Expect rangebound session; April series to end flat: Udayan

On the back of the calm in global equities, CNBC-TV18’s managing editor Udayan Mukherjee says today will be a rangebound session, leading up to a flat end to the April series.

However, things are steady for now but that is no guarantee that it will be steady for much longer. Europe remains in a very manic phase; one day they are fretting over the political situation but the next day there is some comfort as statements come in. So you can’t really take away anything from the bad days or the good days in Europe.

As we go into May, Europe remains an extremely volatile state and it will probably hold center-staged in determining the kind of direction that global markets will move after this period of volatility.

Otherwise, things are steady; currencies have behaved themselves, commodities are pretty stable and results from companies like Apple post markets were okay, so the Dow should rise during the morning session out here. All these cues seem to indicate that India could probably have a session like yesterday, where the market fell into a bit of a range just above that 5,200 level and stayed there almost all day.

Back home, the April series is set to close with a bit of a whimper, although maybe people will take heart in the fact that we at least protected our range. Despite the heavy newsflow, the Nifty is closer to 5,200 than 5,400 on current reckoning and that for a lot of people might have been a disappointing series in many ways. The market attempted rallies past 5,400 a couple of times, but it never quite got there, so the bulls or bears won’t take away much.

Entering May, it is a session of Parliament and despite the bitter experience of the last many months hopes are getting raised. People are talking about a Cabinet reshuffle, etc so the May series will be interesting. More time within the 5,200-5,400 range looks doubtful, and it won’t be surprising if we get a directional move over the next four weeks.

Presently, the Nifty is not breaking 5200, which is frustrating the bears, and it’s not going above 5380, frustrating the bulls. But we might not stuck out here for very long because some internals suggest that the Nifty may not break down.

However, the breadth has been quite disappointing the last few days. The Bank Nifty is sagging or the momentum is flagging and that is generally not a good sign. Stocks like Kotak and Axis which were exhibiting momentum seem to be just splattering out a little, and what’s more concerning is that the sectors like infrastructure have started correcting

So if you look at the overall texture of the market there are signs which look a bit worrisome. Currently we are bordering on worrying a little bit about what happens in the early part of the May series unless global momentum resumes itself.

The surprising fact is that yesterday threw the series into a negative tick in terms of FII inflows and that is one of the highlights of the April series. The reasons may be the confusion surrounding GAAR, the rupee depreciation or concerns about Europe, but a little bit of risk aversion is back in global markets.

Which ever of the three reasons are true, right now money has slowed down and it’s silly to say that FIIs are driving momentum in our market. There is a direct correlation between FII flows on a weekly basis and the market performance, so the market will go flat and become listless, as they became in the April series, if there is no money. So going into May, the big question is whether Europe is going to lead sentiment and would that mean that money flows will be muted. If that’s the case, then don’t expect outperformance.

Watch the accompanying video for more details..