Pre-market: Nifty50 likely to open lower on Fed comments; ECB meet eyed

NEW DELHI: The domestic equity benchmarks are likely to open on a weak note on Thursday ahead of the much-awaited European Central Bank (ECB) meeting, where ECB president Mario Draghi is expected to announce further stimulus to support the slowly recovering economy.

Services PMI data for India and China and factory orders and PMI composite for the US will also influence investor sentiment during the day.

The market will also wait for the US Federal Reserve chair Janet Yellen testimony on the economic outlook and recent monetary policy actions before the Joint Economic Committee in Washington DC.

At 07:45 am, Nifty50 futures on the Singapore Stock Exchange were trading 34 points lower at 7,922, indicating a gap-down opening in the domestic market.

Asian markets were trading mixed. Japanese benchmark Nikkei was trading 0.22 per cent lower at 19,894. China's Shanghai Composite was up 0.51 per cent at 3,555.50.

Other Asian indices, including Hong Kong’s Hang Seng (down 0.47 per cent), South Korea's Kospi (down 0.94 per cent) and Taiwan's TWSE (up 0.24 per cent) were trading mixed.

In the US, Dow and S&P500 fell 0.88 per cent and 1.10 per cent, respectively, in overnight trade.

Market analysts believe while the ECB is widely expected to announce some measures, there is uncertainty over what they will be.

“Very clearly, the ECB has telegraphed that it would like to ease further. The only question is which mode of easing will it favour. It seems that the most likely outcome would be a cut in deposit rate to even more negative levels,” said Manu Bhaskaran of Centennial Asia Advisors.

Any stimulus by the ECB could soothe nerves of investors, who are bracing up for a likely Fed rate hike in its mid-December meeting.

In a speech overnight, Fed chair Janet Yellen said: “When the committee begins to normalise the policy stance, doing so will be a testament... to how far our economy has come.”

“In that sense, it is a day that I expect we all are looking forward to…,” Reuters quoted Yellen as saying.

Back home, NSDL data showed foreign portfolio investors (FPIs) remained net sellers to the tune of Rs 2,063 crore in the first two sessions of December.

Experts see strong support for the Nifty50 at 7,900 level.

“I don’t expect the market weaken that much where one should just start selling off everything. I do not see that weakness. Should we break 7,900 on the Nifty50, only then can one start selling. One can have a stop loss probably 20 points below the 7,900 mark. Watch the index for the first half an hour on Thursday. In case it does not sustain above 7,900, then I would think one should call off all the long bets,” said Sandeep Wagle of Power My Wealth.

“As of now, it will be in that 30-40-50 points band. The index may not break below 7,900. It may not break the 7,970-7,980 range on the upside either. It could witness some sideways action. In that sense going short may not make sense. I would still continue to be stock-specific,” Wagle said.