On internals and scale back on Nifty positions:



We had a very large FII inflow figure more than USD 300 million yesterday but just at the first sign of trouble once again there was selling in the cash market Rs 600 crore, once again they shorted about 1,300-1,400 crore on Nifty futures. So, there is no trend in the FII numbers generally it is down on a good day it turns up but when you get excited the next day it turns down again. I don’t think there is any great trend that you are seeing in terms of flows. Even locally there are risks in the markets the Put-Call ratio is at 1.36, which is high if there were some negative triggers, which were to manifest itself.

The market is not horribly overbought because we are not in that kind of a market situation now-a-days, but if you had to weigh the scales and say is it more overbought than oversold, then at 1.36 Put-Call Ratio (PCR) you would have to say that the bias is clearly on the overbought side rather than on the oversold side. So if something has to go wrong over the next few days, I don’t know whether, if crude spikes or global markets sell off more or energy does not happen, then the potential for the market to come off because of unwinding pressures is there. I am not suggesting it will happen but technically the more you look at the futures data it seems like that potential is there.



Having said all of that I think sentiment has improved somewhat there is no getting away from that, if you just ask people or poll people or investors and traders, now versus if you have polled them couple of months back. I suspect you will find that people seem to be in a more constructive frame of mind, there is no despair like you were hearing two months back. Now the debate is between whether the markets falls 3-4% before resuming its upward journey whether it goes to 4,600-4,800 but right now not too many people are talking about breaking down to the old lows, which in some sense is reflection of the fact that sentiment is improved somewhat and that should not be completely scoffed at.



The other internal that one needs to monitor is the swift and rapid decline of the rupee, which is not good sign at all the fact that the rupee is marching towards 45 has implications for foreign global investor sentiment and for inflation, which are not very benign. So I suspect that is the headwind that we are moving against at this point.



On Nifty:



Closer to 4,350 is where you will start of 4,350-4,370 those kind of levels. So you lose 80-100 points on the Nifty first up in the morning. 4,500 is where we were just a couple of days back. If people get an opportunity to enter at 150-points lower with a couple of positive triggers, which might be looming on the horizon, there could be an attempt for some traders to buy this Nifty and see if it can scale back to those 4,600 kind of levels.



I do not know whether the first dip will be bought but maybe in that zone if we do get to 4,350 this morning and if the view is that we may lose some more, maybe from there to the next 100 points, 4,250-4,350 could be a point where people would look to accumulate at least once. Unless the triggers break down and then the market goes further down; last time too we went to 4,200 and bounced back sharply from there. So I think if we go within shouting distance of that level closer to 4,300 maybe people will attempt to buy this Nifty and see if there is that incomplete move, which is still pending out there.

It looks like it will be a gap down but would be surprised if it is a completely disastrous kind of an outcome for the market because as we discussed the sentiment has improved and typically when sentiment improves a little bit, people look to buy the sharp gap downs rather than initiate fresh shorts. Those will happen if we do get to 4,200 and break below that but for the interim, you will probably see the bulls try and get back into play on every cut.

-Udayan Mukherjee, Managing Editor,CNBC TV18...

Inflation numbers were a relief and seem to consolidating if not falling. However, global cues are still bad and may peg the market down. The local cues though are good and there are a few silver linings that might cushion the fall. But the Nifty is likely to fall 80-100 points.





On trade today:



On the last trading day of this week, there is little bit of hope from inflation there is more than little bit of hope from the Nuclear Suppliers Group (NSG) front but sadly global markets are not playing along. So that’s the battle for the market this morning.



The local cues are not too bad from an India’s specific point of view there is some hope on the horizon. However, the global cues will almost certainly peg us back as we start trade this morning. So early morning difficulties for sure let’s see what we make of it by the end of the day.



Our markets:



We did give up a little bit of ground and maybe we will give up a little bit more and maybe it’s in the fitness of things because we did rally quite sharply all the way up to 4,500, 15,000 came all too easily and therefore the market probably would have been made to do some more work around these levels and so maybe it’s just as well that we are giving up a little bit ground but as I said from an India’s specific point of view I think there are some silver linings to the cloud right now, we hear that the Nuclear Suppliers Group (NSG) situation is a bit better, which might lift sentiment as we come back to trade next week. Inflation is showing some signs of plateauing if not falling over the last couple of weeks. All of this put together might somewhat cushion our fall a little bit. In any case we have been outperforming most of the other global markets but fall, we will this morning with the rest of the world. So at least 80-100 point cut in the Nifty cannot be wished away.

