Pre-market: Nifty50 likely to see solid start on Fed comments, crude

NEW DELHI: The domestic equity indices are likely to open on a strong note on Thursday, tracking firm Asian markets, after US stocks rallied in overnight trade on strong data and Fed minutes suggested delays to further Fed rate hikes, at least for the time being.

Brent crude futures rallied 7.2 per cent on Wednesday after Iran welcomed four Opec members’ recent decision to freeze crude output, raising hope that it would support the move to check the oil glut.

Back home, media reports suggested the government will soon announce higher-than-anticipated capital infusion in state-run banks, which could kick off more action on the banking counter.

At 8 am, Nifty50 futures on the Singapore Stock Exchange were trading 45 points higher at 7,181, indicating a gapup opening for the domestic market.

Nifty50 may find support at 7,000
Dalal Street analysts have turned positive on Nifty50, expecting it to move towards 7,200-7,250 levels. “IndiaVIX has turned lower and suggests that it is a likely to move towards 20 once again, the level being an important pivot for the index. Options data suggest healthy support near the 7,000 level, where Call writing was observed. While 7,200 is expected to be a strong resistance,” said Siddhartha Khemka, Head of Research, Centrum Wealth.

There is a chance of an intraday reversal, which means there could be pullback rally that is stronger that what we saw on Monday, said Mitesh Thacker ofmiteshthacker.com.

“The index may possibly extend and test the 7,200 level again and even get to about 7,250. I am not sure whether we are looking at a rally beyond 7,250-7,270 levels at this point of time. So it could be a movement which is basically a counter-trend which is more on short covering as well as some kind of value buying at lower levels,” Thacker said.

Investors will keep an eye on domestic inflows, which stand strong amid foreign outflows. Provisional data available on BSE showed FIIs pulled Rs 560 crore from equities on Wednesday. DIIs, on the other hand, were net buyers to the tune of Rs 385 crore.

Asian markets up on firm cues from Wall Street
Most Asian markets were trading higher. Japan’s benchmark Nikkei was trading 2.46 per cent higher at 16,229. China's CIS300 rose 0.45 per cent to 3,077. Other Asian indices, including Hong Kong’s Hang Seng (up 2.22 per cent), South Korea’s Kospi (up 0.92 per cent) and Taiwan’s TWSE (up 1.09 per cent) were trading higher.

“At this point of time, you should not try to look at what should be the support area. Volatility in the international market is likely to remain high,” said Vivek Mahajan of Aditya Birla Money.

US market ended higher on Wednesday
Wall Street ended higher on Wednesday, with the S&P 500 index extending its rally for a third day. The index rose 1.65 per cent for the day after the US Fed minutes from January 26-27 showed the US policymakers had been discussing altering their earlier views of the appropriate path for the target range for the federal funds rate, even as most judged it was premature to make big changes to their outlook.

“If the recent tightening of global financial conditions was sustained, it could be a factor amplifying downside risks" to the economy, the minutes suggested.

Meanwhile, US crude inventories dropped 3.3 million barrels in the week to February 12 to 499.1 million, data released overnight suggested.