CNBC-TV18's Udayan Mukherjee says the market is likely to remain volatile on Monday due to Vote on Account. Since it is an interim budget, it is unlikely that there will be any major policy announcement but the market may remain volatile. Analysts will also consider how government reaches its fiscal deficit number and the arithmetic behind it.
Mukherjee says that markets have been extremely range bound. If you had asked me last week whether markets would get into a range, I would have probably said no, because at that point the market had lost a lot of ground in very swift time from 6,300 plus to below 6000. It was bouncing off the 200 DMA and most traders and chartists would have though that the market was in for a slightly bigger short-term bounce.
Earnings season for Q3 was quite patchy with lots of hits and misses. No sector turned out to be a clear outperformer," adds Mukherjee.
Below is edited transcript of Udayan Mukherjee's market analysis on CNBC-TV18
On Nifty
The Nifty did not make too much headway. It got stuck even below 6100. The upmoves over two-three days were 20 points, 15 points. It was a very laboured kind of an upmove and most days were fairly range bound and so, I am at a bit of a loss to understand this kind of a volatile trade within a very limited range and the fact that over the last 4 or 5 sessions the Nifty did not move away too much from its 200 DMA from which it had bounced off. It did find some support around 5950-5970, but on the bounce back it got caught within just about 70-80 or 100 points which is usually not a great sign.
While it would have been expected to see market find some support at the first test of the 200 DMA which usually happens, the second test might be even more important and formidable in determining whether we are still within some kind of a broader medium-term uptrend.
In the next couple of days, the weekly closing and then leading onto the Vote on Account session it is imperative that the Nifty does not violate the 200 DMA once again on the way down, because it is one thing to remain in a bit of a tight range and spend a few days consolidating, it is quite another to repeatedly test the 200 DMA and settle below that. The bullish traders will be hoping that that does not happen over the next two sessions.
Global impact
Last time when market went down below 6000, it was led by all those fears of emerging market panic and weakness and foreign institutional investors outflows, the global mood was even more edgy at that point in time. This week, comments from Janet Yellen sort of stabilised matters a bit, but towards the end of the week the global fears have come back on the table. This time's weakness has probably a lot of other things blowing around it as well and not just the global factors, but that I maintain would be the most important decisive factor over the next few weeks.
Right now there does not seem to be any major panic in the global space. You would have witnessed that FII outflows have also sort of ebbed off a bit. They are still selling, but on the odd day they are buying as well.
The last reported figure two days back was a small buy figure. So the kind of selling that we were seeing in a concentrated fashion over the last 3-4 weeks seems to have ebbed off a bit after the comments from the Fed president. But I still think there is edginess in the global space and that will be quite crucial in determining whether the Nifty manages to bounce off or hold to these supports of around 6000 odd.
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