Uncertainty still lingering in mkts

Markets may be in a range now:

I think we are in a bit of a range now; people are still much undecided, global markets remained quite volatile - both equities and commodities. So the air of uncertainty lingers there. I don’t think anybody is feeling as confident to go out and say, “We have bottomed out of the woods and it’s time to rally on with some great momentum.” I think we will start trade on a flat to positive kind of note. One saw what happened on Wednesday; we started strong after theFed meeting but did not hold on to those gains or held on very little. So people are confused; one will probably see a range bound kind of sessions for the next couple of days and that too on thin volumes. So don’t expect huge movements on the way up or on the way down.”

On Asia:

Three long days and here is what Asia is doing this morning Nikkei is very quite 0.5% up, Korea Composite Index is up 0.5% as well, China has gone for a bit of a toss again. Taiwan of course for reasons related solely to that market the Presidential polls that’s jumped up quite a bit. So if you take Taiwan out its China, which is down and Straits Times which is up and the rest are sort of flattish, on balance you would have to say more good than bad the cues from Asia this morning.

The talk is still very global and so much news came out over the last week, how do you gauge the situation right now?

It is still uncertain out there. My sense is what the Fed is trying to do now with its direct intervention in the financial markets is at least to stem the panic for the moment and put in near-term bottom in place because I think the Fed also does not like the kind of volatility it is seeing in the financial market out there.

So what has started with rate cuts is now getting into direct intervention to some of the pockets like homebuilders that one saw last week. That is giving the market some comfort but the big worry for the market out there is what happens from the economic front because all that has played out in the last two-three weeks is bad news from the financial sector and the Fed trying to throw money at it and trying to defuse the crisis. Once that is done and if the market gets the feeling that for the moment if you have tide it over the financial crisis then people will start talking about the economy and next couple of weeks we will see more economic data coming in. the economic data, which has come for the last two-three weeks has not been good at all but the market eye has been on the financial sector out there.

If the expected economic data is going to be fairly weak then at best you will see a near-term sort of a bounce in the market and that is what we want to see over the next few weeks, whether global market scan at least for the near-term because of the Fed action and the direct sucker which has been provided to the financial sector can give you some kind of a near-term bounce. The longer-term bounce will only happen once the economic data improves and start showing the first signs of easing off but that I think is a while away.

I think we remain in difficult markets. Even if there is a near-term bounce, the medium-term economic data seems to be fairly bad from the US, so I do not think we are out of the woods globally speaking and you can see it in Asia. The rallies tend to be extremely low conviction rallies nowadays. Markets move up one percent, lose their gains in very quick time and at best are flat and on most days in the red.

Asia is signaling that it is still expecting more bad news to come from the US, which is why there is no conviction in the Asian rallies at all, part of the reason why we are also stumbling a little bit.

Is that going to be our performance in the near-term as well, translating from what the US is been doing?

Tough to say because we are in a very shallow market. In the next couple of days if we have some amount of global pull back it’s entirely possible that we pull back as well. This is settlement week too, shallow market, some covering can take you up. Our markets are likely to remain a bit volatile as well, following global cues but one can see that there is no great follow-up happening in any small rally, which is happening.

One saw what happened on Wednesday; there were great set of cues from global markets, we started up 600-points straight away and virtually gave almost all of it up by the end of the session. The market is saying that it’s fatigued at higher levels; it doesn’t want to go up in a hurry right now. Momentum is completely gone. At any higher level there is no added momentum, which is visible and what we saw on Wednesday is that the midcap or the liquid end of the market sold off quite substantially and that tells you that traders have no conviction.

At higher levels for the Nifty we can attempt to move back up to 4,600-4,700-4,800 but beyond that the market is struggling. We could be in bit of a range now a couple of 100 points but as we get closer to 4,800 and higher levels, I think fresh waves of paper supply is coming in making it difficult for the market to stay above those levels.