However let’s see in the remaining part of the day we can use some of the silver linings as crutches to claw back somewhat. It’s not looking like a disastrous market but sadly we will have to fall in line with the globe.



Asian Indices:



Asia is weak as one would have expected because the US fall was crunching; 3% down in the Dow Jones and the S&P (Standard & Poor's). So the cuts are not insignificant across Asia; 2% down on average. Some markets are not doing too badly across Asia but others are. So China and Hong Kong are suffering quite a bit as Japan, though Korea hasn’t fallen quite such a lot, Taiwan has been bruised over the last few days so that’s a market which has fallen already but sticky across Asia.


Worsening global cues:



It is happening despite crude having cooled off such a bit, commodities have cooled down quite a bit and generally globally people are talking much less about inflation then they were one-month back but as a lot of people had been forecasting a month back that the global problem is not just a commodity problem today, there are many other problems and slowly people are waking up to that. The kind of reaction that you saw from the US market yesterday, I don’t think jobless numbers were so bad but it didn’t look like the kind of number which should have sent the Dow and the S&P 500 down 3% although there are apprehensions about what the Unemployment Report might actually put out today and Bill Gross, CIO of Pimco, who is a fairly respected voice out there did speak about financial tsunami which maybe in the offing but I didn’t think there was enough to send the markets down too much.



My sense is that there is just too much edginess in the global market out there. So despite crude hovering closer to USD 100/bbl now than USD 150/bbl, you are still seeing these kind of big falls happening in the US market and the Dow is just unable to get past 11,700 it goes there and then these sharp kind of sell-offs happen. Things are not looking very good for global markets you have seen how much Asia has fallen over the last few days, I think generally across the world people are worrying more about a big economic growth slowdown across the world and continuous de-leveraging which is happening from the financial institutions. So, both from liquidity and from a macro perspective, this global situation is not looking too good and sadly we can’t ignore it though India has been outperforming over the last few days as is well documented but even so to ignore it completely would be quite difficult. So, maybe we will fall 80-100 points on the Nifty this morning.



-Udayan Mukherjee, Managing Editor,CNBC TV18...

It is heartening to see the money flows for Tuesday. Can we play for a bit more support from that front?



That’s the important question and the backdrop is quite important, the fact that India has turned out performer in the global space over the last few days. Nobody wanted to put a dime in India over the last many months because India was an underperforming market. Consistently India and China would be the dogs whether global markets would rally India would rally less, if global markets fell, India would fall more. That’s all turned around a bit coinciding with the price of crude coming down.



So if one looks at the last one week, from last Thursday to today one has seen a 7% rally in the Sensex and that coinciding with that China is down nearly 4%, Brazil is down 5%, Taiwan is down closer to 8% so if one look at it in a one week span one would actually outperform; the degree of out performance depending on the market one is choosing is between 10-15%. That’s not insignificant for a week and the first sign Rs 1,100 crore FII money came in the cash market yesterday provisional maybe or maybe we are reading the data to soon but it could indicate that people now believe that some more money needs to be put into India because crude has come off about 30% and that was one reason or probably the most important reason why India under perform so much over the last six-seven months.

So is it conceivable that now some of the funds which have been shying away from India will relook at India and try and put some money to work here if crude stays close to the USD 100/bbl mark. That’s the thing we need to watch out for the next few days.



Of course the other leg which drove the market up substantially on Tuesday was short covering; 2,000 crore of Nifty futures were brought by the FII (Foreign Institutional Investor) so there was a bit of a scramble to cover up some of their earlier shorts. But the more important number perhaps is the cash market buying; we need to see a few more of those ticks to get confidence that maybe India is not so completely out of flavour with the global money managers.

-Udayan Mukherjee, Managing Editor,CNBC TV18
...

The market momentum may pause a bit today. Crude is still around the USD 109-110 per barrel level and has not yet dipped to USD 100 per barrel. Global cues have not been supportive enough to see a rally in the market. There also is a lot of apprehension surrounding the NSG (Nuclear Supplier’s Group) meet. However, a pause in the market will be good for the market.



Does the environment seem conducive then to pick up Tuesday’s good work?



We may pause a bit because last couple of days global markets have not exactly been supportive, crude after going down to USD 105-106/bbl has not collapsed to USD 100/bbl. There might be a little bit of apprehension around that NSG meet over the next couple of days and of course we have got inflation as well and we have got perhaps some good news, which could come in from the Union cabinet from New Delhi over the next day or two.

