Mkts to witness lackluster trade

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?

Volumes and participation is very low in the markets. Global cues are not supportive and institutional participation is very weak. There are no great triggers for markets going ahead. Overall, it is a dull market and markets will witness lackluster trade.

 

It's only two days before futures and options settlement but one can't guess that looking at the turnover that we are witnessing right now. The volumes and participation are very low. This morning the cues aren't great; the US markets had another sell-off, Asia is a bit soft and crude is still hanging around USD 115/bbl. Global cues are not very supportive but we have been seeing some really listless trade over the last few sessions.
 
Our markets
 
Yesterday the volumes were so tepid, on settlement week I don't remember seeing these kinds of volumes. We are still seeing 1-2% kind of price moves on an odd day but one shouldn't read too much into that because if the market had conviction and it was making a solid directional move that too on an expiry week, I think we would have seen that test on the volumes but no reflection there at all, institutional participation is very weak.
 
We are in a very dull, boring range bound kind of sessions. Every year we go through some of these patches where news flow dries up completely, there are no great triggers for the market and you have a few days of very range bound, listless trading. I suspect we saw some of that last week and maybe this week is one more of such listless trading. Something will have to change globally or locally to perk up the market because right now neither the bulls nor the bears have too much by way of ammunition going for them. I suspect we will have to resign ourselves to another fairly lackluster session of trade.

Asian Indices:

Asian markets are down but they are not down a whole lot considering the kind of brutal sell-off that we saw in the US markets. China which is slipping quite a bit now is down full 2% points the others are just about limping along this morning not down too much but down nevertheless 1-1.5% apiece. The rupee by the way has touched 44 to the dollar that's something that you need to keep an eye on.

On rupee: 

I think it makes a difference to the global guys. 44 to the dollar is something which a lot of the FIIs (Foreign Institutional Investor) might not have bargained for. This month is not been a stellar month in terms of performance but 5% has been taken out from the FII portfolios in the month of August. At a time when all of these global guys or global investors are reassessing which market they need to be in. I think they would be quite skittish about markets where the currency is weakening. So if one looks at a typical FII portfolio for the month of August not quite sure how much the Nifty has done in the month of August but I suspect that adjusted in terms of dollar returns, most of these FIIs have not made any money at all. 

It's not a small insignificant thing; in fortnight for the currency to weaken 5% is quite a bit. I suspect that probably holds the key to why the FIIs are still not putting money into India because while they are unsure about maybe valuations after the run-up or their level of conviction is not sorted out despite the pullback from the lows of 3,800 Nifty, I think on the margin the rupee might be playing a bit of a role the fact that 5% of their portfolio or NAV has been taken out by the rupee's swift move to 44 to the dollar.         

Given the way crude prices are moving right now, you think this situation could only worsen a bit?
 
Don't know, there are internals in the rupee market as well. There is one large deal, which is happening and if it goes through, might alleviate the pressure a little bit, oil is part of the problem but a few weeks back one was getting a sense that maybe the worst is in place for the rupee for the time being and maybe it could appreciate a little bit despite fairly bad macros that India has at this point. But that has not lasted very long and we have swiftly come back to 44 to dollar. So it remains a little edgy for many of the FIIs.

contd on pg 2..