Yesterday was a bad day for our markets and this morning we wake upto fairly negative cues once again. The US is sold-off a bit, the Asian markets are selling off across the Board, crude is gone back to almost USD 137 per barrel; it's not a good environment for us after yesterday's fall. Of course, we fell ahead of all of this yesterday - so maybe a cut hopefully will not be as steep. But even so, this is not good for Nifty which was trying to scale up to those 4,700 levels. Now it seems to be getting pegged back once again. Not a good start this morning.
Is the rough patch back?
Yes, leaning with a little bit of an advance, so we are doing things ahead of most global markets. We probably saw this coming and sold off in anticipation but it looks like the pullback rally is fizzling out once again. It did not last very long; just a couple of days, raised hopes a bit but now 4,700 it doesn’t seem like a very likely scenario at least in the near-term. It looks like we will get pegged back some more from these current levels.
At best we are in a trading market, a rangebound market but it’s betraying quite a weakness. One can see that the environment is not very conducive for huge outperformance in any case. So the market remains very sticky and the best hope was short-covering which we saw a little bit of and that took us up and now the cues are bad again and the bears will find heart, so you will get pegged back deeper into that trading range.
We are prepared for some cuts this morning but we just hope that the cut is not too deep.
Asian Indices:
The news across Asia is not good, most of this markets are reeling, look at the Chinese market it is down 100 points at 3.5%, Korea is down nearly 2%, Nikkei is down nearly 2%, Hang Seng is down 400 points that is about 1.8% and Taiwan is down more than 1.5%. So average cuts between 1.5% and 2% across Asia.
The second half of trade was so disappointing that the game for the Nifty seems to go back to defense rather than strength?
Yes, it was quite something the way stock prices came off in the last hour or so. Yesterday morning we were talking about one of the two possibilities either an overshoot of 4,700 or not even getting there and though it seemed unlikely that one has happened the fact that the market did not even get to 4,700-4,750 that everybody was talking about.
Now it looks like the pullback rally is fizzling out or is about to fizzle off. So this morning we probably get pegged back closer to those 4,500 levels. I think we still are in a bit of a trading range of 4,400 on the way down 4,700 on the way up, so loosely speaking at 250-300 point range on the Nifty, I do not know whether on current evidence we will go back to sub-4,400 levels and test those bottoms once again. We will need more bad news over the next few days, which is not impossible but something would have to come to take us to those levels otherwise given that there has been a bit of short covering which has happened and the fact that we found support sub-4,400 a couple of times last week it is not very likely that we go there just immediately.
But if crude jumps up once again on global markets continue to sell off we can certainly do that but right now I think we are still in a 250-300 point trading range. But with every failed attempt on an upmove or upmove, which fizzles out I think the level of conviction in traders is going to get lower and lower and they will mistrust every bounce even more. The last bounce was far more convincing, which took us upto 5,300-5,400 even that fizzled out and that hurts bullish sentiment at least and the last rally lasted all of 48-72 hours, which is not meaningful at all.
I think we remain in a very low conviction kind of a range bound market at best but let us wait and see if we get more bad news over the next couple of sessions.
Gloabl situation is also not good,now there is talk of hike in risk aversion, talk of lower levels the mood has soured quite a bit?
-Udayan Mukherjee, Executive Editor, TV18 |
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