Nifty to remain rangebound ahead of expiry: Udayan

With large index companies slated to announce their quarterly numbers and and an expiry to go by, this week assumes great significance for trade, says says CNBC-TV18's managing editor, Udayan Mukherjee.

Last week's close seem to have spoiled the mood a bit and there was a lot of damage to individual stocks. So, although the mood seems to have swung around a bit, the 200-point correction seems to have stung people, says Mukherjee. He says our market will have to absorb a log of important earnings, so stock specific action is expected. It would not be surprising if the market is rangebound and moves in 150-point range this way or that and absorbs all the volatility and newsflow of the coming few days, he added. Globally, markets remain uncertain. Since the US market is closed on Monday, one has to wait another day to know whether nerves have settled after last week's big bout of volatility, Also read: Minimum shareholding rule: Market to see $2bn worth of pape Below is the verbatim transcript of his analysis on the channel. The close last week was not great, it was sub-6,000. So I think it has spoiled the mood a little bit. A lot of damages happened at an individual stock level as well. So just in two-three days, the mood has swung around a little bit. It is not like we have collapsed to 5,700 but even those last 200 points of correction has stung people quite a bit, especially the nature in which it came about. So let us wait and see what this week is like. The general expectation would be that after such a bout of volatility last week, markets might just fall into some kind of a trading range. That is pretty much what the global guys are playing for as well. So, you could have a situation where the market went up sharply, has retraced or given up one-third of its rise and then chooses to go into a bit of a range and figure out what the cues are like. It will need to absorb a lot of important earnings this week as well from the names like Tata Motors, Mahindra and Mahindra (M&M), DLF, Oil and Natural Gas Corporation (ONGC), Sun Pharmaceutical Industries and a clutch of very interesting midcaps as well like Jain Irrigation Systems, Educomp Solutions, National Mineral Development Corporation (NMDC), There will be a lot of stock specific action and reactions. However, overall it would not surprise me if between now and the expiry, the market just moves maybe in 150 kind of a range this way or that and absorbs all the volatility and newsflow of the next few days. On global markets The uncertainty has not gone away but tonight we do not expect very bad news from the US because it is shut and so, markets can trade with at least some relief that something dramatic will not happen overnight. Nowadays, Japan is something that we need to watch and the fact that it is down 3 percent again this morning does not inspire a lot of confidence in the regional markets. So, the edginess has not gone away. Coupled with that if you look at what the global investors are doing in India; the first sell figure in the cash market came out on Friday, which is not a large number. However, it is not comforting to see after such a long stretch of unbroken Rs 600-700 crore plus of Foreign Institutional Investor (FII) flows in everyday, both FIIs and Domestic Institutional Investors (DII) were on the sell side. On what their view is for the next few days, is given away by what they have done in the Options market on Friday - the big Rs 1,500 crore sell figure on Options. Essentially, they are playing for a bit of a range by selling Call and Put Options and maybe trying to capture some of the spike in volatility which has come in over the last few days leading up to the expiry. They also seem quite content at least for this week to just play for a bit of a range and let the market soak a 5.900-6.100 kind of a band over the next few days. Then by June once we rollover or close to that, we will get a better sense of which way the international cookie is crumbling. Whether we are likely to see more risk-off or volatility or this was one bout after which markets stabilise. The picture at this point is a little hazy after what happened last week. So, probably all markets will just trade around a bit tentatively trying to figure out what the next move is. In that sense between now and expiry, at least getting close to that it is possible that markets trade in a bit of a range, that is what the Futures and Options market probably is indicating as well. _PAGEBREAK_ On Index The index closing down 3-4 percent especially after what was shaping up like a good May series, contrary to popular expectation of May was a bad blow. It did not work out like a typical ‘May’. The first three weeks were pretty good; at least the first half was pretty good. The market was moving up nicely, earnings seem like they might be a bit better than Q3 and then suddenly in the last one week-ten days, the mood got spoiled. First some very pedestrian earnings came in, then this whole liquidity question mark globally - the market just seems to have lost momentum a little bit over the course of the last few days. It is no surprise that we have drifted down below 6,000. However, having dealt with this liquidity debate over the last four days, global markets have come to the conclusion that nothing dramatic or drastic is going to happen immediately. The fear of this liquidity withdrawal will linger and might just get a little bit more attention as we get closer to the next Fed meeting in June. But for now, markets will amble along without completely collapsing with the fear of liquidity getting withdrawn. Japanese volatility is something which market will monitor as well over the next few days and whether this is a temporary bout, which was overdue in any case and will settle down after a few days as profits get booked out there. The global picture is a little unclear and hazy. There is uncertainty and therefore markets will probably not find a lot of liquidity impulse in the near-term to move significantly higher. That is the problem with the market as we look forward into the next few days. It is probably what will take it higher and the answers to that are few, rather than predicting any major catastrophic downsides in the near-term. We will need more triggers to manifest themselves for the market to fall significantly in a straight line from where we are today after the initial damage, which has been done. Markets can always surprise and probably will but the expectation right now seems to be that we have lost 250 points, so some part of the uncertainty has been priced-in, and now the markets will probably flat line it a little bit and then as usually it happens in such phases, it will become stock specific. Last week names like Larsen and Toubro (L&T), State Bank of India (SBI), Wockhardt  was reacting to news and  there will be a lot more of it starting today. Names like Crompton Greaves, aviation companies, also companies like Tata Motors, M&M, etc, the midcaps will all declare earnings, which might surprise on the way up or on the way down, although down is more likely. Therefore we could see some adjustments in many individual stock prices. However, for the Nifty, I think both the bulls and bears would be a little cautious taking very aggressive position at this point. On market performance till date Market has not done a lot and in dollar terms, it has lost money for global investors. So, it remains that kind of a market, which is up and down. Over the last few days, maybe the excitement factor or the near-term absolute performance attraction has gone down. People were chasing the momentum in India. This market gave you a very smooth run from 5,500-6,200. There was a lot of chatter in the environment about whether we go to 6,350, take it out and open up another leg of momentum burst in the market. A lot of the global money actually tracks these kinds of possibilities. However, this setback that happened over the last three days has robbed India of that absolute return attraction, and Friday's FII number is testimony to that. In the near-term people seems to be saying that this one has played out; it has done what it had to do and now because of earnings, global uncertainty etc maybe the trade is done out here and we need to start getting a little cautious. That is generally not a great scenario for India to outperform and that is what traders are realigning themselves to as we look forward into the June series. However, one must add that this is quite a fickle sentiment because if you get another couple of 100 points for some reason on the Nifty and that sentiment changes around. So, now it is just a lack of interest kind of a market at the moment.