The global cues are great today. We cannot rule out chances of a 3-4% rally in our markets today. The volumes have been extremely low in our markets. But a huge rally may not be surprising and we may get back to Monday's highs today.

Our markets:

It is a good morning the global tidings are not just good they are great today. We had a 400 point rally on the Dow Jones index which takes us back to the new recent highs at least; the S&P is back to 1,370. Asian markets are rejoicing average gains there between 2-4% so, big morning for global markets. No reason why after being so subdued from the start of this week we cannot strike out 3-4% rally for starters as well. So this morning looks good, the sun shining from the global shores.

Can we hold it though till the end?

It’s been an unexpected rally so this morning should be quite good. We have lost quite a bit of ground over the last couple of days. Monday was a big whack for our markets, yesterday we had nothing by way of a recovery and volumes are extremely low in our markets right now. So we become extra beta now because of very extremely sluggish volumes. What could have been a 3% bounce may easily be a 5% bounce because the impact cost would be huge in the market like ours now. So we maybe surprised by the strength of the rally today.

I just wish if this rally in the US had happened on Friday because we were at that 4,955 mark and had we got help than we might have even cleared 5,000 which could have changed sentiment quite a bit. But today we have a good chance of getting back to where we fell off from on Monday. The morning should be good, afternoon lets see.  

Asian Indices:

The Asian screen is a delight this morning. 4.3% gains for Hong Kong, China is up 4%, the Nikkei is up nearly 4%, Kospi is not doing as well 2% and Taiwan is up 2%. All green, all good across Asia as you would expect after such a ferocious rally in the US.

Does it smell like a global rally or at least relief coming in?

Global markets are extremely edgy at this point in time and the reactions are always over exaggerated. From a distance, we don’t know what is going on in the US market but it seem like an over reaction to what went on. All that happened in the US was that a couple of players raised money and of course the corollary to that was since they are now raising money they will not go down and that was enough for the whole sector to rally some 10-20%. So when markets get oversold and the financial sector is terribly oversold out there, one tends to get rallies of this magnitude.

But my sense is that what the US market has been flashing for the last couple of weeks not just a couple of days is there seems to be a feeling that the damage done by just the financial sector problems maybe in the price and to that extent an intermediate bottom is been sort to put in place. Whatever happens with the economy and its impact the market will deal with later but for the moment, the price movements are suggesting that the markets trying to say that I have dealt with the financials crises and every small bit of positive news which comes out from the financial sector now will lead to the market moving higher because every bad news is in the price out there.  That may well be the right thing to do because who are we to argue with the market, the market is showing resilience and strength in the US.

But it seemed like a bit of an over reaction because on one hand UBS disclosed some big warts in its balance sheet and it just covered it up by saying, “I am going to dilute some equity of my own.” So the market bounced on to the good news and ignored the bad news and we had a thumping rally there. So I don’t know whether this will last? Whether this is durable? How long it can rally on?

On the margin the economic data is not been terrible, one would have to say because both the Institute for Supply Management (ISM) data which came in yesterday and the housing data before that was bad but it was not terrible, it was mildly better than expected and that was also something which the market latched on to.

The market in the US is increasingly looking at the glass as half full rather than half empty, the way its reacting to most news points and that might well be the bedrock for some kind of an April rally to come in. But I still think it’s a long summer ahead there will be many twists and turns and one will see many of 400-point rallies and 400 points crashes before we are done with this whole thing.

I suspect that it’s not over by long shot but even bad markets give strong rallies and we could be in the midst of one for April. Who knows?    

Is it still that 4,900-5,000 mark you work with for the Nifty?

I suspect so, because there are headwinds. I think 5,000-5,100 too if we get close to that level. Let us say after this morning’s gap up the next 200-points above that is your zone of resistance. So if there is a follow up to the US market rally it would be good it can get us to the 5,000, get us above that but I think all that has happened over the last couple of days both ways that big crash on Monday and today’s rally I think would keep both the bears and the bulls on edge and I think there would be a propensity for most participants to take quick profits.

I do not think people will play for two-three-five days, they will say if I get 150 points on the Nifty, I want to take it and run because everything might change in a couple of days. Who could have thought sitting on Monday afternoon trade that we will probably get a 200 point rally on Wednesday which is likely today. So everyday is different nowadays I think traders play for small gains and therefore the market probably will be robbed off consistent momentum on either side.

This morning we have a good short at 4,900 above that I frankly do not know whether we can hold that build on that during the second half of the day and whether people will keep positions open by the time trade ends today.