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The world keeps changing every night and we come back with a completely fresh perspective - so much has changed since the markets closed last evening or yesterday afternoon. The Participatory-note (P-note) regulations have changed; the Reserve Bank of India (RBI) has surprisingly cut cash reserve ratio (CRR), global markets continue to tumble though Asia is weathering it a little bit better this morning. So global turmoil, lots of policy changes - it will all go into the melting pot today, who knows what will win; policy action or global turmoil.
On global markets:
These are difficult times, unprecedented times in the global markets and therefore the kind of action that we are seeing is also quite unprecedented. Things are very fluid at this point in time. You do not know what the market will react to this morning, it could easily snap back because of the concerted regulatory action, which is happening or it could continue to drift down along with global markets. So it is a tough call.
We are seeing history unfold in front of our eyes. This is something that we do not see in a decade or a couple of decades, the kind of action that we are seeing in global markets and the way regulators across the world are forced to respond to it to at least keep the patient alive. There is absolutely history unfolding and therefore the less you take in terms of big directional calls in the market, the better because we have no clue of where the situation might land us in finally. It is tough times and absolutely historic times for financial markets around us.
For many markets, it is almost like the hemorrhaging right now?
It is and I suspect that will continue because this is not about small interest rate change and it is not about throwing a little bit money at the system or anything like that. We are probably hurtling towards the global recession not just the US recession at this point in time and the kind of economic distress, which might unfold over the next few quarters, is making everybody very nervous and justifiably so.
So right now you don’t want to get into that, okay inflation at 11.99 so we are fine, Cash reserve Ratio (CRR) down more 50-bps, so we are fine or to get extremely bearish between points and say now the market will go to 8,000 Sensex and the Dow will plunge to 5,000. None of us know what is going to happen. Could any of us have predicted the events that have unfolded in the last 4-5 weeks? The biggest analyst in the world couldn’t have seen of what is going to happen.
We are in unprecedented times and none of us know how things will shape up over the next few weeks and months. It is best to say I don’t understand what is going on; it’s beyond my comprehension completely. I don’t want to stick money into assets and all right now, if I could I would dig it under the ground and sit on it since I can’t do that I just need to be in cash at this point and not be brave trying to fool myself by thinking that I am the best analyst in the world who knows exactly how this thing will pan out. When in doubt just keep your money under the mattress that is always worked in history and that is going to work right now.
Asian Indices:
Asia is okay this morning it is not such a bad picture the Nikkei is down about 2%, Straits Times is actually up 1.5%, China is down 1.5%, so mixed bag but no great sell-off as you have seen across the US market things are little bit calmer out here though they started negatively, the most Asian markets seem to have come-off the morning’s lows.
It’s almost like a vortex situation everyday?
It is and the way things are now capitulating in the West is quite alarming because yesterday Europe was down 8-9% apiece. I do not remember in my memory when European markets fell 8-9% a day, Russia was down 19%. These are indices for large markets which are falling 18-19% a day; it’s not a single midcap stock. So it’s very scary, but the pace at which these markets are falling right now lead you to believe that for the near-term you are probably headed to another intermediate bottom because things do not fall 20% a day for very long. So its getting completely overdone right now, you are seeing the absolute peak of panic, it could last for a day or two sure or maybe in the next 48 hours you will probably see a spike back in the global markets. I know not the best morning to suggest that but it inevitably happens when market falls 7-8% a day.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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We come back to trade after an eventful weekend - the bailout package may be through but global markets are not showing any great strength at all. Asian markets are deep in the red today; so it is not a pretty picture at all as we go into trade, earnings season also kicks off this week but that may have little bearing given the kind of global vortex that we are caught in. So it looks like a tough morning after closing virtually at the lows of the year on Friday.
An important week:
It will be an important week and an important session of trade too because we closed very precariously on Friday and we are almost at the lows of 3,800 and the way global markets are going, it is possible that today 3,800 breaks as well. It is the fifth attempt at that 3,800 level now or 12,500 Sensex whichever one follows, last few times we have managed to claw back somewhat. So the hope is that the second half of the day would be bit better than the start because the start almost inevitably will take us back down to the lows of close to more than 3,700.
So the morning doesn’t look good but the closing will be very decisive today less than earnings more how the global situation is just unfolding and degenerating everyday.
Asian Indices:
The US was not good on Friday night and Asia is not good either. China has reopened after many days 3.5% down, Korea is down almost 4%, Taiwan 3%, Hang Seng has recovered a bit from the lows but it is still down nearly 3%. So average cut across Asia would be 3% this morning and that is what the SGX is indicating for us as well.
After that bailout package there wasn’t even a sell on strength option?
No, the Dow collapsed some 400-points from the highs of the day that was a very disappointing close. So it’s not how much it lost in real terms but how much it came off after the bailout package came through. Also the economic data there is really bad now. For the most part of the last week; all the economic data points have been so bad non-farm payrolls, unemployment and that is just driving home that point that big bailout package or not, things are crumbling in the US. What the world is getting really concerned about is the pace at which things are worsening in the Euro zone as well there too over the last three or four sessions, we have seen consistent bad news.
The bad economic news in the US, the bad news in Euro zone all of that, I suspect is just breaking sentiment quite a bit. I doubt very much, if we will get terrific global cues in the next few days, if we just look at most of the Asian markets are trading at 2008 lows. We have got big global challenges ahead of us and that’s probably the reason why earnings might get overshadowed this time around.
We have got money problems as well?
We do. That provisional figure for Friday, I think will be very disappointing for a lot of people because that was the day when many largecap names were selling off and by the end of the day sure enough we have got a Rs 1,600 crore negative figure in the cash market.
The additional disturbing thing this time around is that earlier when the market has got weak globally, we would see quite a bit of shorts piling up on the Nifty futures which FIIs (foreign institutional investors) would sell. Nowadays the selling does not come in the futures market, they are not shorting too much by way of Nifty futures, they are actually selling quite heavily in the cash market, which probably reinforces the kind of redemption fears that we have been talking about.
Over the weekend, there was a note out from one of the hedge fund trackers suggesting that fund of funds still need to pull out another USD 100 billion by the end of this year. I do not think global markets can absorb, in this fragile situation, USD 100 billion more of selling that I think is the big problem. Whether more redemption are coming and more redemptions came at the end of September, which is the reason why we are seeing this kind of selling and it will not stop right now. It will probably carry on through till the end of the year. So we have got a bad situation on our hands with FII flows and I doubt whether things will get better in a hurry.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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The markets will be rangebound and may probably shift down to a lower range of around 3900-4100 today. Indian markets are unlikely to react to the bailout as the markets have not been reacting to news from the US. We may fall in-line with the rest of Asia.
