking support at 16800. As long as the index trades above 16800, the chances of a quick pullback rally is bright. Above the same, the index could retest 16950-17000 levels. However, below 16800, the index could slip till 16700-16650.”