Nifty may slip to 4600, if it breaks 5000-5200: Udayan

CNBC-TV18’s managing editor Udayan Mukherjee says the global cues continue to be weak today. “The only silver lining today is the fall in crude prices,” he adds.

According to him, the Nifty is trading at important support level of 5,200. "The whole zone of 5,000 to 5,200 represents very strong support," he asserts.

He further says, it is important for the Nifty to hold 5,000-5,200. “If these levels breakdown, you can take any level between 5,000 and 5,200, we have real possibility of going back to the lows of last year, which is at 4,600 level,” he warns.

He says, the next few days will be very crucial to determine whether this important support level holds out or not.

Below is the edited transcript of his comments on CNBC-TV18. Also watch the accompanying video.

The global cues continue to be bad. If you were hoping that last night the US would have managed to stage some kind of a recovery, there has been none, infact the S&P has gone below its 50-day moving average by quite a margin, it was a big sell off across the world. Europe had a big tumble, the US sold off and that’s dampening the mood across Asia. So, let’s see what kind of a cut we get this morning and how we are able to deal with our own important support levels. 

On the global markets:

It is looking like a rough spot globally. It’s not just about yesterday, but the trend over the last week or so on the global screen hasn’t been comforting. It’s a substantial pullback; it’s not a one-two day affair. The US markets don’t move 5-6% that easily. So, it’s been a sharp pullback from a very sharp rally admittedly. But the combination of factors, which have led to that pullback, will worry a lot of people.

Europe has come back on the table and that is making a lot of people nervous once again. The way the bond markets in Spain and Italy have moved over the last couple of days is a little disconcerting because Europe had got off the risk table for about eight weeks on the trot or more and suddenly people in the last couple of days have started talking about it.

China has been relentless with the bad economic news. Even the last jobs data in the US wasn’t great. So, at this point it’s looking like a correction to the rally that’s been in place from the start of the year, but things change so fast these days globally that you need to be very vigilant and watchful about what's going on.

The only silver lining that you can take away is that crude cooled down to a USD 120 per barrel. That helps us a bit. So, if you are optimistic and you want to look at something slightly more cheerful this morning, it would have to be the price of crude, otherwise the global situation looks a bit scary.

On the Indian market:

We are trading at very important support levels. They have held out since the start of the year. The whole zone of 5,000 to 5,200 represents very strong support. A lot of people in the market are invested emotionally with the idea that 5,000 will hold out this year as a base and we put those days of 4,500 behind us. So, it’s not just a technical level, but these levels need to hold out for the whole notion of that uptrend to be in place.

If these levels breakdown, you can take any level between 5,000 and 5,200, we have real possibility of going back to the lows of last year, which is at 4,600 level. That looked very distant and improbable, when the Nifty had rallied up to 5,600. It’s still not the base case scenario for most people in the market, but you will hear more people talking about it if this support level that we are negotiating, the next 3-4 percentage points on the Nifty, breakdown.

I think the next few days are going to be very crucial for the global perspective for the local news that we are expecting over the next five sessions to determine whether this important support level holds out or not.