Here is a verbatim transcript of Udayan\\`s comments on CNBC TV18. Also see the accompanying video.
We come back after a day’s break but the picture is not quiet what one would have been expected to see from the US markets. Yes, the deal looks like it will pass through, the bailout package but the Dow Jones Index was down 350-points, there is one more go-ahead which is required but the market is not convinced and nearly a 100-point cut in the Nasdaq as well.
The good news of course is that Asia is not reacting as violently to it just like last time. So, Asia is down but not quite out this morning but that’s the backdrop; the US sell-off deal almost through, Asia is quiet and we are trading the last day of our week as well which has been a truncated one but quite a volatile one.
It is almost like yes bailout, but so what?
Sort of and I think a lot of people who might have kept positions open on Wednesday hoping that once this market against this sense that the bailout will come through, you will have at least a bit of a pop up in the US but the Dow is very close to, where it was on the panic low which was hit after the deal got rejected. So two days after that big pull back rally we are pretty much back to square one and that’s not very comforting. Of course the market is pretty much signaling what we have been talking about and that is bailout package done but so what? Does it change things materially for the medium-term? - Perhaps not.
For our markets, I think we are in a fairly range bound kind of situation now. The range is shifted lower and within that we will probably grind around. So perhaps a boring kind of a session, a little bit of a nick in the morning and then hold a negative kind of a range for a bit, but don’t expect anything special on the last trading day today.
Asian Indices:
A couple of Asian markets are shut like China and Korea. The others which are open are okay; Singapore is down 2%, Hang Seng is down 2%. One should remember that this is a reaction to a big sell off on the US markets. Taiwan has actually recovered some of its losses; Japan has to a certain extent. So they are down but not quite out this morning.
On the bailout and its impact:
I don’t think we will react as much to the US fall because that is typically what we have not been doing, as in the US sells out 3-4% quite regularly now-a-days but Asia and India does not do that. So perhaps we will be spared that big a cut. We will probably fall in line with the rest of Asia, may be loose 0.5-1% this morning and then amble around there but violent reactions like that may not happen.
I think the market there is trying to put pressure on the regulators and the Congressmen - it is almost like a warning; a sell off before the final vote happens that if you do not pass it, then heaven help you because the stock market is going to take another big tumble. I think it is the market’s way of probably adding a little bit of pressure on the policy makers there. I think there will be more that the US policy makers will have to throw at the market, this bailout package will have to pass and then later in the month you have to see rate cuts from the Fed as well, because the market is clearly signaling that this is not enough to bail it out of trouble.
We had a big fall then a smart recovery and then in the next couple of days we have pretty much given back much of those gains and gone back to virtually the levels which existed when the panic sell off happened that is probably the markets way of saying, “We have priced in the bailout package but materially life does not change for us.”
There are many other things which are very problematic out there and perhaps they are as important if not more, than this bailout which has consumed investor and media attention over the last 48-72 hours. The way London Inter-Bank Offered Rate (LIBOR) shooting up everyday is hugely problematic out there for companies. If you just look at the macro data, the jobless claims data is just worsening, home prices continue to fall, and none of this is good. Even if we get that bailout package through, is it a magic wand after which you say from Monday onwards everything is hunky dory? - No.
The market is probably just reacting in a correct way, which is the relief and the despondency reactions are knee jerk but after that they are pretty much holding a downward drift out there in the US, which probably is the right way to be because the problems are just humungous.
We may not collapse like the US markets have but we have got our own downward drift to deal with?
The range has shifted down there is no question about that. Earlier we were talking about maybe 4,000 to 4,500 kind of range, stretched down to 3,800 to 4,500 but I think the higher end of the range is looking more and more remote now. It would require quite a bit of push to take the Nifty back up to 4,500. On current reckoning I do not think it has strength to get back to 4,500-4,600. So it’s possible that we are shifting now after the drubbing that we have seen this month or last month to a lower kind of range. The lower range could be defined by the lows that we saw a day before or at the start of the week when that bad news came in from the US which is close to 3,700 mark and the higher end could be that maybe 4,100-4,050 those kind of levels beyond which I think people will start selling, shorting and the level of conviction on the up move will go down further.
So on a good day, on a bit of short covering you will see those bounces which take you to 4,000 perhaps take you to 4,100 but now from 4,000 to 4,500 Nifty which was around for quite a bit, I think we are probably now getting resign to a 3,700-4,100 range. That’s not very comforting. This morning again you will get stuck in the middle of the range, probably start the day around 3,900 then just amble around a bit. But we are range bound and the range is lower and therefore it’s suggesting that the market continues on its downtrend.
I also do not think there are huge trading opportunities in this kind of a market because it continues to be volatile in a narrow range that too a downward drifting range so you could get it right once or twice. But this is not the kind of market where you typically end up trading and making a lot of money because at 3,800 kind of levels or 3,900 kind of levels, it requires a lot of courage to short heavily also because you have fallen quite a bit and going long as problematic because news flow is against you so again upsides get capped 150-200 points higher. So, from the mid point of the range it’s difficult to open up fresh trades either.
It has been a miserable month- it has been down like six out of nine months this year and October is really big that way in terms of which way it could swing?
Yes, September was disastrous and I do not think most people expected that we will lose 12% as we did in the month of September; the Sensex is down nearly 12%. So that is quite disastrous.
Now after such a bad month, could you play for a bit of a bounce back? In ordinary circumstances, you would have expected to see a bit of a pullback and that might well happen but these pullbacks do not have much velocity nowadays. Earlier when we were seeing those massive 20-25% kind of pullbacks, markets would go back to 3,800, bounce back to 4,600 those are getting tempered. The pullback rallies are getting shorter and more and more compressed. Nowadays 200-300 points is all you get in the pullback not those 20% kind of rallies. So let us see what we strike out in October. I do not think all this bailout package and nuclear deal will take you anywhere beyond a point. It will only be those couple of 100 points on the Nifty if that.
The two big triggers for me in October are if there is any kind of surprise on the earnings. I doubt if there will be huge positive surprises, which takes the market up 15-20%. We just pray that there are no negative surprises because the market’s tolerance for negative surprises is quite low now. It is that kind of earning season, which may not take you up a whole lot but has the potential of breaking your bad and hopefully that will not happen.
