Udayan Mukherjee of CNBC-TV18 is of the view that the next trigger for the market clearly remains global cues, which could either trigger a breakout or lead to a correction led by either North Korea issue or something else in the US.
Breakout could happen because there are other confluence of factors that are also coming together which might trigger a breakout – factors like what Federal Reserve is saying, some officials hinting that interest rates might not go up as they earlier though, last night Mario Draghi said they would throw in more stimulus if required, Donald Trump is talking of passing tax reforms with a deadline by September 25, says Mukherjee. All this has led to market feeling easy about the liquidity prospect both in Europe and in US which could give a leg up to global markets, he adds.
“So both could happen – one is a binary North Korea situation, which could explode and trigger a breakdown for September, October but equally, one could see gold starting to unravel because of the market getting more optimistic about liquidity and tax reforms,” says Mukherjee. Therefore, global holds the key trigger for markets, he adds.
When asked if investors are worried about Nifty being a range and not making new highs, Mukherjee says, it does not matter to people if Nifty is making new highs or not, because lot of their stocks are delivering significant returns. According to him, the problem with Nifty is that ITC and Infosys are not moving and holding the index back, and so all the breakouts have to be done by either banks or by Reliance Industries.
However, if one closely looked at market performance in the last few days then one could see that there are many midcaps that are making lifetime highs, says Mukherjee.
Therefore people are not overly worried about Nifty being range bound as longs as the stocks they have invested in keep performing, as long as NBFCs, autos keep hitting new highs.
“It looks like liquidity is going into the areas where stock returns are positive,” he adds.
He believes the time is coming where the Nifty is likely to make a decisive move either above 10,000-10,100, in which global factors may play a big role but for the moment midcaps are keeping the market warm and happy, says Mukherjee.
For the entire discussion, watch videoDisclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.