Nifty may go to 5600, if global momentum continues: Udayan

Udayan Mukherjee, managing editor, CNBC-TV18 says, the momentum is very strong. "Flows are very strong, global cues have been exceptionally supportive over the last few days and they continue to be with the exception of crude. Yesterday, we stopped just before the resistance of 5,350. But there is every reason for the market to climb above that this morning," he adds.

According to him, if the global momentum continues, 5,350-5,400 can easily be taken out. "We can go to 5,600, we can go even higher," he adds.

Below is the edited transcript of his comments on CNBC-TV18.

So far, it has been a good week for the market. Yesterday, we stopped just before the resistance of 5,350. But there is every reason for the market to climb above that this morning. So, the momentum is very strong. Flows are very strong, global cues have been exceptionally supportive over the last few days and they continue to be with the exception of crude.

On the global markets:

The momentum is moving nicely in the global markets. If the volumes were a bit better, the overseas markets would have been more supportive. So, I think there is a little bit of disbelief in the global liquidity rally as well. People are saying, ‘yes, prices are moving higher, but should we be chasing it beyond 1,400 on the S&P.’ But there is no stopping the global rally right now.

Unfortunately, it has moved crude at a clearly fast pace as well. That is hitting USD 112 per barrel. I don’t think the market will worry about it at this point in time. But I think it is creating longer-term issues for us. So, this looks very much like the early year rally that we had where prices are moving up against fundamentals. There is a clear perceptible sense of risk-on in the environment.

Commodities are moving up by the same pace as well. So, you just want to ride this rally and see what the extent of this rally is over the next few weeks. So far, the global screen has been looking very supportive.

On divestment talks:

This is the honeymoon period for the new finance minister. So, I think it might support mood. The last couple of days the market has been feeding on any announcement coming in from New Delhi to think that maybe some big things will happen. We’ll believe it, when we will see things actually happening.

I don’t think just divestment by itself is a big trigger for the market. There are two things. One, in the budget, the erstwhile finance minister had made a certain provision for the divestment proceeds. We haven’t even taken a first step towards that. So, whatever is being spoken about right now will probably be just enough to meet that old divestment target that we had set up. This is not an incrementally positive. If we slipped on that, it would have made the deficit figure look even larger. So, maybe we are taking some baby steps towards getting to that divestment target, which is already being set.

I don’t think it should be seen as a major positive for the market right now. Small bits of NTPC being sold in the market is just supply of paper. It makes no difference to the lives of the companies or to the lives of investors. You can buy any amount of share in NTPC from the market today. But I don’t think those are names which investors are flocking to buy. I don’t think this is a big deal anyway.

Right now, the market is looking at things with green shades saying okay something is happening after a long time and no argument with that. The markets job is to hope. It is hoping that the statements of the last couple of days will lead to some kind of action over the next few weeks. I keep my fingers crossed and say, ‘will believe it, when I see it.’ But, for now, mood is positive. I don’t think it makes any great material difference to the market.