Towards the end of the month, a lot of interesting triggers are stacked up because I think there is every chance that the Fed will cut rates. Around that time, you will hear a lot of talk and maybe there could be some intermittent rallies happening predicting or playing for that Fed rate cut this time around because they badly need anything. There would be a monetary policy here as well and let us see what theReserve Bank of India (RBI) has to say.
The wildcard in October, aside of these two main triggers is that the parliament session that will also get underway and since the Prime Minister has a little bit of tailwind going after the nuclear deal, let us see if he can push through with one or two things because we will take help from any quarter in our market right now. So it will be earnings and monetary policy here and overseas but wildcard being the parliament session if it can throw up any positive surprise.
On Asian markets:
Asian markets are not down too much; it’s a flattish kind of morning. A couple of those markets are down 2.5% in a single session and our notions of volatility have completely changed over the last few months. A few months back if we saw the Hang Seng down 450-points we would worry very much in the morning but nowadays 2% we treat like it is nothing, the market is flat out there. So this global volatility has whacked us completely over the last few weeks.
On nuclear deal impact:
I think the market is not focused on this kind of news flow at all. It’s important for our country and will probably help some of our power, capital good companies in the medium-term 4-5 years from now but the market is in such a mood that it ignores most positive news in any case and this kind of news which is medium-term to long-term positive, I don’t think the market has much time for it.
So maybe some trader will but NTPC or Larsen and Toubro (L&T) or BHEL for a half an hour this morning. All of those things will happen but the market is not focused on these things, they will come and go and it will not make an iota of difference truly there are much bigger things on the market’s mind at this point in time.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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Today, the expected has happened. The US markets, which got oversold the day before has pulled back last night and pulled back with some gusto. We saw it coming yesterday which is why the markets bounced back intra-day out here very smartly. Asia saw it coming as well - the reason why Asian markets the ones, which are open this morning aren’t exactly jumping because they saw that this rally was possible and moved up in anticipation of it. So US cues are good, Asian cues are flat and mixed and we have got to go through today’s trade with tomorrow being shut and with the bailout package being considered with a high likelihood of being passed in some form; tomorrow morning India time.
We may start up a bit and then hold a bit of a positive range during the course of the day. But when we come back to trade after the holiday, it seems very likely and one would be very surprised if in the second attempt they could not push through the bailout package. So we will probably have some good news; I do not know how of that has been priced in by the US market in its last night rally and how will be tonight. But we will probably come back to some good news.
So we could start strong and then maybe hold a positive kind range during the course of the day. It is not seeming like the kind of day where you will see a lot of fireworks but very bad closing also seems unlikely, given that the market should reasonably expect to wake up to a bit of good news on Thursday morning.
For the very near-term will most markets wait and watch for that trigger i.e. the package?
Yes it should come through now because I suspect that on the second attempt it is very unlikely that they will fail. This is 6am India time tomorrow morning, so you will have time to react to it in the morning but I suspect this time around they will get it done otherwise they would not have put it up for a second vote only to be embarrassed. I suspect they have worked out the numbers maybe they will tweak the package a little bit but get it through right now.
So could there be another good day for the US markets?- Surely it could, though a large part of it would have priced in last night alone but there could be one more move up after the bailout package comes through and that might well be the cue for us.
I suspect that trader would be thinking thus that let us just trade quietly today with a bit of a positive bias, maybe just hold on to the long positions today and if we do get a little bit of a gap up on next opening after the bailout package comes through then that is your chance to sell out on that gap up and that may well be a view which pans out quite like that though of course last time was a bit of a shocker that they could not push that package through.
But do the world’s woes end with the passage of the bailout package? - I doubt that very much. If we just look at what has been going on throughout this week from the European market, it is not comforting at all and while we will have this bailout package possibly and then next few days there might be a feeling that things have eased out in the near-term, I think something else which is pretty bad will come and hit us from the euro zone next.
We are still in a very fragile kind of global financial system. A USD 700 billion package will not open up risk appetite for money to pour into emerging market, far from it actually. In the medium-term we still have big problems; all that we are talking about is a bit of a relief because the package after stumbling once will probably get through. That might lead to a few percentage points of a rally here or there. But medium-term we still have major issues globally.
Do you in the near-term again have a little bit of relief from our internals?
None, what the internals are suggesting is that the market is in a range 3,700 puts have been written so off the market or the traders have some comfort that in the near-term the intra-day low that we saw yesterday on opening of 3,720, those levels should not be violated because the market got oversold and is in slight pullback mode. But there is very little conviction at higher levels and I don’t think traders are talking about too much more than 4,100 at this point in time maximum 4,200 if that, which would still be lower than 4,300 where we turned from.
I don’t think there is a huge amount of conviction which is being reflected in a market internals or the options data as such. One can see that sentiment is quite fragile in the stock futures side as well despite the market pulling back yesterday’s stock futures shed about 1 crore shares, partly short covering; shorts also got cut. But even yesterday, you didn’t see too much by way of selling on either the cash or the futures market from Foreign Institutional Investors (FIIs), which need to be covered up, so no great fresh shorts were created there.
All in all listless cues from the market internals, all suggesting that we are at best within a trading range of 400-500 points Nifty albeit a lower range than what we were working with a few weeks back.
With the market itself shifting into a lower range, in that sense must one tempo optimism on all these pullbacks?
Optimism is quite tempered, if you go and talk to people in the street, I think sentiment has got damaged quite considerably in the last 15 days. There was a little bit of hope in the early part of September that things are on the mend, can we go to 4500-4600 or maybe even stretch it to 4800 all that talk has died down in the market. So this fall to an intra-day fresh low which has happened, this fall from 4300 back to 3700 kind of levels, its been not only bad for the prices its been terrible for sentiment and there slowly is an air of resignation which is slowly building up in the trading community internally or domestically.
People are becoming more and more hopeless with every failed rally and nobody is talking about 4500 just yet. When you go and talk to traders, they say yes there could be a short covering rally but will be happy to sell between 4100 and 4200 and take some money home if we can get that. The range has probably shifted lower, surprises happen in the market and since all of us are resuming that the market is in a lower zone, you could get those periodic surprises but that aside, I think generally people are getting a bit more skittish with their view every passing week.
