Global mkts mixed; eyes on SBI, BHEL,Tata Steel earnings

Ben Bernanke on Wednesday was very dovish on the quantitative easing (QE), but his colleagues spoiled the party by not doing so. Thus the US market closed down on a day, when Bernanke promised unlimited QE for a whole lot longer.

Today, the market will be watching key earnings like State Bank of India (SBI), Tata Steel and Bharat Heavy Electricals (BHEL), but Larsen and Toubro (L&T) disappointed the street on Wednesday with its fourth quarter numbers, said CNBC-TV18's managing editor, Udayan Mukherjee. Also read: Bernanke signals Fed to maintain stimulus efforts Below is the verbatim transcript of his analysis on CNBC-TV18 It looks like a complicated session of trade that we are heading into. On the global markets it looks like ripples of that nervousness have spread across Asia as well this morning. Ben Bernanke said everything that was expected. He made all the dovish noises, he assured the market that he is not going to pullback the money in the near term. Markets went up 150 points and then came down in minutes, which suggested that not everybody agrees with him. There is a lot of decent within the Federal Reserve. Some want the money to be pulled back as early as June and that created some dissonance in the market once again. We finally closed down quite a bit. So, that debate is likely to continue and linger. It looks like Bernanke is finding himself more and more isolated with his thoughts on being a cheerleader for the market and to keep continuing the funds. I don't know whether he will prevail over the next many months or all this pressure will begin to bear on him. The Chinese data continues to be consistently weak. The latest Purchasing Managers' Index (PMI) numbers actually indicate a contraction so that could have ramifications on not just the Chinese market. However, the commodities are complex so we need to watch that quite closely. Things did not exactly pan out the way one might have thought for global equities despite Ben Bernanke doing his bit overnight. For our own market, we have lost some ground. Yesterday’s L&T did not quite go down very well with the market. So, it could be red though given the companies which are reporting Tata Steel etc, which are not exactly expected to blow the lights out. SBI could have a wrinkle or two this quarter. We have been talking about the rupee and the rupee is at 55.50/USD. Suddenly the dollar is back up to 84.40 on Thursday. I do not know whether this means that the rupee takes another step towards that 56/USD mark right now. That is something which will be a difficult one to carry for the stock market. It has been correcting for the last three days. The global outcome is not great today, which will probably push us down some more. We are not very far from the critical supports that every trader is watching. Results are not helping on the margin now with what L&T did. Hopefully, today we will not have too many misses. Global mood and the local earnings are probably setting the stage up for the Nifty to grind closer to the lower end of the trading band that we are indicating. Yesterday was a knee-jerk reaction to the Fed minutes. Once tonight’s reaction in the west is clear that markets can stabilise saying Ben Bernanke will prevail. Therefore, we should not worry or they could take this as a start of a bigger correction in terms of a trigger. Then the Nifty will drift lower particularly if earnings are not supportive over the next couple of days. So, to cut a long story short, yes the probability of a slightly deeper correction increased overnight or over the last twenty-four hours. _PAGEBREAK_ The traders do not seem to be overly nervous about these last three days in the fall. They have been buying in the futures market and the put-call ratio (PCR) is as high as it was through the last couple of sessions. However, I am clueless on whether that should make us confident or nervous. Traders would do that because they have seen a continuous six week rally and markets have not given any dips. Traders do keep an eye on the rearview mirror and psychologically they do extrapolate what has just happened over the previous few weeks. The previous few weeks do inspire a lot of confidence on the screen because of the strengths that we have seen in the market. After a 700 point rally when the market falls 100 points, traders would naturally be looking to buy the dips. If the dip continues then traders change around their view and feel that maybe the market is going in for a deeper correction. So, I would not take too much confidence about the fact that large short positions have not been built yet or the first dip is being bought, as that is natural. However, this market does not have a cushion of shorts, people are fairly extended on the long side. We are getting into the expiry. The market is vulnerable if global events or results lead us down from here because the market is far more long than short at this point in time. So for me, it is a grey area on what the trading action right now is saying should be taken as comfort for market or maybe it opens up some area of vulnerability. Traders would do well to regard the data point that you alluded to earlier that domestic selling because traders only look at the FIIs number. However, yesterday they saw at least the domestic institutional number. As the day before yesterday the domestic institutional investors (DII) number was twice the size of the buying of the FIIs. In fact, FIIs cash plus futures buying together could not make up for the selling from the domestic institutions. So, I think net institutional commitment, FII minus DII is quite negative at this point. That is something which is robbing the market of the momentum that we are seeing. It is an optimistic view that we settle into a range of 6000-6200 and spend the remaining days of May and early part of June series there. So, the next 10 days when the big offers for sales (OFSs) are coming which is taking out a lot of money from the market you can see that Foreign Institutional Investor (FII) flows are dwindling lower. May be competing also with the primary issuances and then you get through this period of weakness in the rupee. The last bit of earnings season which is not great and you come out having consolidated for 10 days in a 200 point range. I don't think that is a bad outcome at all for the market. The bigger worry is that led by weakness in flows, the currency, the way global tidings are blowing. Or could be because of poor earnings the Nifty actually goes down to the lower end of that range, which is 6000, cracks it and then sets up for a slightly deeper correction of the big move of 700 points. We don't have conclusive evidence of that, but I think the cushion for the Nifty is not too much from here. We closed at around 6090. I think another 70-80 points that is about it. If the Nifty say for example were to have a weekly closing tomorrow below the 6020-6030 kind of levels, then that would be setting the stage up for a deeper fall in the market. So, the next couple of days could be quite crucial in determining whether the Nifty can take a few blows. However, still remain hovering in a trading range where support or buying comes in closer to that 6000 level. Therefore we are not seeing a very deep correction, may be just 3-4 percent nothing more significant. Time will tell, by tomorrow we would have waded through a lot of the significant earnings, most of which are coming today. We would have got another drift of whether global markets will stabilize or fall more. This weekly closing will probably set the tone for either range bound trading or a deeper cut leading into the expiry next week.