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Market Watch: Bull, uninterrupted
There's not been a single bad day since the market broke out on September 17, writes Udayan Mukherjee.
The current momentum is simply amazing. I do not think we have had a single bad day since the market broke out on September 17. For a rally of such staggering proportions, it is not unusual to have a couple of bad days, at least a few flat sessions, to digest the gains. There has been none, no pullback at all. At best a bit of sector rotation, but some stocks have always managed to keep the market afloat. The market just does not want to correct. The price momentum is too strong at this point and, as they say, momentum begets momentum.
The technicals, of course, are very supportive. Global markets are looking extremely strong and this general "feel-good" is an important constituent of our current mood. The liquidity tap remains open; India has been one of the principal beneficiaries of dollar inflows since the US Federal Reserve meeting. We have always been a high beta market and typically tend to outperform in very benign liquidity conditions. Local trader sentiment is also at a high. The wave of scepticism abounding in August has been washed away by the price momentum and the participation in the October series is ample proof of that. Such solid technicals generally support strong price performance so it is not exactly surprising that the market is holding its current gains.
I was at the Merrill Lynch India investment conference last week and there is a clear air of surprise at how well markets had performed. There was an admission, almost without exception that no one expected the market to be so high so early. There is still a lot of talk of politics souring and a growth slowdown so my sense is a lot of people have missed out. Not everyone has been brave enough to jump in and the market has simply run away. Even the bears are now praying for a dip if only to afford them a buying opportunity. Maybe that is why the market is not correcting. Sometimes it has a habit of sucking in the fence sitters with its momentum before correcting. The waiting game is a dangerous one.
(The writer is Executive Editor, CNBC-TV 18)
