Nifty to rely on global cues; seek relief in stable rupee

It was not a bad day for our market yesterday; the rupee too had pulled back a bit but unfortunately global pressure is begining to mount again. Over the last couple of days the foreign insitutional investors have started selling. Therefore it is not a great enviornment to start the day, said CNBC-TV18's managing editor, Udayan Mukherjee. The market had a bad day yesterday. The rupee too had pulled back a bit but unfortunately global pressure is beginning to mount again. Over the last couple of days the foreign institutional investors have started selling. Therefore, it is not a great environment to start the day, says CNBC-TV18's managing editor, Udayan Mukherjee. technical analysis best trading software charting software

US market closed badly yesterday. Japan is down 5 percent and other markets like Hong Kong and China which have opened after a break are doing very badly as well. According to him, the ongoing debate on whether Quantitative Easing (QE) tapering will happen or not, is putting a lot of pressure on flows for emerging market equities and currencies. Therefore, next week's Fed meeting assumes a lot of importance. So, the fate of our market is not only in our hands but it depends quite a bit on what happens overseas too, he added. Below is the verbatim transcript of his analysis on the channel

Global markets

Global pressures are beginning to mount and that is very disconcerting. There is a debate going on in the west on whether Quantitative Easing (QE) tapering will happen or not. From what is going on right now it is clear to spot that markets are putting a lot of pressure on the US Federal Reserve and the Bank of Japan and they will test the regulators out because at the first sign of money being taken away or the punch bowl being taken away, markets will not let you do that very easily and they will test your resolve out. However, there is never a good time to do it so you can keep postponing it but it is not an easy decision because every time there is a hint of taking the punch bowl away, markets will collapse and they will prevent the regulators from doing that. This is exactly the sequence of events which is playing out. nifty trading software stock trading software charting software

Therefore, the next week’s Fed meeting assumes a lot of importance because the Fed will do one of two things. It will either stand up to the market and say that quantitative easing is the prudent thing to do and although we are not doing it today but chances are we will do it in three-four months time and if markets sell off then that is bad luck or it will say that in my role as cheer leader to asset classes, I obviously cannot afford to do this, so why are you panicking. QE is here to stay as long as I am here, markets will bounce back once again. However, it seems to be becoming a binary kind of outcome for the next meeting because the markets are putting so much pressure on the regulators. You can see it happening in Japan as well. After the BoJ meeting the way the currency has moved and the way the stock markets are moving out there, must be alarming the authorities there as well. So that is a bit of a game of blink which is going on in global markets. indian stock marketsoftware stock market software

For the near-term, it is obviously putting a lot of pressure on flows for emerging market equities and currencies and that is a reality that we are trying to grapple with as well.

On FII outflows:

We have had corrections in the past this year but they have usually not come on the back of very large foreign institutional investors (FIIs) outflows. Sometimes it has been a technical correction where FIIs have stopped buying for a few days but this Rs 1,000 crore kind of selling in the cash market for the last couple of days is a disturbing sign because it follows more than USD 3 billion outflow in the bond market in India as well. So, I think people are getting quite edgy about how this flow situation will pan out in the near-term.

Also, last couple of days we have seen quite a bit of shorting in the Nifty futures. Yesterday, there was evidence of some stock futures shorting happening as well in select names like Axis Bank, Titan Industries, Tata Steel and the options activity also is not betraying a lot of confidence. This is a big stone on the market’s back and when it ties-in with what we have been discussing on the global liquidity parameter and you should expect some pressure on near-term flows. eod charts indian stocks best trading software

Now, it could go two ways. This could be the start of a bigger unwind which the Fed does not stop next week and then we are looking at serious trouble for most emerging markets including ours or this is a period of pain, which lasts for another couple of sessions. The Fed and authorities get quite alarmed and they jump in to prevent a 2008-2009 kind of situation. Then for the near-term you see a back stop in liquidity and market has rebound and shorts get covered up. One of the two will play out, so in the next couple of days there could be pain. However, next week given the meetings of the Central Banks here and overseas, and the kind of comments, which might come through from the finance ministry today as well, you will probably see Central Banks also getting onto fairly hyper active mode to prevent big accidents. Because there is a bit of a scare going on now in emerging markets with the prospect of liquidity drying up.
While everybody is saying there is no panic, I can assure you that a lot of the people who are watching from the regulatory and the governments, they are beginning to show a semblance of panic out there.

Source : .Money Control