CRR hike, global cues could trigger volatile session

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

It is not going to be easy to trade but I don't know whether these continuous doses of bad news, which is coming in, first the inflation, figure and then RBI's moving is heralding some correction, which is lurking at some point.

Global cues:

US markets have given a very good bounce. Asia is not looking too bad at all, Nikkei is up about 2/3rd of a percent, Kospi is up 1.5%, Straits Time is up 1%, Taiwan is up 0.25% , which should have come on another day because today the markets may not be in a mood to receive these green cues.

They are probably too obsessed with the CRR hike and justifiably so. Therefore the global cues may not atleast in the morning make much of a dent to sentiment. Among other emerging markets, Brazil was up 3%. Phillipines 2%, Russia was up 1.5% as well; so things look pretty okay.

CRR hike may weigh down heavily on the shoulders of the market and the banking space:

Banks will probably sell off this morning. In any case, since the last CRR hike public sector banks have been under performing big time, all the public sector banks despite the market being where it is are down between 8-10%. So it is not like they have been outperforming but their underperformance might get even more exaggerated right now.

Market cues:

The last two days have been quite gut wrenching. It is not giving you good feeling at the bottom of your stomach because the market has seen lot of volatility, it has not stabilised yet and there is more bad news to deal with. Yesterday, it tried to hold out 4,000 on the Nifty but this morning with the cues, who knows where the markets will go.

I think we will probably remain a bit subdued to volatile in the next few days as well. It is just that you are close to an important event otherwise a slightly deeper cut could have been called more easily. But before the Budget, you could easily see turnarounds after a couple of days of falls because people would still want to trade the event.

But short of that, I think market is getting into a sticky kind of zone, still it could fall a bit and then stabilise and pull back a bit before the Budget. But with all of this happening, unless global markets rally big time, a correction is coming at some point. It is difficult to say if this is the beginning of the correction. But at some point, over the next 4-5 weeks, depending on how things shape up with the macro numbers at some point, a whack is coming. So one is better off being a bit cautious; things are not looking exactly great.