Global good news to push Nifty towards Jan highs

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Global good news to push Nifty towards Jan highs

CNBC-TV18's Managing Editor Udayan Mukherjee said, "Yesterday the market just paused a little bit, something that had happened day before as well, but we are within striking distance of the January highs and there is global good news in the form of what S&P said yesterday."

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Nifty may see expiry around 5250-5300: An analysis Experts guide on how to trade directionless markets ALSO READ See what other CNBC-TV18 anchors have to say Dalmia Sugar BSE | NSE 30/05/12 Are Mutual Funds betting on Dalmia Sugar?

Q: It is a rating outlook change for now, but it is good to have an affirmation and you could see the market for the first time react to positive news positively towards the end.

A: This news wasn't or should not have come as unexpected because at least the outlook changed. All the rating agencies were watching whatever happened in the Budget closely and now we have a roadmap. So the outlook is changed. When we deliver on that roadmap, the rating will change. However, investors hardly wait for rating agencies to confirm what they already know.

So I would submit a move far ahead of rating agencies either way. So yes there were concerns on the Indian deficit. To a certain extent, they have been elate by the Budget. To that extent the stock market has moved up a little bit and you don't hear as hawkish voices from investors about the Budget deficit any longer. Everybody is waiting for confirmation.

During the course of the year whether there is positive news from 3G, though it looks a little dicey, one must admit, or on the disinvestment target of Rs 40,000 crore, that there will be more confidence in achieving that deficit target. Therefore, the stock market will move much ahead even if the good news has to be factored in than the S&P. This is not meant to knock S&P. They do a more laboured job of it as they should, but the market knows it well in advance.

Q: What about the Nifty this morning?

A: It is tough to say what it will do because as I said 5300 is not an easy hurdle to cross. There is a lot of psychological legacy baggage around 5300 as well. Above that I do not think there is a lot of fundamental conviction either that the market should at this point be headed higher unless there are some major positive earnings surprises in the month of April. So both technically and fundamentally, I think people are not quite convinced about 5300 or life beyond that, that does not mean that it cannot happen or should not happen because the market can certainly surprise on the up.

The question is you do not want to get caught in trying to predict whether the Nifty will get above 5300 or not. You want to ask yourself what you do as a trader or an investor. I think as a trader the prudent call would be you say I do not want to pre-empt the top. Yes, 5300 is a tough level to cross, but I do not know whether the market will cross it or not. If I am long I stay long and I keep a stop loss. That stop loss could be 5180, 5150, 5200 depending upon how much you want to give up and how bullish you are. I think the people who have been riding this market post the Budget move are still in the money and well in the money. Anything above 5150-5180, so you keep a stop loss there and you keep a call that if the market comes down and 5300 is a hurdle then I get stopped out and preserve some part of my profits, but at least I took a chance of 5300 getting crossed and I do not lose money.

For an investor, I think the call is trickier because it is quite difficult to go out and buy many stocks at 5300 kind of levels because fundamentally I do not know whether valuations are that supportive. So I think as an investor you can always cherry pick and buy a couple of midcaps here and there if you like them at decent prices, but for overall investing I do not know whether 5300 or close to 17500-18,000 is a great place to be buying stocks.

So I think the call for an investor is easier. You probably wait at best you will probably miss out a bit 5-6% kind of an opportunity, but for traders you tag along with a stop loss.