The budget is over, so is a weekend of analysing the fine print. Monday morning is here with its share of global blues and that drags us back to reality. The Nifty has not been able to break out above 5,500 and now faces a test of the 5,000-5,100 band yet again.
Global markets, after a nice bout of resilience have weakened again and the answer to whether the Nifty will hold out above 5,000 rests squarely on how the world shapes up this week.
The budget, for what it is worth, does not look too bad from a market perspective. Despite the capital gains tax and the confusion on the debt waiver, the medium term positives of consumption and growth stimuli should more than offset these temporary setbacks.
If the market stabilises, one would actually expect some outperformance from sectors like FMCG (excluding ITC) and auto. Sadly, their weights in the Sensex are marginal and they will not have a meaningful impact on the index as such. In any case, the US sell-off on Friday probably relegates the budget to the background even sooner than it would have been.
Despite attractive levels, the money is also waiting on the sidelines. Global turbulence will keep FIIs on the sidelines and local trader sentiment has not rebuilt yet. What is baffling, though, is the waiting game that domestic mutual fund managers are indulging in.
With nearly Rs 20,000 crore of cash lying in their kitty they seem reluctant to put any money to work using these dips. It is worrying to see such utter lack of conviction even at these price levels, from professional fund managers. It is difficult to predict where global markets will head but we are about to enter the value zone again.
Bottoms are always difficult to pick but for my money, the closer you get to the 15,000-16000 levels the better is your risk-reward ratio.
The 4,500-5,000 band of the Nifty seems like a truly good accumulation zone for investors. Now, no level is sacred, so it is entirely possible that we see lower levels in a global panic situation. But if you are buying stocks and not Nifty futures, every time you get these panic attacks it may be a good idea to put some money to work.
The environment is so vitiated that you are likely to get repeated dips into the value zone, so it does make sense to wait for these periodic dips and buy the weakness.
The game in 2007 was momentum sniffing, in 2008 it seems more like value hunting. Take a leaf out of Dhoni's book, see how well he has changed his game to suit conditions.
(Udayan Mukherjee is an Executive Editor, CNBC-TV18)