Udayan@Moneycontrol: Pullback rally almost over, expect volatility in near term

The pullback rally seen over the last couple of weeks may have almost run its course, and buyers need to be cautious hereon, says Udayan Mukherjee, financial markets commentator.

“Around 10,600-650 mark we are mostly done with the pullback rally,” he said, in an interview with Moneycontrol's Santosh Nair.

“I wouldn’t extend myself at this point or get overly aggressive on the market on the bullish front. The market at best now needs to consolidate after the pullback rally. It will probably form smaller trading range for a few weeks,” he said.

Also, the market has discounted the forecast of normal monsoon this year, he said.

While geopolitical tensions have eased a bit, the market could continue to face global headwinds for a while, he said.

“Trade war, interest rates rising globally and increasing crude oil prices, all have the potential to inject more volatility in the global market,” Mukherjee said.

He expects some market turbulence next month around the Karnataka election verdict depending on the result.

In the IT services space, Mukherjee said the stocks may not fall much from current levels.

While growth has not picked up sufficiently, the worst may be behind for the sector, he said.

“The market’s sentiment towards tech sector is that it has bottomed out from stock price as well as growth point of view. But the growth is very anemic so re-rating of the sector may take some time,” he said.

Mukherjee expects the IT stocks to trade in a range with Infosys keeping in the Rs 1,100-1,200–range. He also said dividends from the sector could be quite generous in the current year.

For full interview, watch the accompanying video