It has been a bad day for markets. The mood was spoilt yesterday itself due to the disappointing Index of industrial Production (IIP) numbers. With global markets crashing, the scene just became worse, says Udayan Mukherjee, Executive Editor, CNBC-TV18. He feels the mood will stay negative in the days to come, with sporadic incidents of relief rally.

Q: What do you think were the primary reasons behind the sell-off today? Were they largely global?

A: Yes, primarily global because today was a bad day. The way Asia started off this morning didn’t help us at all. In any case the mood has been sour by the Index of Industrial Production (IIP) numbers yesterday. So we were carrying that emotional baggage or that lingering baggage of that macro number. And today straightaway Asia got hammered, then Europe opened up terribly weak and lot of support levels kept breaking during the course of the day, Traders got a sense that pullback from 4,600 on Nifty to 5,000 on Nifty was just a false recovery and therefore even the bears got more aggressive during the course of the day.

So it’s a combination of factors but primarily global factors. The fact that global markets are just completely failing to recover and at the slightest provocation they seem to be rushing back to those January lows. So a terrible day for global financial markets and we fell in line, but India being a high beta market nowadays, we seem to be falling even more than other global markets around us.

Q: Therefore, are we likely to remain in sync in the way the global markets are going?

A: Possibly. Bbut I think there is a complete buyer strike out here and that is the big problem. Nobody wants to buy. Therefore, volumes are drying up and even small amount of sales, which are being pressed, are having a big telling impact on the stock prices. So the impact cost is so large nowadays that even if an FII wants to sell a couple of 100 million dollars of stocks, he would end up depressing stock prices to a very large extent. My fear is that is what is going on out there. That it is falling on very thin volumes and therefore the impact cost is very large.

Now no retail investor wants to buy. No trader wants to buy right now because he just saw what happened. Two days back we went to the January lows, got a nice 10% bounce from the lows on the Nifty. Some people thought the bottom was in place because we did a double bottom on the January lows. And just when everybody was thinking that, we see another wave of global panic, which leads us back to those January lows. I think confidence is rattled and traders just do not want to buy. Investors are busy clearing their portfolios. Mutual funds are also sitting on their hands because they believe that the global news flow could lead us to even lower levels. FIIs are using every opportunity to sell stocks, which is why many of the largecap names like Reliance, ONGC, Bharti, ICICI Bank fell the way they fell today.

Q: What could perhaps signal a turnaround?

A: I don’t know. We have all been scratching our heads and trying to figure out what could turn this mood around. Right now, I don’t think there is any great news which is going to turn the markets around. We saw the Fed package coming through a couple of days back, we saw a big rally in the US and 48 hours after that's what happened to global markets. So those are small reliefs which are leading to short covering rallies; they are not leading to durable turnarounds in stock prices. The economic news is bad; you hear lots of rumours about banks getting into further trouble in the west, you are seeing bad economic numbers and earnings revisions downward from many analysts in India.

So the whole atmosphere is extremely vitiated with bad news. As they say, it never rains it only pours. So yes, there is a Fed meeting coming up next week. There probably will be a rate cut of 50 bps, maybe 75 bps, the market's expecting that. Will it come as a huge saviour for market sentiment? I doubt it very much. So I don’t know. We seem to be in a bearish kind of groove right now and aside of the occasional and periodic short covering rallies, I don’t know what can turn sentiment around very dramatically. So keep fingers crossed, hope for the best, but the screen is still looking extremely weak right now.