See Nifty's short-term bottom at 4800: Udayan

The Indian market has been weighed by global and domestic factors over the last few sessions.

Yesterday, the Indian market plunged over 1.50%. The Sensex closed at 16,030.09, down 298.16 points or 1.83% over the previous close. The Nifty ended at 4,858.25, down 84.55 points or 1.71%. CNBC-TV18's managing editor Udayan Mukherjee says, the Nifty might see some respite today. He expects a relief rally or upmove, hiatus to the downward trend. "We are in a downtrend. It is just that even downtrends are punctuated with relief rallies and with periods and bouts of respite," he asserts. According to him, 4,800 should be one pit stop for the market. "I think it is too premature to say that 4,800 is a firm bottom. It might be a short-term bottom, but from an intermediate perspective, we have to see much more to be betting on it. It is possible that we cling on to 4,800 as a support for a while," he adds. Below is the edited transcript of his comments on CNBC-TV18. Also watch the accompanying video. It is a slightly better morning for the global markets. It is not that there are great rallies striking out in the region, but atleast it is more stable. Even the currency seemed to have reined in a little bit. The euro has rebounded a bit, just a bit. So, we might start off flat to positive today. Crude has also cooled down a bit. That helps us on the margin, who knows maybe it is going to be a day of a respite. We are in a downtrend. It is just that even downtrends are punctuated with relief rallies and with periods and bouts of respite. You saw that as early as day before yesterday, when the Nifty moved up 40-50 points seeming to suggest to a lot of people that maybe there is support, but then again we fell yesterday. So, it is going to be two steps back, one step forward kind of a market. I guess today is one of those days where we might see some respite. If that respite is followed up by a little bit more positive news in global markets overnight, we might see a few days of respite as well. That is not impossible from the lows that we have got beaten down to. I think it will be just a relief rally or a relief upmove or some days of a pause or respite or hiatus to the continuous and pronounced downtrend that we have seen. So, it won’t get too bullish, but maybe not too bearish this morning.  On the global markets: Politics remains a complete mess in Europe. The uncertainty just got prolonged by three-four weeks. In the first week of June, you will start hearing rumblings from Greece about which party is leading, whether Left has got its nose ahead and what ramifications it has to Greece staying in the euro or not. So, we don’t have a swift resolution. The best one can say is we’ll worry about that, when it comes, in the middle of June. Right now, atleast being a month away, we don’t panic about it just immediately. On the margin, crude is helping because it is now at a USD 109 per barrel. If in the interim, between now and the end of May, brent losses USD 8-9 per barrel more and goes down to USD 100 per barrel, I think that probably will show up India in a slightly more favourable light. But that aside, I think we are in for a bit of a grind out. Whether we fall immediately by more in terms of price damage or we stabilise, form bit of a range and then fall later, that’s the matter of debate. But rallies seem difficult right now. On the Nifty: There could be some respite because we are crunching at that 4,800-4,850 kind of low and 4,800 should be one pit stop atleast for the market. It has been a straight line from 5,300-5,400 to 4,800 or nearabout. I think at 4,800 a lot of targets get met for most traders or many traders. Maybe global markets have bought them a window of uncertainty, but not an immediate catastrophe. Therefore, we could see some period of a respite for global markets as well, which have also come off quite a bit. This has been a sharp fall from the February highs, the Nifty is down 14%, that is not insignificant. So, it is possible that we cling on to 4,800 as a support for a while and do these small countertrends kind of rallies. So far, the countertrend rallies have been very disappointing, they have lasted 50-70 points no more. So, clearly there has been a complete bearish grip on the market from a near-term perspective. Could that change momentarily and get to a slightly more neutral frame of mind for a few days? It is possible, but I don’t think that takes away from the medium-term problems that the market is in. I think it is too premature to say that 4,800 is a firm bottom. It might be a short-term bottom, but from an intermediate perspective, we have to see much more to be betting on it. _PAGEBREAK_ On F&O market: In the futures market, there was Rs 750 crore of Nifty futures selling. So, clearly the shorts have picked up. That is why I am saying that the bears appeared far more confident because of the newsflow that is backing them than the bulls. The bulls are very tentative. The counter-trend rallies are triggered off more by the bears where they cover up shorts, take profits rather than any great long pile up that you are seeing in the market at any point. So, I think the bulls are in a corner right now. As I was saying 14% from the February highs is a lot in rupee terms. In dollar terms, it is probably more, it is probably 20% or something like that. So, when you sit on that kind of profit, periodically the bears will take money off the table. That might spark off those counter-trend rallies. So, in that context, Rs 750 crore of fresh shorts created yesterday also creates a bit of cushioning for the market that at some point they might be covered for whatever reason, global stability, crude oil going down further. That might give the market a little bit of breathing room on the way up. Cash market numbers have been negative for the last couple of days. That, from these levels, remains my central worry because we have not seen meaningful outflows over the last many weeks. There have been fears of that, but it has not happened. So, if that starts picking up then I think the rupee and the stock market will find it very difficult to handle. That risk has to be kept in mind more than any valuation risk or fundamental macro risk, a large part of it might have got priced-in in the fall since the February highs. On the rupee: The currency might also get a bit of a respite because the level of pessimism, on a scale of 1-10, has gone to nine again. That tells you that we may go to 55 temporarily, but maybe even for the currency a pullback is in order. Maybe a couple of rupees pullback, but that is a possibility which even short traders in the rupee-dollar market need to be cognizant of because nothing moves in a straight line. The rupee remains intrinsically weak. All we are talking about is a counter-trend kind of a pullback. I think the rupee is in line for that, whether it starts from 55 today or below 55 and we will see what factors trigger it off. So, in the medium-term, you would still have to be very circumspect. In the short-term, I think you need to be a bit careful.