Period of agony over for mkts

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Sunny days, it seems are here again and last couple of days we have had it good from the global space and lots of news has come through which the market has generally reacted to positively. Beaten down sectors like IT has started performing after longtime and yesterday's closing look like a breakout.

 

So is the period of agony over for us at least for the near-term? Looks like that if one observes what's been happening globally for the last two sessions for sure.

 

Yesterday's closing was particularly interesting and that sell in the morning after a gap up did not quite work yesterday and the market continued to go up and closed at a bit of a high and it cruised above about some very important levels for the Nifty as well. I think yesterday bulls might have taken out quite a bit of heart from trading the FII's are covering up their positions globally the mood seems to have settled.

 

So all of it is looking quite sunny after a long time and today the degree of confidence in the market for the first time in ten days would be a little higher because everything seems to be settling down a little bit, may be we speak too soon may be at another bout of volatility is waiting somewhere but at least for the near term looks like we may be headed higher from here. So fingers crossed but today should be long for the bulls as well.

 

Asian Indices:

 

It's a good morning across Asia; Nikkei is up 1.2%, Straits Times up 3.5%, China is up 1.3%, Kospi where interest rates have gone up is the most subdued of the lot today up 0.5%. The rest of the markets are roaring; Taiwan is up 1.2%, Thailand is up 1%, Hang Seng up 1% at least 1% gains across Asian markets this morning. To go with what they did yesterday so in the last couple of days most of these markets have notched up gains between 3% and 4%, good going across emerging markets and Asia this morning
 

Post FOMC meet:

 

Somebody were saying Fannie Mae and Freddie Mac are feeling fine so when they feel fine nerves settle down a bit but the nerves are settled a little bit because the guys who were leading the slide out there they have bounced the most. If one just looks at the stocks Lehman Brothers , Bear Stearns and Goldman Sachs those are the kind of stocks of course Merrill, Morgan, Blackstone all of these stocks have rallied quite a bit. So the financial stocks got oversold and they have bounced back.

 

The Fed's statement yesterday sort of said exactly what the markets would have loved to hear that okay there is a problem in subprimes its not going to do derail us to such an extent that we will slip into a recession and we still think that the growth is not the issue but inflation is the issue and that's exactly what global markets would have wanted to hear and that's what they got from the Fed.

 

Lets see how the next few days pan out because the market is still susceptible to bad news from the US mortgage area and if we get more bad news out of set of economic data which is bad, sentiment is still a bit fragile its on the mend, but its not quite recovered fully so you are still susceptible to a bit of an attack of volatility keep that in mind but that said generally speaking markets are feeling a little bit more comfortable.

 

Now whether this is a pull back from an oversold situation in the US market after which it will once again start to consolidate or correct is something that we will only find out over the next few days.

 

But for the moment it looks like we are probably in the best global situation in the last ten days, at least the near term cues and there's no reason why we should also not fall in line.

 

What's in store for next few days?

 

I think we are still hostage to a little bit of uncertainty in the global space although we have had a couple of good days and we have pulled back a little bit but which of us can predict what bad news comes in the next two days from the US shores and dents us back after the pullback. So that is entirely unpredictable and one should not even try to do that.

 

In the near-term, as we were discussing a bit of short covering, a bit of global mood, a bit of fresh buying from the local fraternity might all and there could be some cash market buying as well from FIIs who have been on the sell side for the last couple of weeks. You could see the Index moving up, I do not know where, it could go to 4,550-4,600 that is entirely possible because 100-150 points on the Nifty could easily be par for the course from here.

 

After that you are getting close to the old highs once again and you need to see whether the market is ready to go on to a new high just yet or having being stung by the volatility and the recent falls, it needs to consolidate after that pullback a little bit, spend some more time and then if it is sure that there is not much more by way of global volatility coming its way, it can attempt a new high. So I am not sure whether we are done with the volatility but for the near-term, it looks like the mood flows and sentiment can lead us a bit higher for sure.

 

On trading view:

 

I think people would be long; the trade would be certainly to go long on the Nifty and to remain long unless some amount of volatility comes in but I think one should still trade with low quantities because we have had two good days, I know its tempting to go out and say the worst is behind us now we are going to 4,800 straight. But one never knows what the global situation pans out like and we are just coming out of a phase of high volatility. So give it a few days, let things settle down, when one gets strength back and one thinks everything is alright around then begin running but not just yet.

 

But market has its own ways, it moves in manic manner; we may want it to consolidate but it always seems to be in a bit of a rush so who is to say that its not dashing away to new highs fairly soon. But traders should be a bit careful because its the first flush after the cut and one needs to just trade with low quantities if it means missing out on opportunity or two for the next few days.

 

I think for investors the thing is pretty simple if one gets bad bouts of volatility again and one gets good stocks at lower prices as it worked out last time, in the last ten days, I think one should consider nibbling at stocks for sure because one never know this kind of volatility and what kind of lows it can lead to lot more downside and those prices never come. So its best to keep chipping away at the good stocks everything bad volatility strikes one in the face.