India is outperforming its emerging market peers. That seems to be the evidence from the last few times we have had a bad global sell-off. While Asian markets are succumbing to bad news from the US, India inevitably manages to claw back after an initial gap-down knee jerk reaction. Mapped over a longer period too, India, while moving in the same direction, seems to be outperforming its neighbours on the way down. This is quite encouraging, particularly at a time when foreign portfolio flows are not exactly abundant. Local traders and operators are not panicking at every global slide and are managing to hold prices up.
The indices are trying to cling on to supports, psychological or technical, on the way down. The Sensex put in a fight at 19,000 and on Monday there was a good comeback from 5,500 on the Nifty. This too is a mark of strength: the fact that important levels are not breaking down too easily. The fact that traders are still keen to buy the outperforming sectors on declines is amply visible in the way power stocks like Neyveli and NTPC came back on Monday. In the absence of large-scale institutional participation, this has become a punters' market and the punters are not giving up so easily.
Having said that, the roaring momentum of October is clearly absent. There is no better proof of that than shrinking volumes. Trading volumes have dried up by as much as 30 per cent in the last few sessions. Partly explained by lower FII (P-Note) participation and part by a lack of conviction on directional trades. The market is tentative and uncertain, justifiably so, yet not breaking down in a heap. If it gets away by swinging in a 5,500-6,000 band in this uncertain global climate, that would be the most bullish of outcomes. Let the dust settle though, else the sigh of relief may turn out to be premature.
The author is the Executive Editor, CNBC-TV18.