Challenging time for mkts amid negative global cues
A difficult global market and bad cues from overseas makes it a difficult day ahead. At least the bull should try and ensure that yesterday's pullback was not a one-off. Therefore, a little bit of positivity is expected. More headwinds are seen in the markets.
It will be very challenging for the market to move up from the current level amid global cues.
The circumstances are not supportive at all this morning:
No, they are not supportive and it’s unfortunate that after the first day of that pullback we get pegged back with several bad cues from overseas. The start may not be good; there might still be an attempt to claw back and carry on with the rally after yesterday which was primarily a short covering rally because at least the bulls would try to ensure that it was not just the one-off and the market does not get the sense that it is just a one-off which fizzles off with one passing day.
We could see a bit of volatility and bulls may not throw in the towel initially after the first cut in the morning but let see where we go from here. I think the headwinds are strong at this point in time. So if the market has to move up more from here which is a possibility, at least a bit more then I think one will have to see more aggressive short covering. I do not think there is serious buying which is happening yet in the market. It is going to be challenging for the market to move up significantly higher from here. A bit more is possible but that depends more on the bears than on the bulls.
Asian Indices:
Asia had a very rough day yesterday but today it has not reacted nearly as much to the US sell off and the crude spikes. The Nikkei is actually clawed back into the green, Chinese market which slipped yesterday is up about 1%, Hang Seng has cut its losses, the early morning losses were about 350 points and now it is down to just about 60. Taiwan remains very sticky, 1.3% down and Korea is down about 1%. So Asia is not doing terribly badly this morning under the circumstances.
It ran really hard and really fast yesterday, so what does one expect for the Nifty in the near-term now?
It is tough to say because the picture has been muddied a little bit by what has happened overnight, the Dow breaking down, crude going up to USD 144/bbl-USD 145/bbl these are headwinds for us and they make things only worse, crude certainly does.
We went to 4,100 yesterday, so in the near-term will it start a bit weak? I suspect so. If it does and goes back closer to 4,000-4,050 kind of levels then we have to see whether it gets support there and tries to resume this pullback rally, which takes it somewhere closer to that last important level that it broke which was 4,300 kind of levels. So it is possible that it goes there but I do not think it will be easy because we have had a fairly significant bounce yesterday, it was led almost entirely by short covering. It does not look like there was any great genuine buying, which had happened out there.
It is tough to say what is going to go on, maybe we have to see a touch of volatility right now. Did yesterday’s rally indicate that the Nifty is completely out of the woods and ready to rally on and it is firmly put a bottom in place? - I doubt it. I think this time around when a bottom is formed you will probably see more of a base building kind of an exercise, a V-shaped pullback from the lows probably will not indicate a bottom formation this time around because that is typically how bear market bottoms are not phased. I do not know whether we go back and retest and break those levels in the next few days or we go to 4,300 but we are not quite out of the woods yet.
-Udayan Mukherjee, Executive Editor, TV18 |
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