Mumbai: It is Tuesday morning and it had been pouring results over the weekend. There are almost a million results to react to and that will take centre stage.
It's good that global cues are good as the market head to trade on Tuesday. Friday was a bit of a soft day for the market but today it has come out blazing with a lot of results.
There were too many results that came in over the weekend with largecaps, midcaps and smallcaps all over the place. So, today will be a very stock specific kind of market.
Everybody who tracks their bunch of 5-10 stocks, will be reacting to what came out on Friday night, Saturday and Sunday. Most of the results are good, while some of them were not too good. So markets will witness lots of stock specific action today.
Markets are not looking terribly bearish but headwinds are at 3200 levels and one needs to see if it can be broken, which is the key thing that markets look forward to this week.
Global cues:
There is good news from the US markets. The weak GDP numbers led to a belief that rates may not go up in the Fed meeting on August 8. In the Asian markets Nikkei is up 1 per cent, Straits Times 0.5 per cent, Taiwan is a bit soft but Kospi and Hang Seng are up. So there's more than 0.5 per cent gains.
Emerging markets were stable as well; Brazil was up 1.5 per cent, Chile and Mexico were up about 0.5 per cent and Russia was just about flat.
Market cues:
Markets have stumbled at 3200, which is a technical issue. Even the fundamental experts believe that while the market should not crack from here on, it probably should not go too much above 11,000 just yet.
Now the markets do not respect opinion as such, whether it is technical or fundamental; it will do, what it has to do.
Equally, it should not trade too much above 11,000 marks right now. So the weight of fundamental opinion is still in that range. 10,000-11,000 level is a comfort zone for most of the value investors.
Technical experts believe the markets have a big hurdle at 3,200 on the Nifty and above 10,900-11,000 for the Sensex; they believe it will take a bit to cross those levels. This leads to a two-way kind of opinion and movements in the markets.
One notices jerks-both upwards and downwards because from a fundamental and technical perspective, people are not convinced of too much downside or too much upside from here on. Hence, the markets have got into a range. It is not a coincidence that the markets are trading in a range for the last few days.
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It is because most people believe that the markets need to stay around these levels for a while now. For the day, it is good that the markets have got good global cues, whatever little they mean, it will probably start the markets strong, which is great.
On Friday, markets actually retraced quite a bit.
A lot of people believe that the runs are over for the moment. Now, the market has begun turning again around 3200 and it will go back to 3000-2900 kind of levels; that is the sort of indication that a lot of people took away from Friday's mild retracement.
But that may get outdone completely by any kind of a gap up, which we may have this morning. Then markets can get really close to 3200 again.
Now the big question is, given the earnings which have come in and the mood, which is building up globally on the possibility of what might come through in the FOMC meet, can the markets globally break through the threshold and trade at slightly higher levels?
The morning should be good but the key thing is whether the markets can hold on to those gains in the afternoon.
Global markets looming around Fed meet:
If one looks at the global and local cues, there are more ticks than crosses. Even if one is a bear, one has to admit that earnings have been more right than wrong.
There had been more hits than misses this time around for sure. Also, there has been no great sell out happening from the FII front.
The fact that the rupee has come off from 47 to 46.50 is an important cue and it helps Indian markets well. Crude is down to $73, so psychologically $5 gives one a sentiment cushion, if not anything else.
On the F&O side, the series has just begun, so one is building positions. Of course, the most important technical cue right now is that global markets are probably getting a little more sanguine about the fact that the Fed will have good news for them.
Next week, on August 8, when the FOMC meets, will be the corner stone on which one is seeing strength in the global markets right now.
Hope is not getting built into the price and there could be negative surprises. But it looks like that is what the markets are playing for globally.
So the more one puts all of it together, even if one cannot justify a run away rally, it is difficult to envisage at this point a big break down in the market looking at the technical cues.
But we could all be wrong because the market does what it has to do. So one has to wait for the market to do, what it has to but it looks like it shouldn't fall off very substantially just yet.
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