The morning brings with it slightly soft cues from the West. The S&P is below 1,100, the dollar index has rebounded a little bit and the Asian markets are just about drifting and indications are that we might drift a bit again this morning.
Q: Some of that correction we have pre-empted yesterday by the time we close up?
A: Yes, the market had a sense that global markets are probably just going a bit sideways for the moment. No huge damage has been done but you could see that the Nifty after two days of a pause has not been able to get above that 5,100 mark very decisively.
So once it fails in it attempts to go up, it sometime retraces and then tries again and that is pretty much what we seem to be going through. However, markets are full of surprises, today may be the third day of correction and whether at some point during the day you can see a little bit of a support coming in at lower levels. But let us take it one day at a time, we have just closed below 5,000 level on the Nifty. So let us not pre-empt what the market has on its mind.
Q: These past few days it has shown that for the global equity markets there is more strain in the system?
A: The problem is that the Dollar Index is behaving very stubbornly around that 75 mark. A couple of times it has dipped below that, but it is just not staying there and it keeps popping back to that 75.50 kind of levels. So it’s just spending any time which will give traders who are now tracking the inverse co-relation trade any comfort that that level has broken, that the Dollar Index may now start sliding towards 73–72 levels and that will drive the next leg of this technical trade for global equities and commodities. That comfort I don’t think is coming through which is why maybe a bit of re-allocation of resources is happening because people seem to believe that at 75 there is a very strong support which may not break out in the near-term.
So that is the key moniterable at this point in time. If the Dollar Index really rebounds above 76 etc., then people might think that the breakdown trade did not work; therefore, the stock markets might need to adjust a bit in the near-term. These are all technical near-term factors but they are important in the context of a day and week’s timeframe of trading and that is clearly what is going on at this point time time. So you just want to track that and not get lost tracking macro-economic data because this is just year end trade which people are trying to suss out and that is linked very much to flows and what they will do over the next four weeks versus what the dollar is going to do. So I think we just need to be cognizant of what is going on globally now.
Indian market is always on its own or rather as FIIs decide. Global cues becomes handy to explain the market moves if it is in the same direction.
With an FII inflow of 75000 cr from Apr-2009, eventually the market will only go up. In between there will be a lot of ups and downs. As I said earlier, given the F&O expiry next week, there will be a lot of unusual moves. Market can go up vertically in the next few sessions against the global cues also.
Mr Udayan..this is a thanksgiving week in the usa...mkts are consolidating....s&p holding around 1092......bulls are dealing with consolidating and after they digest thanksgiving turkey...they will take dow to 11 k bi December 15 as Mr Bubba told me.....lol..Santa will b happy like that.
| NIFTY 
