Market looks stable; focus on stock-specific plays: Udayan

The important April series gets underway today. The March series was volatile and turbulent. The flows have been good given how poor India has performed. The market has got nearly Rs 10,000 crore in the March series despite so much damage, which has happened on individual names. For the year, it is almost pushing USD 12 billion for the first quarter.

Also read: Market may rally on back of global support “I do not remember a time when we got USD 12 billion in one quarter. So, the year has begun very well with flows. But despite that it has been very mix for our markets. Increasingly now, the market is probably getting into, at least for the near-term, some kind of stabilization mode because we have had a big fall. And if you saw last week, it is becoming quite stock-specific even within sectors,” Mukherjee says.  "There is a sense that the market has fallen quite a bit. In the near-term, for the overall market, maybe the downside is limited and therefore people are going about buying some stocks, which does not mean that the markets rally big time from here but it could be a phase of stabilisation for a few weeks where you see the index probably holding a range but individual stocks are either recovering from their falls or starting some kind of declines heading into their earnings. So, you can see some of that trepidation creeping into names like autos etc, where numbers will be quite poor," he says. Below is a verbatim transcript of Udayan's comments on some hot topics of the day. On April series April will be a bit volatile and maybe a story of two halves because right now we have had a big fall in March, at least individual stock wise and the market is just trying to stabilise a little bit. So as we get into April, particularly if global markets hold up, the first few earnings are generally not bad. You will recall that even in the last quarter, the first earnings started off very well so we thought it will be a good earnings quarter and by the second half it was a huge disappointment. So, this earnings quarter might well pan out like that with the first few earnings not too bad and then you see the big disappointments coming in towards the end of April and the beginning of May. So, you could have a situation where April becomes a story of two halves. For the first part it is bit constructive where the Nifty also moves up a little bit but as we fade into the end of the month and get into May, you might see the troubles coming back for the market. So I think we are probably going to see a volatile series but at least the first bit, it looks like the next 10-12 days particularly if markets hold up, we might see a bit of reconstruction out here. On current account deficit (CAD) woes It is not good. It is probably more pertinent for the rupee in the context that the dollar index is now well above 83 and the euro has started weakening quite a bit. So, for now the rupee is holding 54 so today’s reaction will be interesting on whether the rupee edges towards 55 or holds a bit of a trading range because there is one view that is backward looking data and come Q4 things will get better. But I do not think a very sharp reaction should happen in the stock market. The currency will be more important. On Nifty range The market might well make an attempt just going into earnings season to stabilise somewhere here. Is there a powerful upmove coming, it doesn’t seem like that from the evidence of the screen right now. So it is possible that the Nifty attempts to move back up to that 5800 kind of zone while the numbers come in and then any upmove then begins to fade or people are waiting for that opportunity to short once again particularly going into the second half of the earnings season. But there is one scenario that global markets really hold out very well in April. Sometimes the falls actually happen in May seasonally because that tends to be a very bad month even globally. So if the US rally is to extend for a couple of weeks more and you see a few good earnings, it is possible that the Nifty gets to that 5800 ball park kind of zone. Is it out of the woods? I don’t think so because there have been quite a few fairly poor performances from individual sectors which are cropping up. The way some of these L&T and BHEL kind of stocks have started cracking, BHEL particularly down to Rs 175 kind of levels, the way autos, particularly Tata Motors is leading a big slide, I think something is wrong. Reliance going into what should be not such a bad earnings quarter has gone down to Rs 770. So I don’t think the market is out of the woods but after a fall I think there might be an attempt to sort of stabilise in a 5600 to 5900 kind of trading range even if it has to seek lower levels later. But for now, 5600 is a support that it is trying to cling on to. On new listings It will be an institutional kind of stock because it is housing finance which institutional investors actually like quite a bit. HDFC and then the poor man’s HDFC, LIC Housing. So here is another regional play which is coming in there. Not too expensive, not too cheap at 1.7 times book. I think the subscription too was almost entirely institutional. So don’t expect volatility for a stock like this. I think this one will probably bob around its issue price because it was quite fairly priced. Maybe there would be some more accumulation for people who did not get enough in the company. I don’t think retail and HNI is going to play around in this one so this is not going to be PC Jewellers which goes up 40 percent and then comes down 60 percent. I think it moves probably in a narrow range. Expect a listing around issue price and then probably just sideways move in a five-eight percent kind of a trading band.