May 30, 2013 11:33 PM IST | Source: CNBC-TV18

May series to expire around 6100; rupee to get some respite

The dollar index has come back to 83.50, which means rupee will get some respite.

The May Futures and Options series will expiry today. This May series has been one of the better series compared to other May series over the years and it might end around 6100, which is not a bad outcome, said, CNBC-TV18's managing editor, Udayan Mukherjee

Global markets are quiet. The US market too was down; nerves should have settled by now on this whole liquidity debate with the Fed, but it looks like it is still simmering. Asian markets are very flat. Although it is still a good uptrend in the US, volatility is picking up on the margin and we might continue to see that till Fed clears the air about liquidity. Therefore, till then market will be two steps forward and one step back, he feels.

It is also the tail end of the earnings season with few big numbers slated to be announced today. Meanwhile, the dollar index has come back to 83.50, which means rupee will get some respite, he added.

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Below is the verbatim transcript of his analysis on the channel

On edgy global nerves

It appeared that nerves had settled over the weekend on the liquidity debate with the Fed, but it is still simmering out there somewhere. People are still talking about it and everybody has got different opinions.  Europe also seems slightly cautious about some kind of tightening on margin, and some of the European news yesterday did not look great even for some of the bigger countries there.

The good thing this morning is that at least the dollar index has come back to 83.50, which means the rupee will get some respite because it was looking quite scary the way the rupee went to 56.30 on Wednesday.

Global cues are mixed. It is still a good uptrend in the US. However, volatility is picking up on the margin and might continue till the Fed clears it’s mind or clears the air about the liquidity conundrum when it meets in June next time. Till then market will probably be two steps forward and one step back.

On May series

It is one of the better May’s if one looks at the last few years. There was a lot of apprehension that as we get towards the second half of the earning season, we will get hit once again by bad earnings. We did get hit by bad earnings but the market seems to have digested that quite well.

Markets are reluctant to fall; you could see that on Wednesday but the market did dip intraday. Europe was looking quite ugly and the rupee was at 56.30 but miraculously the Nifty managed to come back to 6,100. May be there was little bit of effort to keep it going before expiry today, that bit of index management always happens. Even so markets are taking a few blows on earnings, on currency, on global jitters but are still standing in one place.

Looking at all the newsflow that has come in the last couple of weeks, for the Nifty to be within a couple of percentage points of its 52 week high is not such a bad outcome.

One can see that the market is resilient, and has not obliged the bears over the last few weeks. So there is still that possibility that if the global liquidity situation remains benign going into June, you could try and move higher from here, may be form a fresh 52 week high and then see if deeper correction is unfolding. However, it is something which will still keep the bears at bay with the kind of price action that they are witnessing. Some things in the environment don't look great, but the price action still seems very resilient.

On Nifty

If this narrow market continues to move higher because liquidity is chasing a handful of names, it is possible that the Nifty can move higher but what happens to the broader market in June is still going to be very important because this kind of narrowness in the market is not sustainable.

If one looks at May performance, what would disappoint a lot of traders is that it is still again those defensive high quality sectors, which have pulled the Nifty along. FMCG is up the most, pharmaceuticals have done well and IT has also done well. These three sectors have pulled the Nifty up 3.5-4 percent for the series. Of course Hindustan Lever went up some 25 percent because of the Unilever offer. But even if you take that out, most of the contributions have come in from these high quality defensive names.

However, Bank Nifty has been a laggard. Infrastructure, real estate, cyclicals generally have not done very well or have not kept in sync with the market. Optically, you may get some joy by thinking that the Nifty is chugging along nicely and every week it gets closer to that all time high but it is not an optical game, it is not just about the Nifty futures traders, the broader market has to show far greater traction for this to really feel good in terms of a genuine upmove in the market.

Just for the Nifty - we are at 6,100 today, most likely expiry should be around that give or take 50 points on either side and then in June, if we do get some lift because of global liquidity, we could challenge that 6,220 level once again, although I don’t know with what degree of success but it can certainly happen. However, that is just a small part of the market as well all know.

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