Loss of momentum visible on Nifty for first time: Udayan

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The Nifty closed below the 5350 level, falling 26.5 points to 5,335.15. Meanwhile, the Sensex dropped 85.11 points, to close at 17,622.20.

Our market was a bit soft today, says CNBC-TV18's managing editor Udayan Mukherjee because in the morning the Nifty was at 5,400. It's not that the Nifty has lost a lot of ground but it has struggled to climb above that level and stay above that level. So maybe the momentum is flagging a little bit.

The first signs of a bit of flagging of the relentless momentum that market has witnessed for the last few days and weeks seems to be there. No great knee-jerk reaction from the market yet, no V-shape correction but generally a little bit of reluctance to get above that 5,400 level. Early signs of a little bit of sagging of the momentum is being seen.

We need to be careful about that. It is also evident in the broader market today - in the midcap and smallcap universe.

Even global markets, especially Europe etc are also showing signs of fatigue. Mukherjee says we have not lost too much ground but we have just not been sticking at higher levels. "We started with a very good market breadth today and that also has given up so you can see corrections creeping into some of the outperforming midcaps too," he says.

He says the market has lost a bit of momentum. Now loss of momentum can lead to two things - if this continues for a few sessions more you could get into a sideways range for a few days because we have had a relentless rally. You get into a 200 point kind of Nifty trading range and spend a few days there and that frankly will be a really bullish outcome for the market which has had a phenomenal 900 point or 20% rally. That would be the more bullish of outcomes.

The bearish of outcomes is that this loss of momentum indicates a bit of a reversal. The Nifty needs to give up quite a bit of ground propelled by any factor that we cannot see today, globally most likely. Therefore, the Nifty will not stand at one place but correct and we will know over the next few days. It's only a 40-50 point pullback that we have seen to be jumping to conclusions but loss of momentum is visible for the first time.