After worries from the global markets and fear of inflation data, markets look weak. A cap down will be seen in the markets. But, still there are hopes of digesting the bad news as the pull back has just started.
Nifty is seen at 4000-4,100 levels and the medium-term is very challenging.
Couldn’t have been a more inauspicious start to the July series; just when it look like there was some semblance of stability and the market was attempting at least a relief rally, comes a big whack from the global markets. 360 points down the Dow Jones’ Index bringing it down to lows for 2008; S&P’s crumble below 1,300 mark by quite a margin, crude shot up to USD 140 last evening before cooling down to about USD 139 per barrel but dangerously high and dangerously high to all time highs which means we probably start gap down as well this morning. So things haven’t been exactly begun well for the July series and of course at noon we will have dreaded inflation number once again.
We were hoping that with burial of the June series the market might just have got off to a slightly better trading range in July because earnings are coming out, we did some rearguard action coming in from slightly above 4,000 levels on the Nifty but that’s the problem with the market. Every time the bulls just put out their fingers a bit, they get whacked so hard on the knuckle that they retrace once again. So some positions might have got built-up in the last couple of days and they will have to get cut once again.
We will wait and see because a pullback has just started. So sometimes in the early nascent days of a pullback, when one is bouncing off fairly reasonable base, then sometimes bad news doesn’t break one down below those levels. So one may still find support around 4,000-4,100 mark; we are not going there this morning in one short hopefully but lets see if it can holdout and one can digest the bad news and try and create some kind of a platform around 4,000-4,100 level. Medium-term still looks very challenging and it would be brave man who predicts the bottom right now.
Asia is not a pretty picture particularly markets like China. China is down 4.5% as we speak, the Hang Seng is down 2%, Nikkei is down more than 2%, Taiwan is down nearly 4%, Korea is down 2% as well. So cuts range between 2-4% across Asia is not a pretty picture.
Q: We were talking about a pause for the global markets though yesterday and it seems the situation is not that sanguine?
A: No, far from it. As you said, all those gains since the Bear Stearns days have been wiped out and I think it is sort of emblematic of what’s gone on in the US over the last few days because all the hope, which had build up into the price, in the US market since the bail out of Bear Stearns has completely been undone and reflected in the index as well, over the last couple weeks. I think it probably just tells you that in event of Bear Stearns, which led the market to believe that the worst of the subprime and the financial crisis had been put into place - that feeling has changed in the US and with every passing day, the kind of news that we are getting from the financial sector out there yesterday culminating in Goldman Sachs saying that there is far more pain in Citi and Merrill Lynch over the first few quarters; and it is just admission of the fact that things are not good in the financial sector.
We may still have to see or deal with blow ups happening in the financial space, may be Bear Stearns was not the last. I think that reality coupled with the fact that earnings are not looking good at all, whether the GDP number in the US is 0.6% plus or 0.6% minus is not as material. I think there will be lot of brownie points quotes by recession callers and people who were saying that recession may not happen but beyond that what is the stock market focused on. What will happen to the companies over the next few quarters and I think increasingly there is a sense that earnings, whatever the GDP number is as a token number at the end of the quarter earnings will not be very good at all.
-Udayan Mukherjee, Executive Editor, TV18 |
Offline
Moneycontrol 
Popular Boarders 7days