The biggest negative trigger just a month back could actually be our only friend in the near term. Saddled with our inflation problems, India has underperformed most emerging market peers barring China in recent weeks. But global markets, particularly the US, have not only been resilient but even strong. The Dow's pullback to 12,600 in the face of much adverse economic news could be sending out a signal that it has put in place an intermediate bottom. Bolstered by the strength of the Dow and expectations of more rate cuts, emerging markets are not doing too badly either.
This backdrop is extremely important for us. After all, we are an emerging market too. The history of emerging market performance tells us that moves are generally synchronised. Some markets outperform and some underperform, but broadly, most move in the same direction in a 10 per cent plus swing either way. So, if global markets are indeed readying for an intermediate rally, we too may not fall much, particularly since India and China have already underperformed hugely. We could rise less but may not fall while other markets go up. Now, all this presupposes that there is an April rally on the cards for global markets. We don't know that for sure, all one can say is that they are looking more promising than they did last month.
So, with no major positive surprises expected on the earnings or inflation front, this is the most likely bull case scenario for us now. In the near term, at least. The Dow rallies past 12,700, the dollar bounces back, commodities correct - soothing inflation fears, the yen slips further and some risk is taken on the table again by emerging market investors. All of this leads the Nifty a bit away from that 4500 precipice, atleast for now. Do I sound too optimistic? Well, these days we need to keep ourselves amused. There isn't much relief from the ticker tape.
The writer is Executive Editor, CNBC-TV18