Udayan’s Outlook: Mkts may not open up today

It is Monday and it is not looking very sunny today. Last week was rough for the markets and the weekend also was rough. Friday was the 20th anniversary of Black Friday and the US markets didn’t perform well.

There was a 400-point crash on the Dow, Asian markets seemed to have picked it up and are down about 1-2 per cent. The yen has also appreciated to the dollar.

Last week, there was a P-Note induced correction in the markets. Globally, the markets have corrected sharply. So, today there is a double whammy, it doesn’t look like the markets will open up.

A rough week:

It was coming for the last few days and we were discussing the possibility of this that at this point if we have an additional burden on the markets back it will not help. So we have got a bit of a technical situation out here.

The P-Note problem has still not blown away I don’t think anything has changed substantially over the weekend regretfully so. And we have got a bit of a political sort of a problematic situation with the Left UPA meeting, I don’t know what will come out of that. You have got the futures and options settlement lurking on Thursday.

So the technicals of the market will not be good, and now you have got a global scare. So we have setting ourselves up for a bit of a fall this morning, the big question is what happens after the initial knee jerk, does the market recovered, do people start buying or are people going to brace themselves for a slightly deeper cut in the market.

We will see red on the screen and maybe quite a bit of it but what people do after that would be quite interesting but its not beginning on a big note for sure.

Approach to any potential crack:

Ever since the market crossed 16,000 people have been crying for correction and we have had that blowout to 19,000. Everybody was talking about a correction then and now that the correction is in, I think everybody is acting pretty surprised or acting fairly negative about it.

I think all of us knew that at some point a correction would come in. What would have trigger it off was always difficult to see but something or the other happens and the market corrects after this kind of blowout moves.

I think one thing is that the situation does not look good but the situation never looks good when the market goes in for a correction. There are always two-three factors, which could become really bad going forward and then the market always looks down which is why it corrects.

But in the context of this rally while not suggesting that the market will not correct significantly and there could be a significant fall even from here; I think a lot of people should see it as an opportunity because many people are under invested, lot of people have not been able to catch this move, people have sold out early.

I think this fall should come as a heaven sent for a lot of them and I think that’s the better way to approach the market that this market for the third time this year is giving an opportunity. It is turning back once again; it’s letting you enter instead of running away all the way to 21,000-22,000, which could have been one possibility too.

There is more than a silver lining to this fall; the fact that this correction will bring down prices to levels at which one can buy with a fair degree of margin of safety, which one could not even one week back.

I think that’s the best way to approach this fall that one have got another opportunity to buy into this market and I do not think that either the P-Note factor or the global correction is signaling in anyway, the end of the emerging market or end of the India bull market for sure and that’s important to keep in the context of today’s morning opening because once we open 400-500 points down, everybody starts panicking but these are falls, which are probably opportunities rather than sessions for panic.