The stock market has been range-bound and volatile for some while. Monday's global cues have been good and we are bang in the middle of the earnings season. Yesterday's closing wasn't bad. But things seem to be stabilising.
Tuesday is the D-Day for Reliance IPO. 2008 would be the year of mega-IPOs. It will be the biggest primary market run in the past five-year bull run.
Tuesday is going to be about the primary market aside of what the secondary market has been up to, which is meandering a bit?
Its been meandering a bit but Monday’s closing wasn’t bad and I think the last couple of days it seemed a little bit more stable than the last one weeks action.
Last one-week everyday mid-caps and small-caps are selling off now while the breadth has become excellent over the last two days, one can see pockets of activities livening up again in the liquid mid-cap and the large-cap space, which is encouraging.
It's not to tell that we are completely out of the mood in that space but at least things seem to be stabilizing and interest is coming back from a trading perspective. This week hasn’t opened on such a bad note for the liquid end of the market, which is encouraging.
Primary markets:
2008 will be the year of mega-mega IPOs. There will be so much primary market action; I think it may just go on to be the biggest primary market year in this 5-year run of this bull market. One can argue pro and con of that one but let’s see how things pan out from here. Today of course we’ll talk quite a bit about Reliance Power IPO and the market will be focused on that maybe there will be ripple effects on the secondary markets as well.
Asian Indices:
Asia is okay this morning, the US was okay overnight and the Asia is just about flattish.Couple of markets have drifted down though they started up in the green. So just about okay day for Asian markets, nothing spectacular is happening there. Taiwan is a stand out market for political reasons out there.
How is the market looking?
Not too bad; it’s been looking okay, as we have discussed for the last couple of days. There has been a bit of a pain on the midcap and smallcap end of the market but the market is not broken down. We had a spectacular rally for three months on midcaps; they have given back some of their gains in quick time and that’s how it always happens.
The large-cap end of the market has been a bit of a musical chair. So Reliance is been holding it out for the last couple of days while other stocks like Bharti Airtel and some of the technology stocks have cooled off considerably.
It’s not going anywhere up or down; its just spending sometime in this current zone till this earnings season gets over and I think there is nothing wrong with it. There is a lot of information flow which is coursing through the market at this point in time and if the market in its wisdom has decided to standstill and absorb all the news flow before making its next move then we should appreciate where that is coming from. We just remain range bound for the largecap end of the market between 6,000-6,400.
In the mid-cap side of the market we have seen some pain and now there seems to be some more stability which is coming in but it looks like we will go through the next couple of weeks. Is the market showing a lot of weakness that’s visible on the screen? - The answer probably is no; it has not shown those kind of scars yet despite the midcap pain of the last one week not withstanding.
Is that what the internals are suggesting as well it’s a stop and take stock situation both with money flows and what’s happening on the futures and options side?
As far as internals go I don’t remember last time the internals of the market were so inconclusive. It is telling you nothing. Even traders and participants are equally confused about where the market could be headed from here and that is showing through in the internals. If one looks at the options data and what has been going on, I don’t think it is betraying or reflecting any kind of conviction on the part of traders around certain levels.
Nobody is playing the extremities of the market range right now with any conviction. So everybody is saying okay we need to trade so we will trade in that small 300-point band in the Nifty till the market tells us conclusively. I don’t think there is anything conclusive in terms of flows. Even the stock futures market is not showing you any kind of massive directional move. Forget FII flows and mutual fund flows, which remain tepid at best. Whether one tracks liquidity or the options data or general futures data, its all quite inconclusive signaling that the market for the moment remains in a bit of a range and we don’t have direction out here yet.
What was interesting yesterday and for the last couple of days is some of the liquid names, which got hurt, have started coming back and some which had not. The way RNRL bounced back, Hindustan Motors has bounced back. There is interest in Arvind Mills, even some of the stocks like Neyveli Lignite and NTPC, yesterday, UCO Bank moved quite sharply. You are getting the first signs that the traders are saying okay we have had the fall and it is time to get back into the liquid names once again.
Let's see if there is follow up to that over the next couple of days but even in the liquid end of the market there is some reason for optimism after the last couple of days again.
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