Don't see major triggers right now

On global markets:

I think those are the kind of questions, which come to the fore right now. Everybody has been thinking about what is going on in the market and I think we have reached a juncture now where you have got to keep an open mind. You are not at 4,500 anymore and the market has rallied quite a bit and I know that there is still overwhelming skepticism and maybe 25% of the market is bullish as in clean bullish and 75% would be more skeptical. But I suspect you now do well to keep a bit of an open mind, which is not to say that get gang ho bullish or gang ho bearish but when I talk to people I see too many people who have got one set view on the market which is bearish-of course there is another leg down we are going to 15,000-14,000-12,000 or there is the other view which is the worst is firmly over, we are not going to go back and retest anything and now the journey has started which will take us to new highs.

There is just too much of this kind of a set of opinion and that has never a good thing. At the end of the day you are not out here to massage your ego and the stock market, you are out here to make money and the trade which has made money over more than the last couple of weeks is the long trade.

So you have got to ask yourself at this point whatever you think about the headwinds-and there are serious headwinds to the market from here-whether the market can actually do the proverbial climbing the walls of worry, which is typically, what a bull market does. Is it doing that, is the screen telling you that it is going to climb these walls of worry and edge higher and surprise people. So I do not know the answer to that but I think the question begs asking at this point because the screen globally and locally over the last few days has been telling you something, which I think one should not ignore completely.

Maybe it is a relief rally, maybe it will peter out soon and maybe there will be retest of the lows where we came from or maybe there will be not, maybe globally and locally things are not as bad, we have not had a terrible earning season, maybe the RBI governor is right and we will have more than 8% growth and if that is the case maybe the markets have got out of the woods which we will find out in hindsight, maybe globally things do not look so bad as the Dow has been suggesting. So all that I am saying is that do not get set with one rigid view on the market right now. We have come to the midpoint or beyond the midpoint of the expected trading range. But I think one should keep a very open mind at this point to stay away from nasty surprises going forward.

You just need to respect what the screen is telling you. I think we will know over the next one-month whether this is just a relief rally or something more than that but keep your mind open for surprises as always.  

The US was fine overnight or on Friday but we have a bit of a mixed bag situation here. Couple of markets are shut; the Nikkei and the Kospi are shut today, China is up in the green, Hang Seng just about down, Taiwan corrected a bit and Straits Times flattish so no cues from Asia this morning.

We were just talking about one bull markets if this is indeed this is still one- climb walls of worry and the other big saying is- don’t fight the Fed that’s played out over the last two months in the US market. The Fed’s thrown everything at the market, done a good rescue job at least for the moment and it did a bit more on Friday and the market is deriving some confidence from the kind of action which is coming in from the policymakers out there. So that’s one story, which is played out- out there.

I think what’s also happened is that expectations from economic data have been very low as it has been the case for the last three-months most of the data points have been very weak. So people’s expectations are extremely toned down. They expect to hear bad news economically speaking. But a couple of slightly better than expected news points have come out over the last few days the 0.6% GDP number was the first, the unemployment numbers were not as bad as the street was expecting, the non-farm payrolls data was not as bad as the street was expecting. You can even hear stray voices on the street in the US now who are talking about the possibility of no recession, small recession, swallow recession all of that.

There are voices on the street in US, which are talking about the S&P going back to 1480-1500 levels as well. So there is a little bit of an optimism, which is playing out. The one significant factor, what happened over the last weekend, was that the first market global market of any importance hit an all-time high- Brazil is at an all-time high it’s one market fueled by commodity prices. But one important emerging market is at an all-time high and many other emerging markets are within 5-7% of old highs. I think that’s quite significant if the general assumption was that we are in a global equity bare market. In equity bare markets you don’t see markets actually hitting new highs or getting very close to old highs. So you would not want to ignore any of these things.         

Ashwini Agarwal’s points are very well taken. There is so much, which is wrong with equities right now and all of us have been talking about it. But once you look at the screen one tends to ignore the bit of good news and the data points, which come in because the mindset is geared to except only bad news and overlook any kind of good news. But there are strays of good news, which have been floating around, and who knows maybe the market is telling us something, which we are ignoring at this point in time which will turn out to be a bit of a surprise. So what I started off saying I think the more you look at global markets you want to keep an open mind. It would surprise nobody if this rally pitters out fizzles out and we see another leg down. But you don’t want to get caught into expecting that and then missing out the big recovery, if it is a durable recovery.

On Nifty:

A: I suppose traders will play for that but now since the goal is so visible and everybody is talking about it who knows one could get a bit of a leg down and then maybe the market will resume its journey. We dithering around this 5,250-5,230 levels for the last couple of days not quite cleared it convincingly. So one may have a couple of flat sessions maybe a bit of retracement but traders are now playing for 5,400 mark because that’s the next stop after 5,000 and its entirely possible that one gets there over next few days unless there is a leg down from global markets. The triggers are out of the way so if there is a correction which needs to be induced I suspect one will have a globally synchronised one.