Yes I am just wondering how long we will have to stop and stare now that we a have come up such a lot. It looks like we may have to do a bit more work out here. The rally has been good and we have reached a level where people are asking questions once again. It’s a time of introspection for global and local markets because what was happening over the last month or so is a lot of gut kind of trading.

Fall off to 4,500 in a rush, pullback to 5,000 in a rush and I think those where the time when the markets got oversold, pulled back with a vengeance, short covering happened and now we have come to a level where we are almost even keel with valuations. I don’t think it’s easy anymore to justify or call the market extremely oversold or extremely cheap in terms of valuations. Globally too there has been a pull back and so we are not at hugely oversold levels or panic levels anymore and now I think people are sitting down and assessing fundamentals with a calm cool head because earnings have come and gone. Those are things which we need to analyze once again. Globally also things are in a state of flux.

So whichever way one looks at things, it looks like its time to take stock, take a little bit of a breather and that is why we are seeing this pause locally and globally. I don’t know how long it will last and which way it will end.

After a pause you could resume the upward journey once again or chose to give back little bit more ground and then consolidate in a band before taking the next move, so May will be quite interesting in that sense but the first part my be a bit boring compared to what we saw in April.

Asian Indices:

Not much happening across Asia; the Nikkei is shut today, China is down a bit, Hang Seng absolutely flat, Korea is flat, Taiwan is flat no cues from there- we got to makeup our own minds today that’s been the case for the last couple of days.

Is the Nifty facing another wall of skepticism or is there just not enough ‘go’ in terms of cues?

Not enough ‘go’ I would imagine. I suspect its just running little bit of steam; its run quite a bit, it’s almost in a 20% rally from the lows. I think right now there are no fresh triggers and therefore the Nifty is finding it a bit difficult. I think it needs a bit of extra zing to push it now to 5,400 level that zing could come, I suspect from the global markets if the rally in the Dow persists or if it does not happen then the market might just retrace a bit and hang around these levels for a while of course if global markets goes for a tumble it will be a different situation.

It looks like on current reckoning although these are difficult to call but the Nifty might just come back a bit more maybe have to do lot more work in 5,200-5,250 zone before it makes the next move if it has to do that and in the near-term maybe it goes back to around 5,100 level which would be giving up 2-3% and then consolidate perhaps in 5,100-5,200 range before trying to go up once again.

I think we will watch global markets quite closely but in the near-term at least for the next couple of days it looks like we will be stuck in a 100 point zone for the Nifty not breakdown too much there is no need to neither go up significantly above 5,250 levels. So essentially this week probably 5,100-5,250 range looks possible.

On broader market is participating:

I think there is little bit more by way of trader confidence. I do not think we are in that kind of situation where even if the market pauses a little bit panic seeps in immediately and the market rushes dwon, that situation we had in 4,500-5,000 zone for the Nifty but the moment you paused at 4,800 people said, ’the rally is done, hammer it back to 4,500.’ The moment we paused after every 100-200 point rally on the Nifty or pullback in the Nifty, heavy shorting started happening and the market got pushed down once again.

Right now the short sellers are a little skittish of going short because they have seen the Nifty climb above 4,800-5,000, 5,100-5,200. They are probably getting sense that there is more strength internally in the market and therefore short sellers are a little skeptical about opening large scale shorts. They might come back into play if they get some support from the global markets but right now the street is a little divided and that is why one is seeing both call and put action around that 5,200 strike price. That 5,200 mark has become the central line for Nifty right now and there are both calls around that level. This is what the internal picture seems to be suggesting

But what is interesting for the traders and investors right now is that since there is a little more confidence that the Nifty in the near-term unless there is some great tumult in global markets, is not ready to break down, the action has shifted outside the index. We saw many money making opportunities over the last couple of days outside the Index. midcaps, smallcaps, non index largecaps, banks, infrastructure, so one is seeing quite a few stocks which can give you those rallies. Unless there is substantially, directional move, I suspect the market might remain within a 100-150 range for the Nifty but maybe lot of other stocks outside the index doing well.

Is the big ‘if’ and ‘when’ of all these though premised on what’s happening with the global markets?

It is and that’s the only trigger for us now. I suspect that people have reached a stage at 5,200 or 17,500 where one does not want to table thumping bullish on valuations because there are still challenges for the market; it may still go up. But the moment one looks around earnings okay, inflation issues, monetary policy tightening, earnings and economic growth slowing that’s not the kind of environment in which the market should run away to 20 times in terms of a PE multiple. So given where we are between 17-18 PE multiples depending on whose number one goes by; I think we have reached a stage where one doesn’t want to be hugely bullish about valuations. So that is not a trigger which it might have been at 14,500-15,000 where the market looked oversold.

So from hereon what can propel us? We can go up in a whole global wave; if all markets around us go up, we will also go up. So it’s like everybody going up holding hands with each other - that kind of a situation is possibly but if that does not happen then I think we need to mark time, digest some of the recent gains and take stock of the news flow which is about to come.

The global markets having rallied to where we are right now they are also pausing because the one thing which the market was looking at over the last few days is whether the dollar strengthens further and whether commodities cool off some more.

One saw that last week but one is not getting clean rundown for commodities; one is not getting a durable correction. There is two days of a sell off and then immediately they bounce back to highs once again, like crude is back to USD 120, gold has pulled back again and that is keeping the equity markets on edge as well that the whole global inflation situation is not cooling down sustainably and durably.

So there are some mixed straws out there floating in the wind globally; lets see if this is just a pause all global markets needs to give some of the recent gains but that is the trigger for May and on it will rest whether we can move back up to 5,400 in the near-term.