In his analysis of the market Udayan Mukherjee, managing editor, CNBC-TV18 says the Nifty is above 6000 but the big question is whether we can carry on this good work in the face of increasingly bad news on the macro front.
Nifty may open flat today despite Infosys giving lift to the market by its better-than-expected results, says Udayan Mukherjee, managing editor, CNBC-TV18.
“A lot of companies’ Q1 earnings are expected, so let’s hope they will be as good as the first couple that we have seen last week,” he adds.
Below is the edited transcript of Mukherjee’s interview to CNBC-TV18.
On global markets
The global markets have pulled back quite a bit after Fed chairman Ben Bernanke’s reassurance that the monetary stimulus tapering is not going to happen soon, but some things in the global space are still not looking very comfortable. One may have expected the US bond yield to come below 2.5 that is still lingering around 2.6, of the highs but still hanging in there, crude is still uncomfortably high for us at almost USD 109.
People were expecting bad data from China that came at 7.5 percent unlike expectations of 7.2 percent. That has not happened but it is not comfortable data and the industrial data frankly is quite bad in China. It is a wishy-washy kind of global environment again. I think after the pullback, people will once again sit back and take note of whether the markets need to rally even further from what they have done from last week. So, it is not as bad as it was 10-days back, but one needs to keep in mind that some amount of recalibration has happened already.
On Nifty rallying
This recalibration is the only thing which has changed. That is the reason we are not at 5700 and at 6000 and people are breathing a little bit more easily on the foreign flows front. Yes, outflows have stopped for the moment but I think the market needs to pause now because we have had a 300-points plus rally. The inflation data on Friday was not comforting at all. Yes, we have had a couple of good results but as we wait deeper into the earnings season we will see far more warts from the earning season.
The macro is a reminder that things are still very difficult for India. One may occasionally have these bouts of pessimism and optimism because of the way foreign institutional investor (FII) flows are moving, because that is pretty much the one thing which drives the market. However, the underlying is still quite weak and that does not go away with rallies or busts in the markets. So, I think it is still a very challenging kind of trough for the market and therefore at 6000 plus, one would tend to think that the market needs to pause here.
The market did cover a lot of ground and it has got to do of course with the FII numbers which have turned positive for the last three days. So, it has been a good run but now the market can go up another 100-150 points easily if the FII buying continues. However, fundamentally, one should start getting a little cautious out here because beyond a point, there is no reason for the market to move up significantly from here. The macros are still quite shaky.
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