Global cues weak; Nifty won't breach 5400 soon

We may not fall too much in the morning, but we would probably start on a flattish note. The Nifty may not take out 5,400 in a hurry which looked like a real possibility yesterday with the way the market was moving in the last one hour of trade, said CNBC-TV18’s managing editor Udayan Mukherjee.

The picture is a little unclear. The currency markets are not giving too much direction at all because the euro makes very stuttering kind of moves. It pull backs, gets to 1.23 and goes right back to the hole where it came out from. That is indicative of the kind of headwinds that those markets are facing.

Even the dollar index is relentless; it is not going back down below that 83 mark at all. So, those are telling that right now while sporadic rallies are being attempted the market probably has some degree of pull of gravity on the way down. Also, earning season has not begun very well in the US and that’s presented itself as a headwind over the last 24 hours.

I don’t think there is a clear answer to whether the summer rally which started 5-6 weeks back is in its last phases or is this just a phase of a lull or a plateau before we get to somewhere higher with an extension of this rally. Depending on who you ask you will get a different answer, but the global market screen over the last few days is suggestion some degree of fatigue and inability to carry on with the good work of the last 5-6 weeks.

Our market did much better yesterday; there was big dollop of cash. It is liquidity driven once again; it is not the kind of liquidity which we saw in January and February, but liquidity nevertheless. For the moment that is keeping the market with a bit of an upward bias. It is still ranging, I don’t think the market has broken out yet from that 5200-5400 range, but it is showing you that mild upward bias.

People are still buying the dips because they can see that money is being put to work in India at least. That showed up in the Indian currency as well in the afternoon yesterday.

So, it is difficult to call and whether we will give back some of these gains particularly if Europe opens up weak which is likely today or we do better and outperform some of the other global markets as we have for the last few days and continue to grind higher to that 5400 mark.

It is a difficult call because markets over the last couple of days have remained quite volatile. But I still think traders would be looking to buy the dips if the dips come about today still for another 100-150 points on the way up.

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