It’s been a turbulent week with a battle between the bulls and the bears,” said Udayan Mukherjee, Managing Editor of CNBC-TV18, on his show Bazaar Morning Call.
“That doesn’t mean that the market may runaway to more than 5,000 just immediately but at least for the near term, they seem to have staved off what look like a possible breach of 4,500 on the way down,” he said. “Today can we close out what has been a turbulent week with a green leaf? Today we may build on yesterday’s positive close. It may also mean that we probably have seen the worst just for the moment and we will attempt to get back to that zone of 4,800-5,000.”
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Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18. Also watch the accompanying video.
Q: In retrospect it would have been a good thing to close up long yesterday?
A: It would have been. But it was an evenly fought battle yesterday and at the end the bulls came away with more than the bears. However, it was bruising, and today we will probably build on that. So if this means yesterday’s outcome that we probably have seen the worst just for the moment and we will attempt to get back to that zone of 4,800–5,000 and attempt the building of some kind of a trading range then its good news that the market will finally consolidate at a slightly higher level than look likely. But international cues are important. Next few hours we will have job numbers from the US and it’s still quite turbulent there. So let’s see which way we come out of it. But as I said last couple of days certainly the bulls would have taken away quite a bit of heart.
Q: Today the move should be up and hopefully less choppy as well?
A: Yes in the morning we should be up, the world is up. So we should get to 4,800 plus. This zone of 4,800–4,900 to 5,000 is going to be an interesting area to watch because you have come back from the lows of 4,550–4,600 and have put in a nice pullback rally. The shorts would have covered up. Now is the test of whether the market has steam shone of short covering to move higher and climb those walls of 4,900–5,000 yet again. Given how circumstances are globally and locally and what the market has taken away from earnings season this time around, it would lead to some amount of resistance in this zone of 4,800 to 5,000 because of two reasons. One, we are not seeing great liquidity support in the market right now, its on and off and maybe some of the factors in the environment may have turned a little more confusing than the one way kind of winds which we were seeing earlier.
However, if global markets continue to rally up and the dollar continues to weaken, it is conceivable that the market gets back to where it fell off from. But first it will have to cross this zone of 4,800 to 5,000 and I think some questions will need to be answered there.
Q: The move will be seen as positive on divestment but a lot of hurdles remain right in terms of how they price it or whether or not they choke the market or whether there is appetite for a couple of these stories?
A: Yes, all of that but even before that, the interesting bit is the unlisted company which can become the listed company now and there is no great percentage joy in a company’s holding going down from 97% to 90%. That’s like NTPC doing an FPO and the sole beneficiary is the government at that point in time which manages to raise a little bit of cash, that is not a small objective. I think our fiscal situation is stretched and if the government is trying to repair its own balance sheet like a lot of private companies have done through QIP. That is good generally for the economy and also for the market per say. In the near term will it put some pressure because of continuous supply of paper on the secondary market, absolutely yes, but there you try to weigh the near term supply versus the longer term macro benefits then that’s a bit of the zero sum game out there.
However, the interesting bit is can BSNL get listed, can Coal India get listed because these are really large companies which will come into the listed space. But there would be a lot of opposition as well as you saw last time with BSNL and it may not be very easy to push through. The government is doing a clever thing by saying whatever is done from the BSNL IPO or any IPO will go into the social sector. So that mitigates a little bit of that activist feeling which we are likely to encounter when large companies do an IPO.
So short point, marginal on the margin positive, good for government’s fiscal situation and that might have important repercussions as well on other things like tax revenues have been falling. So the government at some point would be wandering when to come out or exit from the loose policy or the sops which it had doled out earlier. Now because of disinvestment flows if that remains less of a pressure to come out of the exit or exit from the policy stimulus, that can only be good at least in the near term to tide over the difficult phase. So in that there might be positive as well. But none of this should be construed as reforms, you feel happy about the fact that the government is fixing its balance sheet.
But it is one thing to stretch it now and say the government is moving aggressively on the reform path, reforms is not lowering government stake from 98% to 90%. A reform is when a government exits the company saying I have no business running this company or the sector. I want to hand it over in a strategic form to other investor, when that is done, that is the day for everyone to stand up and applaud and say we took one step forward in the form of disinvestment reforms. I think we are very far from that.
Q: On a separate note, because the pipeline is going to be this big and its now this visible, there should be more care and caution about how these things are priced?
A: But as you have seen yourself over the last few months, they have never raised CAR and caution. It is like fastest finger first, who ever can get its prospectus ready, goes out and hits the market. Sometimes 2-3 at the same time just try and push it through, doesn’t matter what happens post listing. So people are saddled with that paper 20% issued than the lowered price. I think there is no great thought as such. The private sector probably will scramble more now to get their paper out of the way before the government gets active because in some time in January–February onwards the government will get really active on with its own paper and the private sector is probably feeling insecure about that and saying let me quickly get my QIPs and IPOs through because when the big daddy comes and hits the market, then I will be crowded out completely.
So like in the fixed income market so with the equity market, you may even see the scramble to the door now in January and February when the big BSNL and NTPCs might be.
