Market to become rangebound; expect consolidation: Udayan

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Despite a couple of things going against the market today, it was not a bad day considering the run up we have seen, says Udayan Mukherjee, managing editor at CNBC-TV18. Nobody is going to lose sleep over 45-50 points on the Nifty after a 900 point rally. I think the general message is that the market probably needs a little bit of a breather and it needs to consolidate around this 5400 level. It took a couple of days getting here, and having achieved that giving up a little ground was expected.

So I think the market is probably going to be in a bit of a range now, it may even get volatile as it tries to consolidate recent gains. I think it would be very good if the market maybe forms 5200-5500 kind of a trading range and spends some time there.

You will see some sector rotation and maybe profit taking in some sectors which are soaking up some of the money, like infrastructure. That is typically what you see in strong markets which have run up quite a bit, that different sectors come to the fore and the overall index consolidates in a range but it becomes a little more stock specific.

I wouldn't worry too much about what you have seen today. You need to see far more evidence or weakness before you give up on this uptrend. It still remains very strong, and the broader market with the midcap index being flat, I don't think you can draw too much by way of inference from today's mild cut.

There has been a bit of pressure seeping in from Europe, but you shouldn't worry too much about it getting into next week, and not on the evidence of what you have seen today. European markets have been quite strong leading up to an event and that has come through. However, it needs ratification from the Greek government and therefore global markets have just given up a little bit of their profits. I don't think you are seeing any thing like a massive reversal on the global screen yet which is driving a lot of risk off in global asset classes.

Things may change going forward and the consolidation that I am talking about could eventually take the form of a correction, but for that some triggers will have to manifest themselves. So right now, from the little that one has seen over the last few trading sessions, it all smacks of consolidation not a U turn at all. I don't think long traders would be too worried. In fact if you ask them they will say if the Nifty does give up another 100-150 points to get to close to 5200 then they would actually add to their long positions, that remains the prevailing sentiment in the market.

Of course things change around, which of us thought that the market would go to 5400-5450 so soon. So things may change on the way down as well. But at least the first stop is 5200 before you get there or get below that I don't think people will even start questioning the trend that we have been. Today's cut is just too small. At best it is max of tiredness but certainly not of a reversal.

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