Domestic markets are likely to open flat with a downward bias on Thursday, despite a strong recovery seen on Wednesday. Investors remain cautious due to ongoing tariff wars, prompting analysts to advise focusing on stock-specific opportunities rather than aggressive index-based positions to outperform the market. Gift Nifty at 22,375 signals a slightly weak opening, with Nifty futures closing at 22,441 on Wednesday. Analysts expect the recovery to continue, anticipating a slowdown in FPI selling and value buying at lower levels. FPIs turned net buyers for the first time in several weeks.
Emkay Global Research expects volatility to persist in the short term, attributing it to ongoing geopolitical tensions and concerns over tariff wars. The key to market recovery, according to the research firm, lies in earnings stability, with expectations of resilient FY26 forecasts. Despite these challenges, the Nifty broke a 10-session losing streak by surging 254 points or 1.15%, closing at 22,337 on Wednesday. The midcap and small-cap indices also posted gains, with the Nifty Midcap 100 index surging 2.42% and the Nifty Smallcap 100 Index ending the day with remarkable gains of 3%.
In the Asian markets, global stocks are trading in the green, with equities across the Asia-Pacific region up in early deals on Thursday following a strong performance in US stocks overnight. The Nifty managed to close above its 5-day exponential moving average for the first time since February 6, 2025, potentially signaling a reversal from a bearish to a bullish trend in the short term. Despite the recovery, F&O trading signals a neutral stance, with balanced positioning by call and put writers reflecting a cautious approach by market participants.
Overall, while market sentiment remains cautious, analysts expect stock-specific action to continue, with some buying interest in beaten-down quality stocks. The market is expected to face volatility in the short term, but the focus on earnings stability and value buying could drive a recovery in the coming weeks.
