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Mkts to remain rangebound today

Published on Wed, Jun 06, 2007 at 09:05 | Source : Moneycontrol.com

Updated at Wed, Jun 06, 2007 at 13:15

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Nifty

BSE | NSE 25/05/12

Are Mutual Funds betting on Nifty?

No great cues this Wednesday morning. We had a flattish kind of closing yesterday and a bit of stock specific activity. The Chinese market is up about 1%. The US market looked a bit weak as there are some interest rate concerns floating around. The Dow Jones lost about 80 points. There is nothing great in terms of global cues. The markets appear to be heading into a rangebound session at least in the earlier part of the day.

We have been a bit rangebound for the last couple of days. There has been a touch of volatility and that might happen today as well. We are still hovering around that 4,300 mark for the Nifty and do not know whether there will be a breakout or breakdown. Yesterday's closing was not too bad, so I think it left out something for the bulls. We are still in the process of consolidation, which might last for a day or two more, unless the markets spring a surprise. Do not expect a particularly exciting session, excitement will be relegated to that club of 15-20 stocks which we see everyday.

On Asian indices:

The US was not very bright. The Nikkei is just flat as nothing is happening there, the Straits Times is flat, China is up 1%, Taiwan is up more then 0.5% and the Hang Seng is flat. So, mixed cues from the Asian markets but nothing positive or overly negative.

On global cues:

The US markets are getting a bit skittish once again. I think the key concern in the US is whether the economy will move from one of a potential recessionary kind of situation, in the middle of the year, to one of a rate hike. I think the consensus is squarely moving to the view that the US economic growth will actually be weak and therefore there will be more rate cuts.

The US bond market seems to be signaling, for the last one month, that rates will actually not go down. In a global market, which is fueled by liquidity, you tend to worry about what will happen to US interest rates because if they go up then you could see a pull back or a liquidity contraction suddenly, which might trigger off a bit of a correction.

Since China has not triggered off a correction in global markets, it seems increasingly likely that it will not be able to trigger off any correction because all markets seem to be dealing pretty well with China. If there is a big global correction or a contraction, the trigger might be a US interest rate scare. So, you need to monitor that situation extremely closely.