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Market Watch: Uphill struggle

Rumours are flying thick and fast on which stocks will need to make ugly disclosures on derivative losses, writes Udayan Mukherjee.
Hindustan Times | By Udayan Mukherjee
UPDATED ON APR 03, 2008 01:44 PM IST

Every little upmove seems such a struggle nowadays. It is like swimming against a tide. Even tailwinds like global rallies do not seem to help us much. Upmoves are laboured, down drifts are quicker and effortless. The market is getting more and more distrustful of these intermittent global upmoves. Only a sustained upmove or a reduction in global volatility can settle things somewhat but sadly, that is just not coming about. Hopefully, we will be able to strike out a more substantial global upmove in April, even if it is just a relief rally. Anything to lift us out of this morass.

By the end of this week, there could be more bad news on the inflation front. In the US, while the manufacturing data was a bit better than expected, the non-farm payroll data on Friday will be watched closely. Next week onwards, the earnings season begins for us here. The market is visibly worried and rumours are flying thick and fast on which stocks will need to make ugly disclosures on derivative losses. The whole environment is one of mistrust, scepticism and fear. What do you expect with stocks languishing 50-60 per cent off their recent highs with every modest attempt at a recovery getting sold into? There is a crisis of confidence, and it is not just in the retail segment.

Predictions are getting gloomier with every passing day. CLSA is talking about an Asian recession, IMF has cut global growth forecasts and prominent investment banks are talking about 7 per cent growth and 7 per cent inflation in India. A slew of earnings downgrades has happened in sectors ranging from banking to infrastructure - the strongest pillars of this bull run. In earlier corrections one could say, with some confidence, that while technicals had soured fundamentals remained unchanged. Now the basic underpinnings of our growth story are being questioned. These fears may eventually turn out to be baseless but for the moment they are out in the open. The roof over the market's head has been swept away and it is too stormy out there to get on with the repair work. The gales need to abate for the roof to be mended.

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