It’s all about power today. Will it be a blowout, will it be a fuse? We don’t know but everybody on the Street is going to watch that one thing, Reliance Power today. You saw the bulb, it was glowing really bright and then it blew out. We are not saying that it blew out as in a fuse; it may be a blow out as in a big blowout. But either way that’s the thing that the market will be focused on.So in a sense this has assumed far more important in the market today. It might have a direct bearing on what the market does today. But it is all about Reliance Power. The biggest IPO in our market heads for listing. There are hopes, there are apprehensions, and there are fears. We’ll see what happens. But be focused on it because it will be quite interesting and maybe a bit volatile as well.
The Asian markets have not performed well. This may weigh on the markets' mind. Most markets are down between 2-3% and have seen weakish opening. The markets may see some volatility depending on what Reliance Power does which will be at least as important as any other cue in the market today.
So, prepare yourselves for a volatile session and of course a lot of volatility on the stock, which is debuting today.
On the market mood:
At lower levels there has been some support on Friday at 5,000-5,050 levels, we bounced from above that and went on to 5,100. But this morning once again we might go back to retest those levels because of the global market weakness. So, it is entirely possible that we see those levels at around 5,050-5,000 for the Nifty, which is why Reliance Power assumes quite a bit of importance as well because if it gets off to a reasonable listing, then the market may take a little bit of support from that. But if it does not do very well post listing, then you could see further pressure sentimentally speaking from the market and you could see the 5,050 kind of level being violated as well.
So today is an important day and it’s a testing day for the market. The bigger problem is with the breadth. In the last couple of days midcaps haven’t done well at all, smallcaps have done even worse. So you are seeing continuous unwinding in the popular names like the RPLs, RNRLs and Ispats of the world. So traders are also little skittish at this point, not quite confident about building momentum stock positions.
So whichever way you look at it, the feeling is not completely bearish because we are at important support levels of around 5,000 for the Nifty. But it is difficult to find a lot of confidence as well given what’s going on globally and the kind of volatile cues that we may get with the listing closer home.
On market technicals:
While the put-call ratio is still at about 0.96 and it could go down further and that is probably telling you it’s somewhere in the midpoint of, from that slightly overbought zone after the pullback to not quite oversold zone. There is reluctance to build positions as you can clearly see in stock futures rather there is unwinding.
The one positive leaf that you can takeout is that the FII selling over the last couple of days seem to have abated a little bit, the figures are not very large. This market is not falling 100-points Nifty a day because of USD 40 million of FII selling.
While there has been no net buying and that’s disappointing, you are not seeing great numbers by way of net selling coming in from FIIs and while it is very disappointing from a market perspective and it is a negative cue that a couple of those IPOs have got pulled out, Emaar and Wockhardt Hospitals, it also paves the way for some money to return to the secondary market because increasingly you are getting the feeling that the large IPO calendar, which one was talking about between January and March may actually not pan out that way because a lot of people will withdraw as a couple of them have withdrawn already. That might leave more money for the secondary market as such around the Budget and not get completely sucked out or squeezed out by the primary market.
So if one wants to see this in positive light, there could be a positive straw in it that there is more money now available global conditions permitting to come into the secondary market and not just get sucked out completely by those monster IPOs which were coming in.
So eventually once the dust settles in the global situation, you might actually see the technicals improved a little bit because the local futures market is quite light. You just need the institutional selling to abate a little bit, which can give fillip to stock prices. But pending global markets stability, which we can’t assume. So, one should not look at technicals quite so negatively after what has happened in the primary market from hereon. Source
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