For the moment the market looks like it might just inch closer to that 4000 mark maybe if you get some good news from the US over the next couple of days, stretch to say something like 4100 give or take 50 points on either side but at those levels I suspect you will see quite a bit of supply coming in and you will need something more than that bailout package to push it beyond that point because sentiment is quite bad and it looks like a pattern of lower high will be maintained unless there is some big surprise which is unfolded.
We may not see panic in the next few days because we just saw that Yesterday and day before, but that aside optimism is very tempered.
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See Sensex at sub-12000, Nifty at 3600 levels
Nobody had expected the bailout package to be rejected. The Dow Jones fell by 7%. All hell has broken loose in global markets and there\\`s panic and mayhem seen. There will be new lows formed today for the year 2008 and we\\`re likely to see sub-12000 levels on the Sensex and he Nifty may hit 3600.
Here is a verbatim transcript of Udayan\\`s comments on CNBC TV18. Also see the accompanying video
It is going to be a nightmare kind of a session because the unexpected has happened. While we might have argued with the contours of the US package; nobody expected that it would be rejected. But that is the reality this morning and that is why the Dow Jones has had its biggest absolute fall ever, nearly 800 points i.e. 7% on the Dow Jones index. The only biggest percentage fall ever has happened on the day after 9/11. Nasdaq was down 9% overnight and the S&P 500 nearly 9% as well.
This is the stuff that you do not see across the world, you probably come across once in a couple of decades or a lifetime but all hell has broken loose out in global financial markets. Regulators have tried to stem it by banning short selling in many markets across Asia and across the world and that is the reason why the falls in many markets are a bit more muted than the US but that does not mask the absolute panic and mayhem that is around the region and around the world in financial markets this morning.
The global situation this morning is just complete panic:
I haven’t seen those days for a long time, I think September 11 was probably the closest we came to this kind of mood that was prevalent last night and that is prevailing this morning. Its complete mayhem, I don’t think it is about valuations or levels or anything like that it is just complete panic. The whole system is freezing up now and this is the kind of stuff, which leads to circuit downs in the market, where people just do not think because they cannot think they are in a complete panic mode.
I would say that if short selling was not banned across many markets in the world, you probably would have seen circuit like kind of situations in many markets because this is the stuff, which bears love and this is the stuff which just leads investors into a complete tizzy where they cannot think about what kind of prices they are seeing on the screen.
I have no doubt, we’ll see panic today. I hope at some point in the day may be there could be some sanity, which returns though I doubt it very much and over the next few days we will try and find our feet after a crunching blow. But new lows for 2008 will certainly be formed today, no question about that. So that crutch of support of 3,800 or 12,500 is gone. Today for the first time this year and for a very long time you will probably see 11,000 something on the screen i.e below 12,000 levels and I won’t be surprised, if we ground down very close to 3,600 kind of levels on Nifty either, something between 3,600-3,700.
One doesn\\`t know if the market has a stronger sense of premonition than others but yesterday it looked like there was something other than selling that was making us crumble, this morning will we be as intense in our panic?
No getting away from it. Yes it is true that we fell quite a bit yesterday and maybe the market had a sense that something was going wrong or sense of foreboding but that will probably not couch us. We are in a different kind of market. I do not think people are thinking. I doubt very much if people will say that we feel 4% yesterday or 3.5% and therefore today our fall should be no more than 2-3% because we have factored in part of the fall yesterday.
We are in a panic kind of markets so we will start with 4-5% kind of gap-down and then probably struggle around those levels for a bit, there could be a touch of short covering, people will try and talk about the inevitability of the package coming in, in the next two-three sessions whenever it does and therefore the markets will bounce back all of that. But I think a significant low has been broken and that is reality. When a significant low breaks then typically you do not end up 50 points below that, you probably see much lower levels. There could be a short covering rally at some point because after what has happened on Friday and yesterday today another 4-5% and you are talking 10-11% in three days for the index for many stocks the number is closer to 20-25%.
There has been a lot of panic, which is reflected in stock prices already. A short covering trading bounce can happen at any point but even if that happens, the fact that lows are broken and such a lot of panic is coming through from the global markets again, I suspect that you would expect to see lower levels even from hereon.
How are global markets looking right now?
For global markets now after this morning’s mayhem which will ensue inevitably, we will have got to ask ourselves what will happen over the next day or two. Tonight, when the regulators and the US senate members wake up they will wake up to a Dow, which was down 800-points, and the Nasdaq fell 9%. Let me tell you that however, regulators and whatever their compulsions were for the vote, Americans care very much about their stock market about their financial markets. Once they see that panic on the screen, my suspicion is that they will move quite swiftly and pass this package in some form or the other.
Desperate situations need desperate measures and we haven’t seen more desperation like the US is in for a very long time. So whether it is October 2 when the senate is reconvening to consider this package, I am sure Henry Paulson will tweak the package now a little bit maybe dice it up, maybe put some preconditions and I suspect you will see that in the next couple of days the package in some form will come through because there is no other way. Can the US afford to lose for the Dow to lose another 10% over the next couple of days? - They are already in a bad situation; they don’t want to get it worse with the complete panic in the financial markets.
So, probably in the next 48-72 hours this package will get passed in some form, if not then the Fed will cut interest rates, the Fed will throw billions of dollars to ease liquidity in the system through swaps etc. but lot of measures will happen after what has happened in the US markets last night. I think we will probably have the ingredients of a bit of a short covering pullback at some point during the course of the week.
This morning will be bad but if you are a savvy trader, you will keep your eye open for that possibility that they cannot let it be like this for another few days. The package has to come or some relief has to come and there would probably be a short covering rally before this week is out.
There are some plugs being put in place across many Asian markets like short selling bans, is that likelihood for our own market? The last time we heard from the SEBI (Securities & Exchange Board of India) Chairman, he said that was something they were just looking at when it happened only in the US?
Last time he seemed disinclined to do it but between last time and this morning things may have changed a little bit. So the thing is that we are in a very globally synchronized capital market situation or financial market situation. It is like when you shut the National Stock Exchange (NSE) because of a sun outage, you have got to shut the Bombay Stock Exchange even if there is no sun outage on the Bombay Stock Exchange.
I think the situation is quite analogous where if you ban short selling in a few key markets given that money flows around the world and this meltdown will be fairly global, then speculators who cannot short in one market can certainly opportunistically are short other markets because the availability of that facility is there in other markets and therefore it follows that when a few markets ban short selling, other markets will also be tempted to do it just to keep the same kind of level playing field for speculators. Otherwise some markets maybe hammered much more than they deserve to or there would have in ordinary circumstances.
