Market not too keen on India Inc's Q2 performance: Udayan

Unlike most market participants, Udayan Mukherjee of CNBC-TV18 does not feel the market will focus on the second quarter earnings season. "I disagree a little bit. Earnings will cause some near-term volatility in a few stocks, here and there, but I don’t think earnings will come as a major surprise," he says.  

He believes market will be more focused on liquidity flows, global macros and domestic political developments. "As more and more state elections and polls materialise, the market will get more and more excited about the prospect of Bharatiya Janata Party (BJP) stealing a march over the United Progressive Alliance (UPA), which it will see as a positive," he says. Below is an edited transcript of Mukherjee's comments on CNBC-TV18 More room for upside?
It is doing the right thing right now in having hit an important target of 6,140-6,150, which was the September high. It is just consolidating for a bit. What happened on Wednesday was pretty much along expected lines. The market attempted a scale of that level and then just reacted from that a little bit, I think you might find similar actions today.
The market is trying to move up a little bit then getting to that 6,150 zone, broadly speaking maybe encountering some resistance once again but you are right in pointing out that some of the initial results have been quite good expectedly so and the US deal looks like it is going through. So both from a global, local standpoint the makings are there of a takeout of this 6,150.
There are two ways the market can do this. It can dither here for a couple of more days, soak in a few more earnings, just see how the global mood is and then maybe even react a little bit and then take out 6,150 or it could do it in a flurry over the next couple of days. We could have a weekly closing above 6,150, which would be extremely bullish for near-term traders.
The way the wind is blowing; even if there is some near-term consolidation, you would have to bet on the prospect of 6,150 being taken out eventually. It can happen even today being higher than the fact that in the near-term just over the next few days, there will be a meaningful correction in the market. On the political uncertainties
There are two things, which are paramount, and more than I know a lot of people were talking about the fact that this is earnings season and earnings will determine what the market will do from here. I disagree a little bit. Earnings will cause some near-term volatility in a few stocks, here and there, but I don’t think earnings will come as a major surprise.
Markets move on surprising things and I think the two things which are on the margin going to set the tone for this market—not necessarily in that order—is what is going on with the global mood and liquidity and what is going on with political expectations in India. The macros will not improve in a hurry. Earnings will not change their trajectory in a hurry. However, much we like them to but what may change is people’s perception that we have got an October-December window within which global macro will remain benign and will continue to get this Rs 800-1,000 crore of FIIs inflows everyday. As more and more state elections and polls materialise, the market will get more and more excited about the prospect of Bharatiya Janata Party (BJP) stealing a march over the United Progressive Alliance (UPA), which it will see as a positive—no judgements out here but that is what the market likes as you have heard from many participants.
On these two factors, the more newsflow the market gets, I think it will feed some kind of momentum that we are seeing building up at this point in time. So keep your eye on these two balls: the global macro and liquidity and the local political expectation, which is what people are feeding on for May next year and to build on a pre-election rally.