Bad global cues to keep mkts choppy

It's the last trading day of what has been truly an eventful week for the market and so much has happened in the last week. The vote of confidence went through, there was a big rally yesterday, a bit of a cool off, inflation numbers have come in as well which don’t look so menacing. However, today we do not have great cues from the global markets.

So can we finish off a week which has been very good and kind for stock prices and has brought us to the brink of 15,000 once again?

Markets may not look good today because of global cues.

The morning will probably not be great because of the global cues, but this much of a retracement was expected because the rally was very sharp; in one shot we went up from 4,100 to 4,500 over just a few days. So maybe the market gives back a bit as it did yesterday; a bit more is fine and acceptable. Even if we close the day or lose 50-60-80 points today, I do not think traders will lose heart on the uptrend just yet. But if one sees an alarming cut in the morning and more importantly, if those cuts don’t get filled up by the end of the trading day then traders will begin to worry because the global cues are once again not looking good.

But overall the markets seem fine; it has started an uptrend and it's doing all the right things having gone up very sharply, it's pausing and giving up some of those gains - that’s all very fine. So as long as the losses are limited today we will still be okay for next week.

Asia is a bit soft, as you would expect after the sell off in the global markets or the US markets. Taiwan is down more than 2%, Straits Times almost 2%, Korea is about 1.7%, China is down 1%, Hang Seng has recovered some of its losses now around 1.5% and so is the Nikkei. So cuts between 1% and 2% across Asia this morning.

On Global markets:

The global market seems very volatile that is the problem. It is not settling down and the kind of volatility that we are seeing-we see very smart short covering rallies punctuated by fairly sharp sell offs like yesterday’s. So things are not quite easy out there though there is an attempt to bounce off the bottom that they put in place or seem to put in place a couple of days back.

Equally, the economic data which is coming through from the US is not very reassuring again; housing data continues to be extremely poor, financials extremely edgy they bounced back and then they sold off once again, big experts like Bill Gross are talking about more pain in the financial sector out there.

So I think sentiment is quite shaky and if the market indeed is to climb higher levels from here, I think it would need help not just from the crude oil market but it would need some reassurance from global equities as well. I do not think if global equities do collapse even if crude is cooling down, I doubt whether Nifty can hold out very much further from here. So this morning we will get pegged back but that is not the end of this run at least for the moment it seems like.

I think one needs to see a little bit more stability, the Volatility Index (VIX) is just running all over the place; one day it cools down 10%, the other day it bounces off 10% that is a very unsettling kind of an environment for us to outperform in. 

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