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Udayan Mukherjee says market has enough worries, rising on global optimism


"I hope it doesn’t become the new normal that we keep getting quarterly numbers of 5 percent,” said Udayan Mukherjee.

The stock market is in a rebound phase supported by global money flow but, looking at macroeconomic indicators, it is difficult to say that shares can rise further, said CNBC-TV18's Udayan Mukherjee. “GDP growth and earnings growth cannot be delinked beyond a point. Therefore, I think the market has enough worries."
When Q1 GDP growth came in at 5 percent, everyone was shocked including the government and the RBI. Many economists and analysts have projected growth of 5 percent to 5.25 percent for the full year. "I hope it doesn’t become the new normal that we keep getting quarterly numbers of 5 percent,” said Mukherjee.
The market was able to reclaim the previous highs on the back of a global rally, he said. Positive trends in global markets and dollar trades together with an earnings boost has lifted sentiment in the market, said Mukherjee.
Worst is over for Yes Bank
It looks like the worst is over for Yes Bank and that swing low day, when the stock went to Rs 30 probably, was the lowest point for Yes Bank, said Mukherjee.
"It looks more likely that they will be able to raise capital and the last qualified institutional placement (QIP) was bought at a price and then the stock went down much below that QIP offering, but now it looks like there is more than one player who is looking at injecting capital into Yes Bank and if that is done, half of the trouble is over,” he said.
Macroeconomic situation
“I do not think the market reacts to macro news on a weekly or monthly basis. Right now we are at the throws of some kind of liquidity pull and the mood is good on the street. The mood was very bad about a month-and-a-half back and now the mood is better," said Mukherjee.
He said it is difficult to put a finger on what has happened. "Maybe levels have changed, maybe 11,000 held out well and that has given a lot of comfort that a new bottom is in place, maybe around the time of Diwali all the positive talk rubbed off to the market," he said.
“The two questions for me are, given this macro backdrop which we all want to desperately improve. However, which is not improving and only getting worse; in the face of it and you cannot dismiss it beyond a point. Will liquidity and sentiment keep taking the markets higher? Therefore, my base case is that we may have a bit more of an extension of rally, but to talk about a meaningful runaway from here, which is breaking this high and going to a significantly higher high just at this point in time, I think would be once again stretching valuations and not been supported by basic earnings and therefore, I do not see huge upsides for this market,” he further added.
According to him, the macro will come in the way and prevent a major runaway bull run from heron given notwithstanding the current mood and sentiment that we have on the street.

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