So, it’s a mixed bag out there. It would be good if we pause a little bit before moving further ahead but who knows with momentum you never know and there were clear signs of momentum on Tuesday for sure.



Asian Indices:



Asia is not looking great; yesterday was a bad day across Asia and today too Taiwan is down 1.25%, Hang Seng holding almost a 1% cut, China is down three fourth of a percent and Nikkei is down 0.5% as well. For the second day running Asian markets are looking a bit sluggish.

On global enviornemnt:



Global environment is not nearly as strong as us; it’s looking quite sticky. The Dow despite the crude price at USD 106-107/bbl which is where it fell to is just not crossing through that congestion zone of 11,700-11,800; its got stuck there many times, the Dow Jones index. So one is not getting a clear sense breakout in the US markets either and that is a subject of a bit of a discomfort for sure.



Crude has fallen quite a bit but we need to see if after stabilising or spending sometime between USD 105-109/bbl like the last few times where every consolidation is lead to a low level in crude over the last few weeks whether crude falls once again and maybe this time go and touches USD 100/bbl mark.



These are all things which will probably determine where our markets are headed in the near-term. It’s difficult to gauge what’s going on in the US because one hears good news and bad news at the same time; factory orders data is not bad but the auto numbers are terrible and on the margin some hedge funds going burst as well – one do not know what to make of it. Those are not the huge fund or anything like that. So mixed cues but one thing is for sure that despite this precipitous fall in the crude price global markets haven’t exactly broken out or anything like that and that remains a bit of a worrying concern for us.

On Nifty:



The mood will be good and while two days of bunched up global falls might be weighing on sentiment a little bit early in the day. It is possible that we give up a little bit ground now in the first half of a trading session, consolidate somewhat between 4,400 and 4,500 before we move ahead. But the momentum is quite strong and more than the price jump which happened on Tuesday, volumes picked up to such an extent that one can sense that because of crude coming down so much, a lot of people are finding confidence to get back into the market. So, if there is a morning dip or first up dip, it is entirely possible that a lot of people would use that dip to enter the market once again, predicting or anticipating higher levels. One could see that kind of trade play out quite easily despite the slightly mixed global cues, which are coming in.

The question is having rallied to 4,500 on the Nifty, do you rally straight to 4,650 over the next few days which was our last high or does the market need to give up some ground maybe come back closer to 4,400-4,450 those levels, which we thought will be difficult to cross but which the market crossed effortlessly with one big leap on Tuesday. Whether around those levels the market could need to spend some time to test those supports right now before it can move back and keep its eventual date if it has to with 4,650 or 4,800 whatever. For the moment I think the momentum is quite strong but do not rule out a bit of a pause because the journey has been quite strict on the way up as well.


-Udayan Mukherjee, Managing Editor,CNBC TV18...

On Nifty:

It is set up to go to 4,400- 4,450 levels in the near-term and there it will encounter resistance once because last time too it made a really heavy weather of that level. Also not that global markets are expected to do to badly today because crude is cooling down but even so tomorrow the markets are shut and we come back Thursday and one doesn’t know because its still category II and surprises can happen.

Towards the end of the day the bulls might just ease off a little bit because of the holiday and some trimming might happen. During the course of the day one can expect to see 4,400 once and maybe even over the next couple of days the market gets closer to that 4,450 mark; these are technical levels but it is possible and likely that the markets will keep its date with the last high, that is step one.

Step two is whether we take 4,450 out over the next few days because global markets and crude are supportive and then we go on to touch 4,460 which is the last high we made before we turned back. That is the bigger call. It is easily conceivable that that happens if crude continues to remain soft but one step at a time

First step is 4,450 which is not bad coming from the lows of 4,200 just a few days back and then traders will ask themselves if there is a couple of hundred points more to milk out on the Nifty.

