Pre-market: Analysts remain cautious amid weak global cues

Till the Nifty doesn't cross and hold above 8,145 levels, analysts suggest that weakness may continue and drag it towards the 8,000 mark

Benchmark indices plunged by over 2% on Wednesday, with the Sensex breaking its crucial psychological level of 27,000 and the Nifty slipping below its crucial 200-DMA mark, amid a global bond rout.

In fact, the markets have corrected by around 10% to underperform their global counterparts and are now trading at 2015 lows. This should be a good reason for a technical pullback, aided by selective value buying on beaten-down counters.

However, the global cues do not seem supportive on Thursday. Asian stocks slipped, taking a lead from a weak Wall Street. Nikkei, Kospi and Shanghai indices lost around 1% each and the Taiwan, Singapore and Jakarta markets slipped 0.5% each.

US stocks also showed weakness with the Dow Jones industrial average slipping 86 points, or 0.4%, to 17,841 levels, while the S&P 500 lost 9 points, or 0.4%, to 2,080 levels on Wednesday.

“The outlook is a weak start. The indices would look at picking up the pieces after perhaps another round of adjustments in various counters. The Nifty once again is well below its 200 DMA, a level most traders would watch. Foreign cues are not aiding for now,” said IIFL in a morning note.

“Federal Reserve Chairperson Janet Yellen has pointed to high valuations in the stock market. There are potential dangers there she said adding that she sees risks as moderated and does not see any bubbles forming, though the central bank is watching the issue closely. The other factors to watch out today include BoJ Monetary Policy Meeting minutes,” it added.

Till the Nifty doesn’t cross and hold above 8,145 levels, analysts suggest that weakness may continue and drag it towards next major support of psychological 8,000 and lower levels.

"On upside crucial hurdles seen at 8,145 followed by 8,180 – 8,200 zones. Traders need to be cautious as bears are controlling the index from last two sessions even after its oversold price structure," said technical analysts at Anand Rathi in a report.

Jayant Manglik, president-retail distribution at Religare Securities also maintains his negative view and expects the Nifty to test psychological mark of 8,000 in the coming sessions. Any rebound in index, he says, can be considered as shorting opportunity.