Mkt trips on whiff of European rumble: Udayan

"It's been a disappointing session so far," says CNBC-TV18's managing editor Udayan Mukherjee in his analysis of the market's movement so far. He points out that cuts in Europe jeopardised stability in the region and triggered a slide in the Indian market.

Udayan reveals discussions on Monday that explained GAAR's ineffectiveness in affecting the market. So Monday's rally, Udayan adds, was a short-covering rally that did not find any follow-through today. Below is an edited transcript of the analysis presented on CNBC-TV18. Also watch the accompanying video.
It's been a disappointing session for the market so far. The morning looked stable but the market slid again on European weakness. Just when it seemed Europe was stabilising, there were cuts that triggered off signals of weakness. The CAX was down nearly 2%, the DAX fell by nearly a percentage point and that’s led to some pressure in the Indian market as well.
So we have come back from more than 5,100 on Monday to down to 5,050. The rupee has gone back to 5,310-5312 again and that is not a good sign. Today sectors like IT and infrastructure were singled for punishment. So still remains a volatile market at just above 5,000 level and the market is not out of the woods yet on volatility.
The Dow Futures has also indicated a cut. But it's sad to see that Monday's short covering has not seen any follow-through.
There were discussions on Monday that GAAR by itself would not be trigger enough for the market. If today global markets were stable there might have been a bit of an extension of Monday’s moves. But the first whiff of weakness in Europe caused the Indian market to unravel.
Monday seemed to be short-covering rally as it did not appear that in the current global environment investors would want to put in a lot of money into risk assets at this point in time.
This apprehension is evident in the commodity space by the speed with which they are correcting. So 5,000 may yet hold out because it is a significant level. But serious upsides from hereon seem restricted unless the global problems are resolved. The first signs of pressure began to appear in the rupee even before the Nifty started cracking at 5,050.