“That doesn’t mean that the market may runaway to more than 5,000 just immediately but at least for the near term, they seem to have staved off what look like a possible breach of 4,500 on the way down,” he said. “Today can we close out what has been a turbulent week with a green leaf? Today we may build on yesterday’s positive close. It may also mean that we probably have seen the worst just for the moment and we will attempt to get back to that zone of 4,800-5,000.”
Also Read
* See what other CNBC-TV18 anchors have to say
RSS feed for news Click here
SPAN lang=EN-GB style="mso-bidi-font-family: Arial">
Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18. Also watch the accompanying video.
Q: In retrospect it would have been a good thing to close up long yesterday?
A: It would have been. But it was an evenly fought battle yesterday and at the end the bulls came away with more than the bears. However, it was bruising, and today we will probably build on that. So if this means yesterday’s outcome that we probably have seen the worst just for the moment and we will attempt to get back to that zone of 4,800–5,000 and attempt the building of some kind of a trading range then its good news that the market will finally consolidate at a slightly higher level than look likely. But international cues are important. Next few hours we will have job numbers from the US and it’s still quite turbulent there. So let’s see which way we come out of it. But as I said last couple of days certainly the bulls would have taken away quite a bit of heart.
Q: Today the move should be up and hopefully less choppy as well?
A: Yes in the morning we should be up, the world is up. So we should get to 4,800 plus. This zone of 4,800–4,900 to 5,000 is going to be an interesting area to watch because you have come back from the lows of 4,550–4,600 and have put in a nice pullback rally. The shorts would have covered up. Now is the test of whether the market has steam shone of short covering to move higher and climb those walls of 4,900–5,000 yet again. Given how circumstances are globally and locally and what the market has taken away from earnings season this time around, it would lead to some amount of resistance in this zone of 4,800 to 5,000 because of two reasons. One, we are not seeing great liquidity support in the market right now, its on and off and maybe some of the factors in the environment may have turned a little more confusing than the one way kind of winds which we were seeing earlier.
However, if global markets continue to rally up and the dollar continues to weaken, it is conceivable that the market gets back to where it fell off from. But first it will have to cross this zone of 4,800 to 5,000 and I think some questions will need to be answered there.
Q: The move will be seen as positive on divestment but a lot of hurdles remain right in terms of how they price it or whether or not they choke the market or whether there is appetite for a couple of these stories?
A: Yes, all of that but even before that, the interesting bit is the unlisted company which can become the listed company now and there is no great percentage joy in a company’s holding going down from 97% to 90%. That’s like NTPC doing an FPO and the sole beneficiary is the government at that point in time which manages to raise a little bit of cash, that is not a small objective. I think our fiscal situation is stretched and if the government is trying to repair its own balance sheet like a lot of private companies have done through QIP. That is good generally for the economy and also for the market per say. In the near term will it put some pressure because of continuous supply of paper on the secondary market, absolutely yes, but there you try to weigh the near term supply versus the longer term macro benefits then that’s a bit of the zero sum game out there.
However, the interesting bit is can BSNL get listed, can Coal India get listed because these are really large companies which will come into the listed space. But there would be a lot of opposition as well as you saw last time with BSNL and it may not be very easy to push through. The government is doing a clever thing by saying whatever is done from the BSNL IPO or any IPO will go into the social sector. So that mitigates a little bit of that activist feeling which we are likely to encounter when large companies do an IPO.
So short point, marginal on the margin positive, good for government’s fiscal situation and that might have important repercussions as well on other things like tax revenues have been falling. So the government at some point would be wandering when to come out or exit from the loose policy or the sops which it had doled out earlier. Now because of disinvestment flows if that remains less of a pressure to come out of the exit or exit from the policy stimulus, that can only be good at least in the near term to tide over the difficult phase. So in that there might be positive as well. But none of this should be construed as reforms, you feel happy about the fact that the government is fixing its balance sheet.
But it is one thing to stretch it now and say the government is moving aggressively on the reform path, reforms is not lowering government stake from 98% to 90%. A reform is when a government exits the company saying I have no business running this company or the sector. I want to hand it over in a strategic form to other investor, when that is done, that is the day for everyone to stand up and applaud and say we took one step forward in the form of disinvestment reforms. I think we are very far from that.
Q: On a separate note, because the pipeline is going to be this big and its now this visible, there should be more care and caution about how these things are priced?
A: But as you have seen yourself over the last few months, they have never raised CAR and caution. It is like fastest finger first, who ever can get its prospectus ready, goes out and hits the market. Sometimes 2-3 at the same time just try and push it through, doesn’t matter what happens post listing. So people are saddled with that paper 20% issued than the lowered price. I think there is no great thought as such. The private sector probably will scramble more now to get their paper out of the way before the government gets active because in some time in January–February onwards the government will get really active on with its own paper and the private sector is probably feeling insecure about that and saying let me quickly get my QIPs and IPOs through because when the big daddy comes and hits the market, then I will be crowded out completely.
So like in the fixed income market so with the equity market, you may even see the scramble to the door now in January and February when the big BSNL and NTPCs might be.