Stock markets are expected to remain lacklustre on Wednesday, amid mixed global cues. According to analysts, global stocks are also struggling to see a clear direction ahead.
With the market closed tomorrow due to Ram Navmi, analysts expect volumes to remain low at the bourses today. However, individual stocks, especially from mid and small-cap space will remain volatile, as trades will have to see either square-off or roll over their positions due to the settlement of March contracts today.
Mid and small stocks are already facing heavy selling pressure due to risk-off trading adopted by investors. SGX Nifty at 17,006 signals a flat-to-positive opening for domestic markets. While Asian stocks are ruling mixed, US stock futures are up. Analysts expect the market to move in a narrow range while the focus will be on battered small-cap and mid-cap stocks.
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According to Ruchit Jain of 5Paisa.com, FIIs continue to hold significant short positions in the index futures but they have shown initial signs of short covering as they have trimmed some of their short positions on Monday which were short-heavy. However, one should not pre-empt and rather see whether they cover their shorts further or roll over these positions.
The Midcap and the Small cap stocks are witnessing a sharp sell-off as both the indices breached their important supports during last week.
Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd, said the market range is expected to be between 16850 to 17,150. “As market analysts continue to monitor global market developments and their impact on India’s economy, they will closely observe the market’s movements to determine its direction in the near term.”
Ajit Mishra, VP-Technical Research, Religare Broking Ltd said, “We expect volatility to remain high due to the scheduled expiry of March month derivatives contracts. On the index front, participants have been trying to defend 16,900 in Nifty for the last three sessions and its breakdown may trigger a sharp reaction on the downside.”
Needless to say, the recent sell-off in the broader indices may deteriorate further, he said and added, “We thus reiterate our view to limit trade and maintain positions on both sides.”
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