On the new Reserve Bank of India Governor, Dr Duvvuri Subbarao:

From the people that I have spoken to, haven’t heard too many people cribbing about him; they are saying he is a good guy, good pedigree, good track record, reformer etc. But it’s very important and it’s not just about who has taken up a post because it is the RBI Governor’s post and individual matters in monetary policy. If one looks at the US Fed as well individuals are remembered; Mr Paul Volker (Former Fed Chairman) is remembered as a greatest monetary policy maker or the best Fed Governor ever, Mr Alan Greenspan (Former Fed Chairman) is wildly criticized as the guy who actually stoked all these bubbles and Mr. Ben Bernanke (Chairman of the US Federal Reserve) is now thought of as a guy who has done a good job of amending there, has cleared up the mess. So individuals remain in public memory and there must be something in it. So it’s not the office which is only important, the RBI Governor’s office. Individuals have their own style, their own leanings, their own ways of functioning, and their own takes on the economy and therefore the appointment of the man is quite important particularly for this.

At a time when the market does not have a clear answer on how much more inflation targeting will happen through the monetary policy route because it’s a toss of a coin. As we have been discussing for the last one year Dr. Reddy’s mind is very difficult to fathom so what will the new Governor’s mind be like? Will he be as sharp an inflation targeter? Will he use the monetary policy hammer as Dr. Reddy has been using to cool inflation? What is the brief that he has from the Finance Minister now that he is been ushered into the top seat? Will the Finance Minister lean on him considerably as a new candidate till the elections are out next time round and what is his own take on how to cool this particular breed of inflation?

October policy will be watched closely because it will be his first statement to the market, to the economy and to the industry and it will be watched extremely closely. So one do not know what kind of inflation targeting he will do but it is very significant what he says on 24th October.

The other point is that he is widely regarded as a banking reformer and the one crib that one have with Dr. Reddy is that he pretty much shut the door on banking reforms for right or wrong – I do not know, I am not passing judgement on that but he shut the door on banking reforms or banking M&A till to 2009 and the new Governor comes in at a time when 2009 is approaching. Is he the sort of reformer who will say that “now we need to do a lot of big moves in the banking sector so let the big banks come in, let them swallow up a couple of banks here?” So we would watch with a great interest because that could galvanise the market completely if we do see big ticket banking reforms starting 2009 and that’s something that we will certainly hope from him.

Near-term it will be about his stance on inflation, medium-term it will be about what he does with the banking space but this has the potential, this appointment of changing the landscape of the financial market for sure.

-Udayan Mukherjee, Managing Editor,CNBC TV18...

The Gustav storm threat has weakened; it seems that the markets had factored that in. With the US markets closed yesterday, the key cue would be the storm. But Indian markets may take a step forward today; one may see an attempt at 4400 levels on the Nifty. The day should not be too bad for the markets.

On the storm Gustav:

Gustav has weakened and that’s the top story this morning. That was all that we were watching last evening and it fell to USD 110/bbl crude because now from Category 3 it’s Category 2, whatever that means. Meaning basically the storm has weakened considerably and while the Dow and the Nasdaq were shut overnight, this is a key cue for us this morning. Maybe the market had a whiff of it yesterday and therefore it rallied off at the lows of the day. So that’s pretty much your backdrop as you go into trade, Asian markets are mixed but crude is at a USD 111/bbl.

A good backdrop:

One could see that the market had a sense early in the day yesterday because we went up to USD 117/bbl in the middle of the trading session and then came off to USD 114/bbl and the market in its wisdom figured out that maybe something is happening with the storm there otherwise why would crude have cooled down in the middle of the day.

That bet was taken and it’s turned out to be a good bet. I do not know what the reaction to some Asian markets could be but India should hold firm there is no reason for us to slip off today maybe we can take a small step towards 4,400 but the day should not be too bad.

Asian Indices:

Asia is quiet; a couple of markets are down, a couple of them are up so nothing special is going on there. The biggest loser is Taiwan – down 1.5%, other markets are fairly quiet despite crude cooling down, and no great cues from there. SGX (Singapore Exchange Ltd) Nifty is also suggesting a quiet opening just about 11-12 points higher.

Does crude have a potential to be a bigger catalyst?

Its been our biggest friend ironically over the last few weeks and probably single handedly responsible for the pullback that we have seen in our market, so its very comforting to see it repeatedly going back to that USD 110/bbl. One would have to say that in the last one month, the way crude has moved, it seems to have weakened considerably and the rallies are just not sustaining hurricane or no hurricane. One is getting a comfortable feeling and a comforting feeling for the moment for crude but you never know with these commodities, it’s about the most difficult thing in the world to predict the price of crude.

Having said that, even the ten-year bold yield is just grinding down to 8.5% at the slightest provocation, its interesting, the bond market is off the view too that crude is done for the moment, inflation may also start peaking off. It may not peaked yet but market’s see ahead so maybe the market is seeing a few months ahead and saying you don’t have much to go, maybe just about a percentage point on inflation.

