Dec 20, 2012 06:25 PM IST | Source: CNBC-TV18

Market might like Narendra Modi's victory: Udayan

The Indian market did quite well yesterday to close around 5,930. Udayan Mukherjee, managing editor of CNBC-TV18 says there is a bit of a set back for US markets overnight. He further says the Nifty is approaching fairly significant resistance zones, the 2012 peak.

The Indian market did quite well yesterday to close around 5,930. Udayan Mukherjee, managing editor of CNBC-TV18 says there is a bit of a set back for US markets overnight.

With the results of the Gujarat Elections today and the Parliament winter session coming to an end, he says, it is officially the last day of the big newsflow for 2012. "The market might like Narendra Modi’s victory," he adds 

He further says the Nifty is approaching fairly significant resistance zones, the 2012 peak. "At this point, global markets should not let us down. We should be able to get a little bit of support from here to get to that 6,000 level," he asserts.

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Below is the edited transcript of his comments on CNBC-TV18.

With the results of the Gujarat Elections today and the Parliament winter session coming to an end, it is officially the last day of the big newsflow for 2012. After that, shutters are down on news flow. Let’s see if the market can climb on the back of today’s news to get back to the 2012 high, which is not very far away.

On yesterday’s session:

Yesterday was good, but let us see how market deal with global markets right now because there has been a bit of a set back. I think there might have been a bit of a turn in negotiations as well in the West. So, these things will continue to be volatile.

We are approaching fairly significant resistance zones for our market, the 2012 peak. At this point, global markets should not let us down. We should be able to get a little bit of support from here to get to that 6,000 level.

The local newsflow is pretty much done at the end of the day. So, next couple of days is our best chance of clearing pass this congestion zone, with a little bit of tailwind from global markets and powered on by bit of sentiment, which might come through today from the local newsflow.

On Gujarat election results:

There might be some sentiment rub-off today. But beyond that, I don’t think there is any material takeaway for the market. If Narendra Modi goes on to win today as everyone suggests, people will talk about what implications it will have on BJP’s Prime Ministerial candidate for 2014. But, at the end of this Parliament session, most people realise that there is now an even chance of the government lasting its full term as opposed to earlier. So, if you are talking about elections in 2014, it is too premature to start talking about candidates and stuff like that.

The market might like Narendra Modi’s victory because market is quite partial to him and believe that he may do good things, if he comes to power, big if there. But just to that extent there might be a little bit of sentiment fillip in the market, if his victory is confirmed. But beyond that I think it is too premature to start drawing scenarios for 2014 elections and any reaction today will just be that, a bit of sentiment rub-off, nothing more material.

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On the market:

We are just about 30-40 points away from the 2012 peak. On a couple of occasions, in the past, we have run into some rough weather out here. Flows are still good. We have got Rs 1,250 crore yesterday. That is overwhelming any kind of domestic selling towards the end of the year. We just crossed USD 3 billion for the month of December in terms of net inflows from foreign indirect investors (FIIs). That is a staggering number.

We certainly seem to have the support of liquidity at this point. That is why despite a fairly lacklustre kind of global screen, we are still suggesting that we might open flat to positive this morning.

If Narendra Modi does go on to win today and in late morning that news comes in, maybe that will be enough to just inch the market higher to that 5,960 kind of level and then we take it from there. But if global markets disappoint over the next couple of days then I think we might struggle with that congestion zone once again.

Parliament session is much better than expected. At the start, a lot of people thought that maybe not much business will happen, but the government tried its best. We put foreign direct investment (FDI) retail to bed, we have put through the Banking License. We could not do insurance. That is a mild disappointment, but maybe that will happen in the Budget session.

On Companies Bill:

That will happen soon enough. So, I think you will see a lot of business in the next session of Parliament, maybe going into the monsoon session as well. We should hope that a few more bills get passed, but atleast the market is getting this sense that this is a functioning government. It is not completely frozen government. I think that is worth atleast 500-600 points on the Nifty.

The hope that came up in September has not been belied by the Parliament session. Sure, we could also always have done more, but I do not think we end this session with any tinge of disappointment. Infact you would have to give the Finance Minister some brownie points for what he managed to pull off in this session.

One can only hope that this is a precursor of what can happen in the Budget session. The finale could be a really nice tight Budget this time around, which the stock market will celebrate.

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