Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18. Also watch the accompanying video.
This week has begun really well. Friday was a good day for the markets and Monday was almost the perfect follow-up. The result: after 21 trading sessions, we have made our way past 2,900 on the Nifty. Is there more to come? Is the Nifty going past 3,000 in next and is it eventually going to go to 3,150 which was the early January high? That is the big question on everybody’s mind as we go into trade today whether this is a genuine breakout and it will take us another 8-10% higher at least in the near term.
Just about four weeks back, we did make our way back to 3,150. It is possible and likely that if there is some help from global markets, we do make it to those kind of levels and if that happens, it is a tradable kind of rally for the traders. So, we should keep our eyes on that possibility. However if global things turn around after this evening’s events then of course we will run into resistance once again. But it has been a good one-two kind of a move Friday and Monday and yesterday the way the market broke out with a lot of attendant action in many of the liquid midcaps looked pretty good. So, the screen is looking good for last couple of days but we need a little bit more of global support to make it back to 3,150.
Asian Indices:
The US was very flat; Asia is flattish as well third of a percent, half a percent flat nothing wrong with that. Markets have been doing reasonably well these last few days so we have a quiet morning on our hands across Asia.
Are some of the wrinkles of gloom getting ironed out?
There are two ways to look at it that you have just come out of such a bad phase that any marginal improvement will lead to some kind of a recovery. It is like Nifty falling to 2,250 and you get to 3,000 and feel that everything is looking much better right now. So it could be a bit of that - after a terrible quarter, you are seeing a bit of rebound not just in numbers but also in sentiment and people are saying that if you have gone through October and December that is probably the worst, we have stared the abyss in the eyes and now we are beginning to come out of it.
So far the numbers are not looking materially great and compared to October-December they look okay but year-on-year (YoY) they are still down. So they are not looking great but sentiment is important and sentiment - as Mr KV Kamath (President CII, MD &CEO ICICI Bank) says correctly - has improved in January and February. So you don’t know how to read this whether this is a sign that things are durably on the mend or this is just a bounce back from an oversold kind of a situation or too much depression in October and December. Time will tell but I don’t know whether it is easy to take that call that things have turned around.
However, after yesterday’s gross domestic product (GDP) estimates I think what might be happening now - and that is the optimistic scenario and the one which you hope for - is that now that there is so much cash on the sidelines globally that people might just start making up and saying everybody is talking about massive de-growth and these two economies are still talking about 6-9% kind of growth and do we need to put a little bit of money to work out here where there is still growth and if that happens you could certainly get a bit more of a durable bounce like you have seen in China from the start of this year. So that is the hope that people are seeing us in a relative sense now with the cash on the sidelines or cash in their pockets and they would want to deploy it in the higher growth economies like China and India maybe some of it has already happened in China.
So there are two positive takeaways you want to takeaway; one is corporate sentiment is very important and if that is on the mend then that is only a good thing, there is nothing bad about that and of course if there is more money which chases this sense of optimism from a stock market perspective that is also good.
The only fear that you have is that you get a little bit of a rebound from this October-December abyss and then when the market gets very hopeful and after that you find that the recovery is actually not as durable that you thought it would be and then I think the market will have to pay for the disappointment. That certainly is the scenario that you cannot wish away.