Is it a distortion?- Absolutely yes and however you moralize this one on how in the interest of the country and the nation in difficult times you should not be shorting the market, it goes against every grain of a fair market to ban one leg of the market. However, these are exceptional circumstances and this might be a necessary distortion that most markets are coming around to accepting and I would not be surprised if today or tomorrow, at some point during the day even SEBI comes out and says that we will only allow the global guys to short to the extent that they have portfolios running in this country essentially to hedge and we will not allow naked shorts or any kind of Nifty future shorting because that is what other principal markets are also doing at this point in time. So Korea has done it, Taiwan is doing it, Hong Kong has put out a veiled threat and I suspect you will hear something from India as well.
It is not a good thing to do at all but when did we last see this kind of a situation across global markets? We have got to accept some things which we do not like in ordinary circumstances.
On Nifty:
3,800 is gone now so we will probably start the day today around 3,700 and then just toss around a bit. I think people will figure out like you spoke about the premonition that people had yesterday about something going wrong our markets typically tend to work in advance. So while the start will be terrible, at some point in the day people will want to look forward once again and say will the bill have to be passed in the next couple of days and if the answer to that, if they find is yes, then at some point you could see the shorts taking profits.
Also what is important is that people who have been running positions or short positions, not even big positional shorts for the last one week, just last two days they are sitting on a pile of profits and after this morning’s gap down they are probably sitting on something like 400-500 points on the Nifty. When you sit on more than 400 points on the Nifty in three days you want to take it because short sellers tend to be edgy, global markets are volatile, so I suspect once you get that big gap down people will take some profits and you could see the market give you a temporary bounce.
Now counter to that what kind of global selling happens today in the market is very difficult to fathom and I don’t know which one will win over during the course of the day but at a level between 3,600-3,700 for the start, may be closer to 3,700 downwards and then a bit of a pull back at some point in the day seems like the pattern, which one can expect during the course of the day. But even if there is a pull back in the next few days, I think people will not make the mistake or should not make the mistake of thinking that that short covering rally spells the end of this bear market. As we have seen things will turn murkier and murkier with passing weeks and we are not probably done with this pain just yet.
Is it tough for the trader?
Yes, it is and the big question that you ask yourself as a trader, if you don’t have a position, if you had a short position you are getting a lot of profit to cover up in and that might be a call , which traders or short traders have to take. If you don’t have a position, is it too late to short at 3,700 or sub 3,700 Nifty, may be it is just for the moment because it has fallen one way from 4,300 to 3,700 start this morning, that is about 600 points gone. So after 12-13% on the Nifty now in a very short span of time opening up a fresh short position is probably risky. It may still work out, if there is complete panic during the course of the day, lots of selling you could still head lower after the initial pullback led by short covering but to open a fresh short is a bit of a brave call at 3,700. Can one play for a bit of a bounce back or short covering bounce? - That seems like a possible trade but again fraught with a little bit of danger.
But as we saw couple of recommendations coming from our trading friends saying that do this and do that but we have no positions and that tells you that the level of conviction in trades this time around is very low, and one could go easily wrong. So just be a bit cautious about the shorting just now, may be if you get that short covering bounce, then I think your purchase is more to short once again.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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The weekend is over and it was a weekend where we all were sitting and watching whether the many deals which the markets focused on would come through. This morning we hear that the bailout package in the US is almost through, virtually done but in tranches so there has been a bit of a tweak in the package which probably is making Asian markets just a touch nervous this morning.
Nuclear deal also should come through but we had a disastrous closing on Friday and there will be a bit of an aftertaste of that as we head into this week’s trade.
Things are not great; the October series has not started very well for the market. Now it’s up to the market to tell us whether there is more downside or it can start picking up the pieces and rebuilding in the early part of the series.
Markets in need of good news:
I don’t know whether the bailout package in its current form will be that good news because if it was unambiguously good, you would have seen a bit of a relief rally across Asia that’s not happening and the way it has been structured, I think a few question narks still linger. So it would be interesting to see how the US markets open up because that could probably the more important trigger just for the next two-three days.
Otherwise things are suggesting that we could have a flattish kind of an opening. We had a very debilitating knock on Friday; it is not easy to come out raring after that – after a sub 4,000 closing. So maybe a few points this way and that but not anything yet in the market which can lead to a big gap up or gap down either this morning.
Asian Markets:
Asian markets are a bit mixed this morning, no great jubilation after the passing of that package; on the contrary, the Hang Seng is down more than 2%, Korea and Straits Times also have cuts at about half a percent to one percent. So no great joy visible at least at this point across global markets.
Our macro backdrop this morning is not looking great with the rupee having moved to 46.90 nearabouts, so that is edging in on 47 once again. Even the bond yield is back up to more than 8.7. So the macro-environment is a bit sticky.
Is the bailout package a bailout for the markets as well?
Partially, because they have got USD 700 billion through but it is USD 250 + USD 100 +USD 350 billion. So USD 250 billion comes in with USD 100 billion plus, the second USD 350 billion needs a Congress approval once again. So it is almost like do a first half and then we will see if we require the next half to go in as well. Even if we assume that USD 700 billion will go in because they seem to have the numbers there to push it through and once USD 350 billion is done almost everybody will realize that another USD 350 billion will be required and maybe much more than that. But even if there is a little bit of a relief in the near-term, it will be just that-a bit of relief because USD 700 billion probably will not cure the world’s problems at this point in time.
The point is that markets are focusing on one problem at a time serially. Have you wondered how little we talk about crude nowadays over the last ten-fifteen days, just go back two-three weeks and all that we could talk about a start in the morning is what is the price of crude, has it gone up USD 2 then we are gap down. So now the market has taken its eyes off that problem and gone to the US bailout package.
We had an investor camp in Chandigarh and everybody wanted to know about the US bailout package as if that was the only reason why the market was at 3,900 in India whether the bailout package would go through or not. So I think these are temporary obsessions with one part of the problem, the important that they are but I think it is being too simplistic to say once you get a bailout package in the US of USD 700 billion that is the end of the bear market and globally we can now start looking for a great bull market from hereon.
I do not think it is as easy as that so the best you will get is probably if the US later tonight does see this packages, an okay package, you might get a little bit of a pop-up and one must remember that the Dow is up 300 points in two days leading up to this package. So some part of it has been priced in already or it may chose to sulk because it is USD 350 billion first and USD 350 billion with approval later but either way I think the impact of that is for 48-72 hours or maybe a bit more than that. Beyond that medium-term, the other problems still continue to linger.
