Monsoon: Mkt sentiment truly broken down now

Here is a verbatim transcript of Udayan Mukherjee on CNBC TV18. Also see the accompanying video.

The week has not begun well and those monsoon concerns clearly are hovering over the market. Yesterday you saw what happened - the gap up opening and then the market just failed to sustain closing at the lows of the day. In fact the lowest point of the day was pretty much the last trade which was at 4,400 Nifty. It is only the adjustments which got it back to 4,430.

We haven't had a good closing yesterday. The sentiment clearly has been impacted quite considerably by the monsoon hangover. Global markets are hanging in there and that is giving us a little bit of support but we are trading perilously close to that 4,400 support level. So this is an interesting week to watch whether those support levels hold out or get violated. The sentiment clearly is nothing like what it was even 10-15 days back.

On third day of weakness for our markets- should investors take notice?

I think they are already taking notice. Last few days the sentiment clearly has worsened. There is no getting away from that. Whether that means if the market will fall significantly more from here or not that we will find out, that is not a given. But the mood certainly has been dented quite considerably by the enormity of the monsoon problem which the market had not warmed up to even ten days back but suddenly it has cast itself on the markets and now upsides look capped. That is the easier thing to say that even if the market recovers or does not violate 4,400-4,300 meaningfully, any dash to more than 4,700 kind of levels looks a little unlikely at this point given the monsoon hangover.

I think the best case scenario for the market now at least for the next few weeks is that let us get through this monsoon phase, try and hold some kind of a trading range without too much damage on the downside at specific stock levels and if we come out of it holding a range, I don't think it is too bad an outcome but you would want to be a little hesitant because clearly the way the wind is blowing, if there is another week or two of delay in monsoons or inadequate monsoons, there is certainly downside risk to the market.

On global cues:

I think the global markets actually have been supportive in the context of what is going on locally. The S&P is still holding a 1,000. If you look at the region, the Singapore gross domestic product (GDP) data is strong, Chinese industrial production numbers are very strong even the Bank of Japan (BoJ) is saying that the economy is not worsening as it was earlier. So both from a regional or Asia perspective and the US, the way the S&P is holding a 1,000, it is not a bad kind of a global set up, which is encouraging for us that even if the monsoon problems drag us down and global markets remain where they are or inch up a little bit then some of our fall or negative kind of sentiment can be offset.

Two weeks back if you would have asked people, what is the big fear, they would have said global markets tanking from here because the S&P has had a great run but if you ask them now, they would say the big fear is local and hopefully the global markets will support us a little bit in this kind of an environment.

Asian markets:

Asian markets are stable, Shanghai is up 0.25%, Hang Seng is flat, and the Nikkei is flat. So, most markets are sort of flattish, no overwhelming cues coming in from Asia.