Mkts optimistic; global cues to guide ahead now

On April Series:

It has been quite constructive this last few days. The series is not been bad, so there is a sense of relief in the market. We have had such terrible series the January, Feb, March, big legs down in the January series and in the March series, we need one positive F&O series to just lift the sentiment a little bit and I think we are on our way to doing that today, just ending the April series on a good note and rollovers to may are also, reflecting some amount of optimism, global markets are pretty okay.

The uptrend which started early in the April series seems pretty much to be on now and it depends on how long the global markets can continue to help us but today we have got quite a few interesting earnings from various marquee sectors so, we will watch out for all those.  

Asian Indices

Some of the Asian markets have given up their gains. Japan is in the red, Kospi is flat and so is Taiwan. Hang Seng is still going strong but was up 2.25% but now is up 1.25%. China is still standing tall although not 10% up as it was in the morning but still up 7%. China is strong but the rest of Asia is quite flat.

How is it looking for our own market though?

For the day it might have a touch of choppiness as we often see for future expiry days, broadly we might just move around in that 5050 or 5100 kind of a zone that we have done the last couple of days, lets say a broader range if there is some pressure on the futures side, 5,000 to 5,100, that could be the broad trading range for the day but we are sill in the midst of the uptrend that has been on for the last many weeks and no signs of termination have come on the screen at least yet.

The good thing about the market is that there is a fair amount of skepticism out there, every morning when you do your dip-stick surveys, at least 50% of the experts say, book your profits, there is no too much upside, might well turn out to be right but markets usually do not end up trends when there is such a healthy dose of skepticism. Almost every body is saying this is it, maybe 100 points more or maybe 50 points more, and then we will turn once again, what’s the upside on the Sensex? - they say maximum 17,000 and after that there is no headroom, so who knows, maybe in the near-term global markets permitting and helping, one could be surprised by the strength of this intermediate up move.

Don’t take things for granted out here, we have looked pretty okay for the last 4 weeks, and that uptrend might still be on, for the day we might struggle in this or move around in this 100-point Nifty range, but beyond that if things are okay, maybe we will start the May series with a bit of a pop, which takes us beyond the 5,100 mark as well.  So near-term it doesn’t look to hopeless.

It’s been okay for rollovers as well?

It’s been good and I think the first sign that sentiment is improved a bit while it is true that there are many sceptics in the market; I think from a trading perspective sentiment has improved a bit 61-62% done on the market and for the Nifty rollovers which is more than what we saw in the previous series. We are already at 39,000 crore open interest (OI) which is a good bit more than what we saw on the last day of expiry for the previous series of the March series.

I think we will start the May series with at least 25% more OI than the last series which is a sign of confidence that at least traders are feeling little bit more hopeful that could turn on a dime; the first time the market shows a crack but at least for the moment it seems that a few more players have come into the market, stock futures open interest has built-up quite a bit and we are going to start stock futures open interest quite a bit higher than previous series and the put call ratio is healthy on the higher side 1.36 as well.

All of it is indicating that for the moment the bulls have the upper hand and sentiment has improved a bit going into the May series. We are starting with a bit more confidence hopefully we won’t get pegged back early in the May series by some adverse news.            

We have also got a handy global rally going by the time we wrap up, double digit returns across the global markets?

It is and sometimes we don’t take stock of how much global markets have moved up because we come in every morning and see 1% on the screen and say okay the global markets have generally been good. The Hang Seng is up 25% from its recent lows, I am not even talking about the January lows but the recent lows, and 25% on an index in a pullback is very smart. Japan is up 16% despite all the problems in that market, Korea is up 18%, Taiwan’s up 20% so is China.

Most markets on an average in the emerging market space, Asian space has given you 20% on an average by way of a pull back from the lows that are on the index and we are up about 12%-13%. My sense is that our pull back that we are seeing out here has completely everything to do with what’s going on with global markets and make no mistake about it that, this is a big emerging market and not even an emerging market but a global equity pullback in the midst of. So as long as that continues, even if there is a problem on inflation, etc, we will probably move up. Although we have underperformed compared to other markets which are up 20% and we are up only 13%. We are not moving as far as other markets because of our local problems of inflation, interest rates etc, but we are still moving up despite 7% plus inflation levels, so that’s the thing to keep an eye out on, is the US not crumbling, are all global equities still moving up, if the answer to that is yes, and as long as it is yes, and I think you need to be trading with a bit of a positive bias.