We really got backed into a corner on Friday though just even by way of sentiment to close below 4,000 is something?
Yes, it is since it has not happened in the last one and a half years nearly a weekly close below that but those are technicals. The point is that the market is still looking weak, we attempted an upmove from the lows of 3,800 and that’s stopped at 4,300. So technically speaking again we formed a lower high, we didn’t even get to 4,500-4,600 and that’s not good news.
Will the other leg also follow from that higher or lower high when we drift down, will we take support around 3,800-3,900 and bounce back again or is that lower high going to correspond with a lower low as well which is the pattern that you expect to see in a bear market like this. I don’t have the answer to that it could move up a little bit.
The market is not following any predictable sequence; it bounces back and then it stops well before people think it would then it goes down and sometimes it stops before people think it would and sometimes it goes down below. So I don’t think there is any great pattern. The point is we are volatile so far within a range of broadly 3,800-4,500 now the test for the next few days is whether the Nifty goes down to 3,800 again. If it does then does it take support at 3,800 or this time around it’s violated because this kind of pounding against the lows of the year repeatedly, I don’t think is making it a stronger base it is probably is making it a weaker base.
So who knows whether this time or the next time whenever it has to whether 3,800 will also be taken out and we will drift down to lower levels. Short point whether it is 3,800 or a bounce to 4,200 first, we are in a fairly fragile and weak market and the market seems quite focused on bad news at this point in time one after the other. The market has no time for good news at this point.
We are weakening against peers as well ? A week is a very little time to put out that kind of statement but we fall a lot on bad days, for the week with a worst performance this time across Asia etc?
That’s true but that was preceded by a small phase, where we have outperformed and probably to a certain extent we are paying for that. I think our out performance coincided nicely with crude falling to USD 90/bbl and now that crude is bounced back somewhat and is stabilizing in a USD 103/bbl to USD 104/bbl to USD 110/bbl range, and I think that has taken edge of India’s out performance a little bit that may not be the only reason but that’s taken the edge of our out performance to some extent for sure. Also there is continuous exodus of money may be in India more than some of the other emerging Asian markets out there and that on the margins certainly seems to be hurting us.
Locally too there is no commitment in the markets in terms of money, if you just look at the Futures and Options (F&O) data very early in the series, there is no rush to get into stock futures position at all. The opening build up that you see in the stock futures at the start of the series has been the most tepid that you have seen this time, and I would go as far as to say that some of the more liquid names are actually seeing short build up rather than any kind of long build ups out there. And even the options data is saying that 3,800 puts are being written once again, 4,100 and 4,200 calls are being written quite aggressively, which means the near-term trader is saying that this will be probably consigned to within this range 3,800-4,200 for the time being and one of these levels break then, we will take it from there.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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Nifty to trade rangebound around 4000-4300 in Oct
Asian markets have not picked up yet and trade will not be great this morning. October has always been an important month for trade and the markets will be in for a volatile series which may be rangebound around 4000-4300.
Here is a verbatim transcript of Udayan\\`s comments on CNBC TV18. Also see the accompanying video
It is the last trading day of the week and the first after the history of the September series. We just about got away with 4,100 on the Nifty for September and this morning while the US markets are up, Asia is just not picking it up refusing to pick up the good cues from the US. So we have a mixed situation globally; it could be interesting to se on what note the October series opens up after just about scraping down to 4,100 Nifty for September.
It’s a big series which is unfolding; there are earnings there is monetary policy lots of global cues, so this one could be quite a big series for the market as well.
On our markets:
The early morning may not be great because Asia is not looking particularly great this morning but it is a very interesting and important series because October generally turns out to be a very important month. In history it has sometimes been a very big decider in terms of trend. I don’t know what we will come out with at the end of it but there is just too much by way of triggers which are stacked up over the next four weeks for this market.
I suspect the easy answer is that we will be very volatile this series. We are starting off virtually at the lower end of that 4,000 band and whether we break that go lower in the near-term or till the earnings coming in and till the big local news manifests itself, whether we will still be in that 4,000-4,300 kind of range and then depending on what news is present to the market- it makes a dart above 4,300 or below 4,000. But for the moment there is a likelihood that it might just be in that range.
Asian Indices:
The US markets were up but Asia is not looking very good this morning. It’s not a sell out there but after a 200 point Dow rally is quite disappointing. So 1% kind of cuts across the region and now some of those cuts are getting wider like in the Hang Seng, down almost 2%, Taiwan is been already down 2% since morning so things are not looking good across Asia.
On Yesterday’s closing:
To start a series close to 4,100, the bulls would be disappointed that the settlement happened at 4,100. The expectations were that maybe 4,200 to 4,300 was a more even level to get settled at in the September series. Having said that if this morning in line with Asia, we lose 50-60 points more on the Nifty and get back to those 4,050 levels; I think every trader will tell that there are strong supports there and the bears will want to cover their shorts once around 4,000.
So around 4,000-4,050 we could see a bout of short covering which comes in this morning. We could see some adventurous longs being built up and the market probably can get tossed back within that trading range of 4,000-4,300.
The point is that we are not at 4,400 right now and are good 8% lower after today’s start from there and there is no compelling reason for the market to break down to 3,800 level. When the break happened in September there was a lot of bad news which was happening around the market from the global side but that seems to have abated for the while and the market may go to 4,000, but may not chose to go to 3,800 just in the near-term.
As we go into the series because of the various news triggers which lay ahead those will probably prompt a more decisive break on either direction but for the moment pending that news there could one bout of support which comes in at 4,000-4,050. I hope it does because if does not this morning then there is a bit of trouble ahead.
On global cues:
I think in global too; you need to just separate the short-term and the medium-term. In the short-term it’s all about the package and how it comes through – that is over the next two-three-five sessions. So the market is just focused on that for the next few days saying, “lets not worry about macro and what’s going on; we just want to see this package through “ and if the package comes in like we saw with the NSG (Nuclear Suppliers Group) waiver. The market was focused on that the next day we got a big pop-up.
That’s entirely like that you gets the bailout package and one saw last night what happened in the US despite fairly disappointing data otherwise the market went up because they thought the package is coming in. But once you cross that bridge and you just say, “Okay two days of partying is over after the package comes through because I do not see the package not, not coming through because it has to be the only attempted solution.”