Crude close to USD 112/bbl coinciding with nearly 8.5% bond yield, I think this is the stuff which the stock market wants to see for some more time and therefore I wouldn’t be surprised if in this morning too you would see interest once again in the interest rate sensitives because the inverse correlation is playing out quite well with the price of crude and some of these bank stocks. We could see some excitement there which nudges the market higher but it could have swung either ways, last couple of days, crude could have easily gone to USD 125/bbl and that could have driven us back to 4,200 if not lower. But that’s not happened so, it’s a happy co-incidence.

-Udayan Mukherjee, Managing Editor,CNBC TV18...

But I think macros are still very sticky, we are still running very high inflation, and 7.9% cannot be a very encouraging GDP number for the Q1, the rupee this morning is at 44.20 that cannot be a comforting number either. I think we have got macro challenges for sure so it’s premature to start celebrating and saying that macro turf has changed dramatically. I think crude will hold the key as well for the next few days.

The last tropical storm got dealt with pretty okay and it did not disrupt things but Gustav is threatening to be more powerful and disruptive and I think whether the Nifty goes to 4,400-4,450 depends on whether this storm will nudge crude backup to more than USD 120/bbl. If it does not we will still carryon for an up move for a few more days. So crude probably holds the key but in the medium-term there are enough macro problems here for us to start relaxing.

Flows and internals:

Short covering on Friday, 1,000 crore bought on Nifty futures and you could see that the Foreign Institutional Investors (FIIs) were in a bit of a rush to cover up some of their recent shorts, which is why the Nifty did not dip at all on Friday despite not so strong GDP numbers.

Traders also believe with this rally that we are in the middle of that range. The kind of put writing, which happened at 4,300, is quite large therefore there is a growing belief that maybe we will hold those 4,280-4,300 kind of levels and try and claw back once again to the higher end of the trading range, which is 4,400-4,450.

Also with Friday’s relief rally we saw quite a bit of stock futures getting piled up. So that was quite interesting that people were getting back to some of the individual stocks and trying to build positions. We are in an uncertain market but the mood is not terrible because if it was then 4,200 would have broken last week, which it did not.

Traders know that their lines in the sand are well marked out. The bear starts covering up every time we go to 4,200 and close to those levels and the bulls starts covering up every time we go to more than 4,400. Beyond that no one is sure of life and therefore it is a nice little ping-pong, which is going on there between the 200-point range and that is pretty much what the internals are suggesting as well. No flows happening at all, despite good data and bad data, I do not think the institutional flows are there at all.

-Udayan Mukherjee, Managing Editor,CNBC TV18 ...

On internals and scale back on Nifty positions: We had a very large FII inflow figure more than USD 300 million yesterday but just at the first sign of trouble once again there was selling in the cash market Rs 600 crore, once again they shorted about 1,300-1,400 crore on Nifty futures. So, there is no trend in the FII numbers generally it is down on a good day it turns up but when you get excited the next day it turns down again. I don’t think there is any great trend that you are seeing in terms of flows. Even locally there are risks in the markets the Put-Call ratio is at 1.36, which is high if there were some negative triggers, which were to manifest itself. The market is not horribly overbought because we are not in that kind of a market situation now-a-days, but if you had to weigh the scales and say is it more overbought than oversold, then at 1.36 Put-Call Ratio (PCR) you would have to say that the bias is clearly on the overbought side rather than on the oversold side. So if something has to go wrong over the next few days, I don’t know whether, if crude spikes or global markets sell off more or energy does not happen, then the potential for the market to come off because of unwinding pressures is there. I am not suggesting it will happen but technically the more you look at the futures data it seems like that potential is there. Having said all of that I think sentiment has improved somewhat there is no getting away from that, if you just ask people or poll people or investors and traders, now versus if you have polled them couple of months back. I suspect you will find that people seem to be in a more constructive frame of mind, there is no despair like you were hearing two months back. Now the debate is between whether the markets falls 3-4% before resuming its upward journey whether it goes to 4,600-4,800 but right now not too many people are talking about breaking down to the old lows, which in some sense is reflection of the fact that sentiment is improved somewhat and that should not be completely scoffed at. The other internal that one needs to monitor is the swift and rapid decline of the rupee, which is not good sign at all the fact that the rupee is marching towards 45 has implications for foreign global investor sentiment and for inflation, which are not very benign. So I suspect that is the headwind that we are moving against at this point. On Nifty: Closer to 4,350 is where you will start of 4,350-4,370 those kind of levels. So you lose 80-100 points on the Nifty first up in the morning. 4,500 is where we were just a couple of days back. If people get an opportunity to enter at 150-points lower with a couple of positive triggers, which might be looming on the horizon, there could be an attempt for some traders to buy this Nifty and see if it can scale back to those 4,600 kind of levels. I do not know whether the first dip will be bought but maybe in that zone if we do get to 4,350 this morning and if the view is that we may lose some more, maybe from there to the next 100 points, 4,250-4,350 could be a point where people would look to accumulate at least once. Unless the triggers break down and then the market goes further down; last time too we went to 4,200 and bounced back sharply from there. So I think if we go within shouting distance of that level closer to 4,300 maybe people will attempt to buy this Nifty and see if there is that incomplete move, which is still pending out there. It looks like it will be a gap down but would be surprised if it is a completely disastrous kind of an outcome for the market because as we discussed the sentiment has improved and typically when sentiment improves a little bit, people look to buy the sharp gap downs rather than initiate fresh shorts. Those will happen if we do get to 4,200 and break below that but for the interim, you will probably see the bulls try and get back into play on every cut. -Udayan Mukherjee, Managing Editor,CNBC TV18...

