'Global markets mildly sluggish'

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

It's a Tuesday morning and we didn't have a convincing close yesterday. The market struggled around that 4,300 mark for the Nifty and finally closed quite a bit below it. This morning, the global cues are flat but China is still bleeding; the second big cut in China. Not that global markets have sold off because of that, but keep that in your horizon, because you never know how these bubbles burst.

That's about the bad cue, otherwise things are flat. There is a listing today hopefully, that can perk things up a bit - Nitin Fire Protection Industries .

W have been spotty in the last two days, but we have seen this spell in the past as well. And the markets come out on tops, so you do not know what to make of it. 4,300, once again, is proving to be difficult to cross. Even in the midcaps , there are periodic bouts of profit booking in stocks that have gone up. So for the last two days, the signs have not exactly been the greatest, but you never know, what the markets will do next.

We will play for a flat morning opening this time around and see whether there is a bit more weakness later in the day, because afternoons typically have not been very good. So keep your fingers crossed, but on the evidence of the last couple of days, it has been looking a bit sluggish.

Asian Markets

The world is flat this morning barring China, the Shanghai Index is 200-points down, Nikkei is okay, and Straits Times and Taiwan is flat and Hang Seng is down a bit. So a mixed bag, global markets are mildly sluggish and flat.

I don't think we've been knocked back significantly. Things have played out to quite an extent, you have had a good month of May, following a good month of April, the Nifty has done its bit, gone to new highs, broken out of 4,245. The Sensex is almost there and lots of midcap stocks have rallied. There were rotations in midcaps and they have rallied quite a bit.

We don't have too much by way of triggers in June, so once again you have come to that point, where both the bulls and bear seem to be evenly matched, both seem to be slugging it out. You cannot always go by historical evidence and say last few times the bulls have won the battle and moved ahead, so this time too it will be the same. It's not an easy call for the traders to go long or short, though I suspect, people are doing a bit of both, but there are no easy answers for the trader right now.

Probably around these levels we may just to and fro a little bit, see some more volatility around this level, 4,200-4,300 as the signpost for the moment and then some individual stocks may move up and down.

So far markets have dealt with the China cut pretty well. It is not a small cut, last two days we were down almost 15% and from the peak China is down nearly 20% in the last 4-5 days. But year-to-date, it is up quite a bit and so there are still gains on the table. If the world can deal with the Chinese correction so maturely, it will be great. It's true that market went up irrationally and it will correct very sharply as well. We need to do our own things and look at our own markets, but if you lose another 10-15%, then you might feel little bit of nervousness or tremors across the region.

Other markets seem okay, the US is stable, none of the other markets are correcting very meaningfully. So for the moment you are okay, and as long as the global markets collectively do not tank, our cues will be okay. But just keep watching the Chinese situation and as an expert was saying, if this becomes a much bigger thing, then you will feel some amount of collateral damage too.

Futures & Options

The implied volatility is rising, which is an important sign. It's simply indicating that maybe the traders expect that there will be a sharp move now either 4,300 goes to 4,450-4,500, which is a good couple of 100 points or 4,300 breaks down to 4,000-4,100 kind of levels; both are possibilities at this point, partly determined by how global markets move, how the money moves over the next few sessions. The market pressing itself for a big move around that 4,300 pivot point. So it's a little indeterminate. You can see there is hesitation because the Nifty futures discount has gone up once again to 20 odd points yesterday, that's also significant.

On the delivery side, FIIs continue to buy and buy quite a bit, last couple of days they have got couple of USD 100 million that's not small change. For the moment, the internals are suggesting it's indecision time. The midcap side, which is a very important pointer in the context of the market, lost some ground yesterday. So even in the midcap side, traders are feeling a bit skittish and moving very fast between segments; they make profits in one, book profits and move on to another set of midcaps. It is discomforting for the bulls because that betrays little bit of edginess. None of this is to say what the market will do next, but all we can do is read the road signs.