There's a bit of a setback in the US - that's what all Asian markets are grappling with this morning because of US Securities and Exchange Commission (SEC’s) call for more disclosures. The Dow lost a couple of 100 points. But to be fair, Asia has not overreacted - we do not have a big sell-off in Asia; just mildly subdued on the back of what has happened in the US.
We have been just trading water over the last two-three sessions - extremely rangebound, quiet, consolidating kind of markets. So let us see if we can continue on the same vein or we need to give up a little bit more ground.
We may give up little more ground. It’s all looking like consolidation for the moment, the three days of this week and after six-seven weeks of a rally one week of doing nothing is fine; it’s completely acceptable. The big question is whether the global cues etc. will nudge us further down or we will get away with consolidating in this 100-150 point band on the Nifty. So we will find out over the next few days.
I think the breadth has been a bit disappointing; the last couple of sessions as well. So people might be getting worried. But so far, no signs of any major reversal or a massive sell off or anything like that. I think it looks like consolidation and even if it is with a touch of a negative bias today, that may well continue.
Asian Indices:
Asia is okay this morning, though the Hang Seng is slipping a bit more into the red now, the Nikkei has been for a while, China is the only market which is standing out but the other markets on an average are holding up losses of just under 1%.
On global markets:
They have been sort of tepid but there has been no major sell off. Yesterday there was the first significant crack or pullback in the US markets and that too because of regulatory action. They are asking for more disclosures out there nothing wrong with that at all. But we saw a little bit of a reversal out there.
I still think crude is a bit of a wild card out there, commodities are not showing any signs of cooling down globally and that remains a bit of an issue and the economic data is a bit mixed. Some data points have been okay, some have not been so okay.
I think the big call for global markets is that whether there is a bit of a correction which is looming there after the recent rally or this will just be a sideways to drifting kind of phase after which the markets will try to edge up once again.
I think people are a little confused on which one it is-whether it is going to be a pullback, some serious give up of the gains posted in the last few weeks or we can just amble along through this period of May and still not get dented too much.
That gray phase of uncertainty that global markets are going through. I still think commodities is a bit of a discomfort factor, which might be the joker in the pack and lead markets down but otherwise I do not think serious cracks have opened up yet, we wait and watch. I think we will all move in a synchronized fashion; give or take a little bit I think, all global equities will probably head northward or southward depending on what the outcome finally is in May but it is just not very clear yet.
We have been range bound not overly nervous like we were in the first few months of this year?
I think to that extent we are not seeing those kinds of huge knee jerk kind of moves. When mood gets little skittish one suddenly see a 500 point sell off in the Sensex. That mood is not there right now because we have come a long way from the lows. I don’t think we are skating on that thin ice just for the moment.
The call for the near-term trader is whether we get away with around 5,100 kind of range on the way down if this is a mild pullback or we get tested to 5,000 and sub-5,000 levels on the Nifty. Don’t know the answer to that but what was going on even a week back was that the breadth was improving quite a bit. So it didn’t matter so much whether the Nifty put on 50-60-70 points everyday, lots of individual stocks have given extremely meaningful pullback from their lows, 25 to 40% pullbacks in many good quality midcaps have happened.
The question going forward is not whether the Nifty can dart to 5,500 immediately but whether this kind of constructive movement for the broader market can continue? Last couple of days the breadth has weakened a bit. So that’s the question for a lot of people whether after this pullback from the lows, the midcaps need to retrace and give back some of their recent gains too or whether they will still hold pretty strong? I don’t know the answer to that and I think the cues still would be quite global.
-Udayan Mukherjee, Executive Editor, TV18 |
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