There has to be a pause in momentum Superman. Momentum was on my page today... :)...

It is heartening to see the money flows for Tuesday. Can we play for a bit more support from that front? That’s the important question and the backdrop is quite important, the fact that India has turned out performer in the global space over the last few days. Nobody wanted to put a dime in India over the last many months because India was an underperforming market. Consistently India and China would be the dogs whether global markets would rally India would rally less, if global markets fell, India would fall more. That’s all turned around a bit coinciding with the price of crude coming down. So if one looks at the last one week, from last Thursday to today one has seen a 7% rally in the Sensex and that coinciding with that China is down nearly 4%, Brazil is down 5%, Taiwan is down closer to 8% so if one look at it in a one week span one would actually outperform; the degree of out performance depending on the market one is choosing is between 10-15%. That’s not insignificant for a week and the first sign Rs 1,100 crore FII money came in the cash market yesterday provisional maybe or maybe we are reading the data to soon but it could indicate that people now believe that some more money needs to be put into India because crude has come off about 30% and that was one reason or probably the most important reason why India under perform so much over the last six-seven months. So is it conceivable that now some of the funds which have been shying away from India will relook at India and try and put some money to work here if crude stays close to the USD 100/bbl mark. That’s the thing we need to watch out for the next few days. Of course the other leg which drove the market up substantially on Tuesday was short covering; 2,000 crore of Nifty futures were brought by the FII (Foreign Institutional Investor) so there was a bit of a scramble to cover up some of their earlier shorts. But the more important number perhaps is the cash market buying; we need to see a few more of those ticks to get confidence that maybe India is not so completely out of flavour with the global money managers. -Udayan Mukherjee, Managing Editor,CNBC TV18 ...

but for two days in a row the TRIN is oversold at greater than 1 which is a very bearish divergence. I doubt if we will get there even if we get if we will stay...lets see... ...

