Moneycontrol
Dec 06, 2012 10:56 AM IST | Source: CNBC-TV18

Retail FDI not material issue for mkt; focus on stocks

The Lok Sabha is done with voting on FDI and for the next couple of days the drama shifts to the Rajya Sabha. Hopefully, things will move along expected lines there as well. Global markets are stable today.


The Lok Sabha is done with voting on FDI and for the next couple of days the drama shifts to the Rajya Sabha. Hopefully, things will move along expected lines there as well. Global markets are stable today.


The Nifty has also been steadily inching higher over the last couple of days. Traders should not complaint because lots of individual sectors have been giving very good gains and it looks like that recipe should hold today as well, said CNBC-TV18’s managing editor Udayan Mukherjee.


Today might be a bit aggressive particularly with all the noise around the Rajya Sabha. Our market may do what we have done for the last couple of days, which is just inch up a little bit on the index. The index matters much less this week; it is all about what is happening with other cluster. Yesterday, metal and real estate stocks performed very well yesterday.


There are very lively corners in the market right now, which is generating enough excitement for traders to worry about the index. The index will do what it has to do. Targets of 6,000-6,100 may well come about in the next week or so, but for now the game is about individual stocks. People are having quite a party there.


As far retail FDI voting is concerned, it looks like a tamasha which is going on in the Parliament. The foreign direct investment (FDI) in retail is not such a big deal for the stock market. Everybody is watching it and having some fun on the margin, but I do not think it is such a big event if it were to come through or not.


From market perspective, we need to see after this issue is out of the way, what happens with other bills. This is like a hurdle, which needs to get cleared to get the meat. This in itself does little for the stock market. Even if it were to come through, the way things are positioned right now; it is unlikely that billions of dollars will come in the next three-six months. I do not think this is the material issue.


It does not matter to the stock market. But the way things were managed yesterday in parliament, it was quite distasteful. After Instances like this, one knows why people have such scant respect for politicians in this country and one can only hope that the end justifies the means.


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Even in this consolidation phase if this is it, Nifty is not giving up anything. In fact, everyday it is adding 15-20 points. So, the pace has slowed and one would expect the pace to have slowed, but it is still running quite hard. It is more prudent for traders to look at midcap stocks and to focus on them. Yesterday, too many clusters did quite well, sectors like metals, real estate and high beta - traders should be looking at them.


Globally, it has been all about China these last few days. The market is getting the sense that the political transition there will be quite smooth, which means a lot more stimulus is coming. It is no coincidence that metal stocks have started perking up; yesterday Hindalco and Tata Steel did so well. It is partly to do or largely to do with the China factor out there.


It has huge ramifications for the commodity complex if there is a lot of stimulus coming China’s way over the next few days. But one should also have a macro kind of an underpinning to what China is about to do now.


The Chinese market has been a dog this year, but that started to change around and India has got disproportionately large flows this year partly because China has been such a poorly performing market. If China gets its act together now and we do see stimulus and that market starting to perform, then it might take away a little bit from India’s performance because everything is relative in the world and India has benefited from a relative trade versus or against China this year.


I just hope that does not start to change around once China starts performing over the next few months. There are some macro issues that India needs to think about in terms of attracting liquidity.


If one looks at the Asian basket this year, the performances have been so disparate. Markets like Philippines, Indonesia and Thailand have just torn away from the pack. China has been a big dog and India is somewhere in between.

It is no longer that all markets are moving in a 20-30 percent band kind of an Asian phenomenon. Even in the region, people are beginning to pick. That holds true for emerging markets as a class, the performance have been so disparate this year. India and China still remains an important relative thing to focus on in terms of attracting FII flows.

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