Good rally in banks, real estate, infrastructure stocks

CNBC-TV18s Managing Editor, Udayan Mukherjee - It’s been a good day for the market. It did not start off in great fashion very quiet, towards the start almost flat, dipped into the red a couple of times but towards the afternoon strength is back in the market. So we are up nearly 400 points on the Sensex; 12,500 just a few days back. We are now up to 13,500 and the Nifty is clawed back from 3,800 all the way up to 4,050. Good rally in the beaten down sectors which is banks, real estate, infrastructure, they have all done well. Select buying is seen in many of the largecap names even outside these sectors so, good going so far no great sign of nerves before that big vote of confidence on Tuesday.

Q: We had a follow through but this would have been a good day as well to get out of your short positions?

A: I think that would have happened yesterday because the rally yesterday was quite substantial and you had a sense that there might be good news coming later in the day. So I think on the margins the shorts would have squeezed out may be the stronger bears would be holding out till may be 4,200 kind of levels. And if we cross that, then I think another round of short covering might well happen. But there are many reasons for which the market should have gone up today; crude is down to USD 130/bbl and is still not gone to USD 133-134/bbl though it inched up a little bit. I think the US market cues were pretty smart and inflation was not springing any negative surprises and also the bond yield is cooling down, was a surest cue for some of the rate sensitives to move up once again today. So the banks have led the way and not quite unexpectedly either.

Now we come to the first small hurdle which is tonight’s global market performance. But Europe hasn’t been dismal so may be US post market closing action would not lead to a dire fall or anything like that in the US. That is the hope on current reckoning and maybe the market is going with the sense that next week on Tuesday chances are it would work out in favour of the government.

Therefore there is a little bit of a sticking the neck out kind of bullish rally, which is happening at this point preempting that event, so there could be many reasons for the move up. This technical bounce is not unexpected if the vote in confidence goes in favour of the market, it can take us certainly much higher from here. So 10 days back the call was 4,300 and in this move we can certainly get there. But if there is hell from crude and from the political front, then may be we could get a little bit higher as well, not the stuff of celebration but from the beaten down lows of 3,800 it should surprise nobody. If good conditions prevail we could even get a 15-20% kind of a rally that is what bear market rallies are all about.