Short-term trend weak; Parliament session crucial: Udayan

It was not a bad session yesterday, the Nifty did move up a little bit and closed above 5,600

Udayan Mukherjee, managing editor, CNBC-TV18 says the Parliament session flags off. “The market might just be focused on some of the local cues. Global cues are flattish,” he adds.

He further says the short-term trend is very weak. “I think the impulse, in the market, is fairly tepid at this point in time,” he asserts.

Also read: Mkt may move up to 5800 resting on major reforms says market expert

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

Today, the Parliament session flags off. The market might just be focused on some of the local cues. Global cues are flattish. So, there is not much going on there. I guess everybody will be focusing on what comes through from New Delhi today to figure out whether we are on this pullback drive for a few days longer or we just remain very listless as we have been for the last four-five sessions.

On parliament session

The market did not seem terribly nervous going into the parliament session which is good but this could be a one day thing as well. Right now, the short-term trend is very weak. It is not very decisive or conclusive or very pronounced. There is not a lot of selling which is coming through below 5,600, on the Nifty. It bounces back but then follow-ups are not very strong either.

I think the impulse in the market is fairly tepid at this point in time. It will need something in terms of a trigger to wake it up out of this slumber it has got into, since the start of October. For many weeks now, the market is not finding the strength or the weakness to break out of this trading range.  I do not know what happens in the parliament session for the next couple of days and whether the impulse lies there. But short of that, one can only say that the near-term trend has been quite confusing and weak and I do not think Nifty traders would have made a lot of money over the last five-six weeks.

On positive global cues

Things are not too bad globally and it does not look like something alarming is going to happen. It is true that the euro group meeting did not find the conclusive answer to the Greek problem but maybe that comes through early next week in the Monday meeting.

The euro is telling you that it is not thinking of very dire things at this point in time because it refuses to break down below that 1.28 kind of level. The currency markets are telling you that things are not great but they are not terrible. Even on the fiscal cliff issue, the US was fretting a lot about it two weeks back but now they seem to be more or less comfortable that something will be struck out.

It is more flat for global markets as well, which is the problem out here that we are not seeing outflows or inflows. We are not seeing a major decisive 10 percent move in global markets, which would then help us out of this trading range. As long as something alarming does not happen in the month of December, it looks like we could be trading in a range for a bit longer.

_PAGEBREAK_

On index

It is not giving you much impulse on either side. It has been no joy trading the Nifty over the last six-seven weeks and I guess it will remain like this. Every time we get excited because of a slip out of the trading range, it has always been on hindsight, a bit of a false move.

We have had a couple of breakdowns below 5,600; people have said this is the big breakdown and it should take the Nifty down to 5,400-5,450 but that has not happened so far because the selling just evaporates below 5,600.

A couple of times we have traded above 5,730 and that has led people to say, now chase the rally because we are on for a 200 point move on the way up and that has not materialized either.

Probably the market in its wisdom is telling you that after the September rally, something new has to happen. The positive things have been priced-in, in that move from 5,300 to 5,700-5,800 and now there is no reason for the market to trend higher. But certain things have changed since September; the market is reluctant to give up much of those gains. Therefore the falls also tend to be quite shallow, which is the perfect recipe for a very range bound and tightly cornered market although traders do not like it.

It has been a difficult six-seven weeks, on the trot, for Nifty traders and it may continue to be that way for a while longer. For the next day or two, around the parliament session, the thing to monitor is whether we can get back into 5,630-5,730 groove once again, which is a neutral gear for the market. The moment you start slipping below 5,600, the market gets slightly bearish in the near-term, for traders. The moment you can cross over 5,730, though that is not likely to happen just today, you start getting more excited about a cross over above 5,800.

Although we may dislike it, the reality is that the market is in a very tepid trend right now. It is very weak in terms of a clear decisive directional thrust.

On internals

October was a flat series after the big breakout in September. It increasingly appears that November might also see expiry next week, within this trading range of 5,600-5,700. That is a very surprising outcome because it is rarely visible. It has happened once earlier this year that we have had two series on the trot where the market remained in a very tight range. Now, it is staring traders in the face that you may not get a breakout or a breakdown by next week’s expiry, which would make it a thinly traded kind of series.

The internals are not suggesting anything. Both the Call and the Put writers are very comfortable writing the other extremities of the range. Periodically there are some shorts happening but they get covered like you saw in some of the metal stocks. I do not think there is high conviction for the bulls or the bears and that is coming through on the internals. The foreign institutional investors (FIIs) activity is also flat. It is Rs 100 crore plus one day, Rs 100 crore minus. So even from FIIs there is nothing very directional.