Another listless day on Dalal Street. Early morning exuberance coming off in late trade. Volumes abysmal, still stuck around Rs 50,000 crore. The Nifty is bang in the middle of the 5,000-5,500 trading range and doesn't seem to be in any tearing hurry to break out, in either direction. While we did see a price recovery last week, there is no momentum in the market at this point.
The problem is the past and the future. The savage fall of the recent past has left many open wounds on market participants and there is a palpable mistrust of the future. Having seen how quickly things turn for the worse in the US, traders are reluctant to open large positions and get caught on the wrong foot, again. There is a general feeling that the 5,500 level on the Nifty and around 19,000 on the Sensex is the near term roof over the market's head. Some degree of confidence may come back if the Nifty manages to cross this level and stay above it. With the current lack of conviction, the index needs a bit of help. The obvious trigger lurking ahead is the Union budget and we haven't seen a pre budget rally this time round. While the current lack of confidence does rob the market of momentum, stocks have climbed such walls of worry to move higher. Most people are quite skeptical now, which isn't necessarily a bad thing.
The big risk remains the global market. The US Fed will cut interest rates again in March, either 50 or 75 basis points, but it's difficult to guess whether global markets have bottomed out yet. Is there another leg of weakness which will drag all markets to their January lows? Will the S&P drop to 1,300, will the Dow Jones index collapse below 12,000 again? Opinion is divided but this is what worries most investors today. The selling may have dried up but buyers are waiting for another big dip. Given global conditions you can understand where this is coming from. It's still a long summer ahead, I still think it's best to wait for the stormy patches to accumulate and not get carried away by the good days. Too early to start chasing momentum yet.
Executive Editor, CNBC-TV18