But beyond that look at the other data which came in yesterday whether it’s a durable goods data which is pretty bad, the new home sales data which is bad, the jobless claims was bad, GE one of the biggest giant there coming in and taking their buyback back saying that they are cutting forecasts, none of this is good news fundamentally.
So earnings continue to slip; the macros continue to weaken so in the near-term we will probably get these pop-ups and for our market which is why I am saying from 4,000 you might get a bit of a trading bounce back inline with a relief after the bailout package. But at higher levels once again the macro concerns will come back to haunt and I doubt very much whether this market has enough impetus from a fundamental perspective to break the top end of its trading range, globally speaking too.
On October series:
If we get away with a range bound market in October, I don’t think anybody would complain because there are many things which couldn’t wrong. What can go right? - If technology doesn’t come out with disastrous earnings as the market expects it to; Infosys says we are fine with our guidance for the full year. Later on in the month new the RBI governor says I am happy with inflation plateauing therefore I am not going to change rates now which the market may take as a conclusive signal that rates have indeed peaked out materially. They might not come down for a while but at least they are not going up and that might come as a big relief. These are all points in October which can see the markets getting in a bit of booster shot. The bailout package first comes in. we don’t get bad or terrible disappointments on earnings and we get good news from Reserve Bank of India. If all of these three triggers workout then there is reasonable chance that the market moves back to the top end of its trading range which is 4,400-4,500. If however starting with technology the earnings news is bad this time around then we are going to be drifting down to the 3,800 kind of levels.
So like September the chances of the market going to 3,800 and 4,500 both seem pretty high. So you will probably see a volatile month ahead. All the talk of starting the series light etc has no meaning. Whether we start at Rs 54,000 crore or Rs 57,000 crores is the stuff with F&O analyst get excited about but that has little or no bearing on what the market is going to do.
Series generally have been starting fairly light over the last few months because the level of conviction if fairly low. So both for the Nifty Futures and for Stock Futures positions are not very strong in terms of rollovers but that is no guarantee of an upmove or a down move in the market. I think the fundamental triggers will determine where we go from here and there are plenty of them in October.
-Udayan Mukherjee, Managing Editor,CNBC TV18
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For Sterlite Industries, it is a bit better for the moment because of the restructuring deal being unraveled right now. That was a deal which was not in the interest of shareholders and not surprising that the stock has bounced back a bit. The stock was at Rs 620 before the deal and it fell to Rs 440.
I have my doubts whether the stock is going back to Rs 620 in the near-term because two things happened when the deal got announced; firstly it was materially bad for shareholders, which is part of the reason why the stock fell 30%. Part of it was the intent of the management and I think that 30% fall probably was half-half between the material damage which was done to shareholders that was priced in and it was a corporate governance discount which came in because of what the management was trying to push through.
So I suspect that you will recover or unwind the discount because of the material damage on the deal which is now out. The market, whatever it feels about what the management wanted to do, will in its efficiency price back to the point where it says okay, the deal is not happening so I do not need to price in that discount.
I still think it probably will leave a bad taste in the mouth. It is one thing to say okay they heard investors and therefore did not push through with the deal. But the reality is that investors would have dumped the stock some more and the management probably got scared that investors are reacting so violently to a deal, which obviously was not in their (shareholders) interest.
I think they have no recourse but to pull this deal off. It was not with any great benevolent thought about the good of the shareholders because if that was the case they would not have tried to push through such a deal in the first place.
So I do not think this exercise has done any favours to the corporate governance or image of Sterlite promoters and while the stock might get back to Rs 500-520 kind of levels in the near-term. In the longer-term, it will probably still have a bit of a hangover of this restructuring attempt and it will depend on metal prices copper and aluminium. Those would be the underlined reasons for the stock to move from here.
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It is the last day of the September series. It has been a volatile series this one we have seen 3,800 Nifty, we have seen 4,500 Nifty but finally today we will probably close somewhere around 4,200. So in the middle of that trading range, a volatile series will probably end on a fairly dull and a tepid note.
Globally too cues are quite flattish this morning, so no reason to expect any great turbulence but it remains quite directionless this market and the closing of the series probably is indicative of the fact that the market despite tossing and turning throughout September has still not been able to strike out conclusive direction for itself.
Markets to see two-way moves:
Essentially the market is still range bound. We saw two-way moves yesterday as well, the market did this and that but finally at the end of it did not do two much. It is difficult to predict what happens in the last one hour of trade on an expiry day but that said it is still within a trading range. As we have seen throughout September, it has seen quite a bit of volatility up and down but at the end of the series we are just about 1% lower at least on the rupee Nifty. So it does not matter what happens during the course of a trading day or a trading series, finally we are just about stuck within trading range and that is the broader picture. I suspect today we will see more of the same.
Asian Indices:
Asia is very quiet this morning. The Japanese market is down, the other markets are very flat and China is up 4%, it has bounced from 1,900 to 2,300 the Shanghai index. No great cues coming in from those markets.
Global cues on a pause:
They are waiting for that package. As we were saying yesterday in the near-term I think it is the contour, shape, timing and execution or implementation of that package which will swing global markets. But I think that will be a temporary kind of move but it may well be a move.
In the next week to fourteen days that I suspect is the big trigger that the market is watching out for. Having said that, you have had a period of extreme volatility over the last four-five weeks in global markets, we have seen the CBOE VIX (volatility index) go to all time highs, this volatility generally history will tell you does not last forever. The longest it lasts generally nine times out of ten is the maximum of six weeks and the minimum is four weeks. We have almost done five weeks, so this volatility probably is on its way down right now. Now whether this volatility will end with the market moving up or with the market lying completely sideways that we do not know but it often happens that the market goes into a period of lull after the kind of hectic volatility, huge volatility that it has gone through.
Because of the nature of the spikes and the falls I think you saw probably the first signs of it that the market is feeling quite sapped of energy, volume has drifted down quite a bit on Wall Street. That coming after a period of heightened volatility sometime suggests that people are completely exhausted not just financially, they could be emotionally exhausted with this kind of volatility and you could have a few weeks of sideways movements essentially ranged as the market just recovers from the excesses of what has happened in the last five weeks.
The answer to whether this lull in volatility and slightly calmer phase in the market will be in a very tight narrow range or it will be a constructive phase with the market globally moving up a little bit that is a little difficult to surmise. The answer partly to that will also lie in the kind of implementation of the package that you are talking about in the west.
