Udayan Mukherjee says market to see only tactical rallies unless earnings improve

"We will see whether that is enough or not with the passage of time. However, given this is the government’s thinking, I suspect that there are no major upside to the market purely on account of what the government is trying to do but the bigger question over the last couple of months has not been what the roof over the market’s head is but what the floor is on which it stands today,” said Mukherjee.

He further noted that unless a material pickup in earnings, the market will be limited to such temporary tactical rallies. "The interesting thing about the rally if you can call it that of the last two weeks is that there was cherry-picking in midcaps and smallcaps. I think a lot of stocks, which have got beaten down a lot, we did see a comeback of 10-15 percent in many of those names. Some of questionable quality but some good names as well," he said.

"Whether 10,600 holds or not, more than anything that will happen locally, I suspect it depends on the October outcome because October can be a brutal month or a good month. If for some reason the news out of US-China negotiations turns out to be a disaster in October then 10,600 probably breaks and we seek a lower level. If however, the global markets appear more optimistic, it is possible that we amble along in this range for a bit longer,” he further mentioned.