On Nifty: It is set up to go to 4,400- 4,450 levels in the near-term and there it will encounter resistance once because last time too it made a really heavy weather of that level. Also not that global markets are expected to do to badly today because crude is cooling down but even so tomorrow the markets are shut and we come back Thursday and one doesn’t know because its still category II and surprises can happen. Towards the end of the day the bulls might just ease off a little bit because of the holiday and some trimming might happen. During the course of the day one can expect to see 4,400 once and maybe even over the next couple of days the market gets closer to that 4,450 mark; these are technical levels but it is possible and likely that the markets will keep its date with the last high, that is step one. Step two is whether we take 4,450 out over the next few days because global markets and crude are supportive and then we go on to touch 4,460 which is the last high we made before we turned back. That is the bigger call. It is easily conceivable that that happens if crude continues to remain soft but one step at a time First step is 4,450 which is not bad coming from the lows of 4,200 just a few days back and then traders will ask themselves if there is a couple of hundred points more to milk out on the Nifty. On the new Reserve Bank of India Governor, Dr Duvvuri Subbarao: From the people that I have spoken to, haven’t heard too many people cribbing about him; they are saying he is a good guy, good pedigree, good track record, reformer etc. But it’s very important and it’s not just about who has taken up a post because it is the RBI Governor’s post and individual matters in monetary policy. If one looks at the US Fed as well individuals are remembered; Mr Paul Volker (Former Fed Chairman) is remembered as a greatest monetary policy maker or the best Fed Governor ever, Mr Alan Greenspan (Former Fed Chairman) is wildly criticized as the guy who actually stoked all these bubbles and Mr. Ben Bernanke (Chairman of the US Federal Reserve) is now thought of as a guy who has done a good job of amending there, has cleared up the mess. So individuals remain in public memory and there must be something in it. So it’s not the office which is only important, the RBI Governor’s office. Individuals have their own style, their own leanings, their own ways of functioning, and their own takes on the economy and therefore the appointment of the man is quite important particularly for this. At a time when the market does not have a clear answer on how much more inflation targeting will happen through the monetary policy route because it’s a toss of a coin. As we have been discussing for the last one year Dr. Reddy’s mind is very difficult to fathom so what will the new Governor’s mind be like? Will he be as sharp an inflation targeter? Will he use the monetary policy hammer as Dr. Reddy has been using to cool inflation? What is the brief that he has from the Finance Minister now that he is been ushered into the top seat? Will the Finance Minister lean on him considerably as a new candidate till the elections are out next time round and what is his own take on how to cool this particular breed of inflation? October policy will be watched closely because it will be his first statement to the market, to the economy and to the industry and it will be watched extremely closely. So one do not know what kind of inflation targeting he will do but it is very significant what he says on 24th October. The other point is that he is widely regarded as a banking reformer and the one crib that one have with Dr. Reddy is that he pretty much shut the door on banking reforms for right or wrong – I do not know, I am not passing judgement on that but he shut the door on banking reforms or banking M&A till to 2009 and the new Governor comes in at a time when 2009 is approaching. Is he the sort of reformer who will say that “now we need to do a lot of big moves in the banking sector so let the big banks come in, let them swallow up a couple of banks here?” So we would watch with a great interest because that could galvanise the market completely if we do see big ticket banking reforms starting 2009 and that’s something that we will certainly hope from him. Near-term it will be about his stance on inflation, medium-term it will be about what he does with the banking space but this has the potential, this appointment of changing the landscape of the financial market for sure. -Udayan Mukherjee, Managing Editor,CNBC TV18...

But I think macros are still very sticky, we are still running very high inflation, and 7.9% cannot be a very encouraging GDP number for the Q1, the rupee this morning is at 44.20 that cannot be a comforting number either. I think we have got macro challenges for sure so it’s premature to start celebrating and saying that macro turf has changed dramatically. I think crude will hold the key as well for the next few days. The last tropical storm got dealt with pretty okay and it did not disrupt things but Gustav is threatening to be more powerful and disruptive and I think whether the Nifty goes to 4,400-4,450 depends on whether this storm will nudge crude backup to more than USD 120/bbl. If it does not we will still carryon for an up move for a few more days. So crude probably holds the key but in the medium-term there are enough macro problems here for us to start relaxing. Flows and internals: Short covering on Friday, 1,000 crore bought on Nifty futures and you could see that the Foreign Institutional Investors (FIIs) were in a bit of a rush to cover up some of their recent shorts, which is why the Nifty did not dip at all on Friday despite not so strong GDP numbers. Traders also believe with this rally that we are in the middle of that range. The kind of put writing, which happened at 4,300, is quite large therefore there is a growing belief that maybe we will hold those 4,280-4,300 kind of levels and try and claw back once again to the higher end of the trading range, which is 4,400-4,450. Also with Friday’s relief rally we saw quite a bit of stock futures getting piled up. So that was quite interesting that people were getting back to some of the individual stocks and trying to build positions. We are in an uncertain market but the mood is not terrible because if it was then 4,200 would have broken last week, which it did not. Traders know that their lines in the sand are well marked out. The bear starts covering up every time we go to 4,200 and close to those levels and the bulls starts covering up every time we go to more than 4,400. Beyond that no one is sure of life and therefore it is a nice little ping-pong, which is going on there between the 200-point range and that is pretty much what the internals are suggesting as well. No flows happening at all, despite good data and bad data, I do not think the institutional flows are there at all. -Udayan Mukherjee, Managing Editor,CNBC TV18 ...

Nifty may go down to 3200. Sensex - 11000....