So October could become a constructive month if the market likes the package and volatility will probably subside in October. It would be very surprising indeed if after what has happened through September and early August if the market remains globally as volatile as it has been through the last five weeks. That needs to come down and probably is on its way down as well.
As you said depending on which currency you are looking at this could either be a flat series or a bad one, is it important how we close it up?
I doubt whether you will have such a meaningful move today, which will change the contours of the September series. It is pretty much done right now whether the market moves up 2% or down 2%, I don’t think will materially alter the shape of what’s gone on. And yes you are right that the dollar investors have lost in the September series the Defty (US dollar-adjusted Nifty) is down about 6% and that is not an insignificant cut, in the futures market large number of players are global and therefore the Defty matters to them. So it’s been a bad series for them, you can’t hide that.
For the rupee Nifty it is down about 1.5% that can become 3% today or it could become flat today but I don’t think that will materially change. The key message of course is that you have seen it in three out of four series last few months, is that it does a lot of things in the middle of the series but then finally ends on a fairly flattish kind of note. So may be that is telling you something. This series we saw 3,800, we saw 4,500, but at the end of it neither the bulls nor the bears have been able to break the market beyond those two goalposts. We are still bang in the middle of it about to close somewhere in the 4,100-4,200 kind of range.
That must be a message from the screen that we are still trapped in a range, within that range there is a heightened volatility because of the news flow, which is coming through globally. But at this point a decisive blow has not been struck by the bulls and the bears to form a discernible trend in the market.
Any flags for the October series:
I am afraid not. The short answer to what the market will do in October from my perspective is - I don’t know. Could there be a trading rally in October? – The answer is yes but is the worst over? - I don’t think so.
What are we saying at the start of the series that the market could go up to 4,500, on bad days could break down to 3,800 but that is not a very clever analysis of the market because then you are saying what has happened in September that on bad days we could still retest the lows of 2008 and on good days we may go up but we may go up to 4,500-4,600. That is what the options data is suggesting as we go into the October series. At 4,400-4,500 people are happy to write the calls, at 4,100-4,200 for the moment people are happy to write the puts. So everybody is playing for a range. Will that range break in October, I don’t know I doubt.
There are earnings also in October, you can see the first scars there and the market is unhappy about the expectations with IT. IT has sold off as a sector and those are the first earnings which will come in but who knows whether there will be so much news flow on the earnings that that will change the trend either way. If you had to stick your neck out you would still say that in October you will still within that same goalpost. It is big trading range but difficult to say which side of it will come out.
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Another day but no end to the uncertainties - that continues to shroud global markets. Two days after the biggest bailout package ever, we are still trying to find our way out of mess in the US. The Dow Jones is down below 11,000 again, Asian markets are a bit mixed but it’s uncertain and volatile across global asset classes - that sums it up. Not up not down because we have seen both sides of the coin over the last three-four days. So we got to be resigned for some more volatility in our market from hereon as well.
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It looked very quite in the morning but now the cuts are getting a little deeper. So we are down to below 4150, virtually at the lowest point of the day on the Nifty and for the Sensex as well which has been grinding lower in the last one-hour and it is now 340-points lower at 13,650. So the day hasn’t exactly panned out very well. After that very quick dart up over the last couple of days to 4300, the Nifty seems to have lost its way a little bit. It is still not completely out but today there has been selling in many popular sectors like banking, infrastructure, technology and all these heavyweights sectors have led the market down quite a bit. We are still an hour away from close but the last one-hour has been quite disappointing for the market.
I suspect Europe is making the market a little nervous because Asia dealt with the US market sell-off overnight pretty okay, barring a couple of markets, things were relatively stable. But the way Europe is opening up 1.5-2% down, I think it is making the market nervous on whether the Dow needs to slip or give back some more or today there will be a good attempt at a recovery because the fall or sell-off yesterday was quite savage. That is keeping the market a little uncertain at this point in time. But there has been some cash market selling in a few largecap names in technology and in stocks like Ranbaxy.
It appears that on the institutional front too we have not seen any kind of support, which has coming in. I don’t know whether the market will fall in one-line from here because this was expected. From 3,800 you pulled back to 4300 in just about three sessions of trade. The market would have give up a little bit of ground. Whether this is just a routine giving up 150-points of the 500-point rally that you have seen over the last few days or is it more – that the market is not clear about.
But early this morning the pattern was quite familiar. You started gap down, then the first fall was bought. It is the second fall which is a bit more worrying which means that at higher levels there has been just no follow-through despite the intraday recovery which got us back into the green in the first one-hour of trade.
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Some part of commodity space has to do with the dollar because the dollar has appreciated quite significantly in its bounce back to sub 1.4 to the euro and then it has bounced back closer to 1.48-1.49. So maybe this is just a retracement or a partial retracement of the recent dollar rally and no more than that. One would like to think that the recent events in the US should make the US currency quite uncertain and weak and maybe that’s playing out.
If the dollar were to weaken more say it goes to 1.5, higher than 1.5 to the euro, it’s conceivable and likely that commodities which have got battered out of shape that trade also unwinds a little bit globally. Maybe we have seen the start of that in the last couple of days. I think gold is probably the first commodity which is showing some signs of bottoming out in that USD 850-900/oz zone. The moment it goes there it sees a little bit of a bounce back, so precious metals partly because of the world’s many problems is probably showing some signs of bottoming out.
From USD 90/bbl crude has gone back to USD 109/bbl so crude has bounced back 20% from its recent peak in the last one-week that’s not an insignificant rally. It’s a 20% rally in crude that you have seen from the lows. So things are in a state of flux, you don’t know whether these are merely recoiling or retracements of some of the trades which had played out for the last one-month. That is the dollar gained quite a bit, is it giving up some of those gains.
Commodities fell quite a bit, is it now recouping a little bit because if the primary trend is what at least for the near-term next few weeks and months is still some more dollar appreciation in the near-term or some more weakness in commodities and this is no more than a pullback. I say this because it has lot of ramifications for our equity markets as well. We have been closely following commodity market movements and global dollar movements.
So you need to watch where that trend is moving with the dollar and with commodities because we are seeing powerful pullbacks from their near-term trends in both those asset classes. That’s the macro.
In terms of micro you are probably going to see snapbacks or rallies in stocks like Cairn India, which have already tried to move up with crude, back upto Rs 225-226 levels, Oil and Natural Gas Corporation Limited (ONGC) is a difficult one to grain. But you can see that Bharat Petroleum Corporation Limited (BPCL) has closely st