Keep watch on midcaps today

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Asian mkts could correct 20-25%: Bank Julius Baer Stocks to watch: Syndicate Bank, Triveni Engg Consolidation, profit booking seen ahead: Experts ALSO READ See what other CNBC-TV18 anchors have to say Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

The global emotions remain volatitle. Let's see where we go from here; India's outperformance story in the past has been good. But yesterday's FII figures were disturbing. The follow-up from FII selling needs to be seen.

Will midcap settle down? It would be an interesting challenge for the markets to settle down. Watch the midcaps  space today - whether there is stability or signs of nervousness in that space.

Yesterday we had a bit of a scare, in the second half there was a sell-off and now we know it was triggered off by fairly significant sales from the FIIs both in the cash and the futures market. Why were they selling; is it to milk some of India's out performance versus other emerging markets? Asian markets generally are quite weakish this morning, so no great news coming in from that side.

 

The global environment remains a bit volatile and weak. We have had a bit of a scare yesterday, so the big question is whether we can bounce back and the midcap universe settled somewhat today after yesterday's second half performance. It is a big listing Religare , and it should be a very strong listing as well, so that would add to the morning excitement.  

 

Was yesterday the first chink in the armour really?

 

Yes, chink is right let's see where we go from here because it was one day's trade and this morning there might be a little bit more but we have seen in the past the markets tends to bounce back. However our out performance is been very strong and yesterday's FIIs figure are little disturbing because they came out of nowhere. I don't know how much it had to do with the fact that Citi and Morgan have taken slightly a dim view of the Indian market now.

 

I don't know what has happened to precipitate that kind of selling pressure in India suddenly but we need to see if there is more follow up coming through from the FII sell side, that could be quite important and that is very difficult to gage whether there is more lurking out there.

 

I think we start with a bit of an apprehensive note this morning I think it would be an interesting challenge for the market to bounce back and settle after the yesterday's move. So I think today could be the crucial session of the trading watch the midcap screen extremely closely for the signs of stability or further nervousness today.

 

Asian Indices:

 

Asia is not feeling too good again this morning the US managed to get out virtually after a very volatile session. But Asia is not picked it up almost 2% cut in Nikkei, Korea is down 1.7% and Hang Seng is down another 3%, Straits Times is down another 1.5% even China, which was in the green, has dipped into the red.

 

It is not a pretty picture across Asia most of the markets seems to be drifting down even after the falls that they have had from their October highs.

 

Markets for the near-term:

 

Today is going to be quite a crucial day for the midcaps particularly. For the largecaps it does not matter so much because on current reckoning the Nifty is still firmly in that range of 5,500-6,000, it goes up a bit faces resistance comes back, I do not know whether it is going back to 5,500 but I think the general view is that we are in that 500-point Nifty range consolidating, digesting and tooing and froing so even more than the largecap space, what one needs to watch very carefully is what is going to happen in the midcap space.

 

We saw some cuts yesterday and I think it is important that the market stabilizes on that side today because the problem with the midcap space is that it looks very good, when they go up but if you are trading futures and suddenly you get a 10% hit then you get knocked back quite a bit and people enter at various points. It is a fallacy for us to think that everybody has been riding positions for the last five days. People come in at various points and suddenly the last man who is carrying the can gets a 10% hit and he gets knocked back quite significantly.

 

We will watch the day very carefully, if midcaps stabilize today, the midcap index is relatively okay, the liquid names in the futures market do not fall too much then I think we are still okay because the largecap universe can be in a bit of a range for a while there is no problem with that. The problem happens only when midcaps start falling particularly midcap which have gone up quite a bit because they have a habit of falling 10%-20% in three-four days and that on the futures market with leverage can hurt you quite a bit.

 

I would watch what is going to happen with the Nifty Junior, the CNX Midcap index today the top 20 most active liquid stocks in the NSE very closely today. If those are all right then I think the market will stabilize and we may still hold that whole range of 5,500-6,000 on the largecaps and carry on but you shouldn't too much more damage today on the midcap universe because that could destabilize sentiment.

 

contd on pg 2...