With blockbuster set of events lined up in the day, Sushil Kedia, President of ATMA tells CNBC-TV18, the triggers are likely to give a window for large chunk of intraday calls. However, he holds that the 'larger' sentiment remains that the market is on the way down.
"At 5300, it is a safe level for the market to find a support for a rebound. However, until the market hits 4,700, there are a set of corrections lined up," says Kedia. On the rather brighter side, he sees the market finding a new high in the later part of the year.
On the IT sector frontrunners, Kedia says. Infosys and TCS is going to fall along with the market, though not too low. Commenting on the metal space, Kedia sees "collapse" for stocks like Hindalco and others.
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Below is a verbatim transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee.
Q: We went to 5700 plus, but this morning will probably have retraced a couple of 100 points from there as well. Do you think the tide is turning or is this a buying opportunity from a trading perspective?
A: The tide has clearly turned. Even within that, while the trading range now is finding support until it breaks close to 5300, given last two days it has come off one way and again there will be a gap down. So in the perspective of last two and a half days odd, we would be really opening in oversold territory for the hourly charts and for the intraday traders. Given a lot of events during the day, there can be strong intraday noises, large jumps intraday. Whether they will come, those will be the great opportunities to short.
So while the broad call remains that we are sliding down from here, its still not going to be easy to get on to any meaningful sized trades. There will be some degree of luck required.
Q: What is the downside risk present at this point for the market because of what you are seeing with global downward momentum?
A: 5300 is a safe number as a forecast for one to say that that area is likely to find some supports and some meaningful tradable rebounds from. But for a decent amount of time ones mind has been pegged on to downside as deep as 4700 and perhaps more realistically 4900.
This huge up move that we saw recently is less of any kind of smart buying, its all conjectures and guess work, whether its hot money coming from ETFs or wherever; money will keep coming and going from various sources. But looking purely from trade perspective, typically we classify markets as overbought or oversold and in some rare circumstances people do talk about under bought and undersold markets. What keeps happening most of the time and we very rarely talk about is price mark up phases. There were so many sectors and stocks so deeply oversold that there was really no fun really selling them down further. Banking, IT, the autos - everything got marked up with very little of frugal participation.
From here on I think very humongous amount of massive short selling should come. Chances are until 4700 breaks this should be the final round of correction that has been going on for last five-six months. 4700 breaks, one abandons that also. But until that happens, prospects for new highs and much more to come towards the later part of the year remains intact.
Q: How are these two sector indices looking now, CNX-IT and bank Nifty?
A: Bank Nifty has sort of rallied strongly in the interim rallies on the Nifty, much more strongly. Now I think this is a final leg of the fall that is very likely opening down and maybe this will collapse all the way down to 9,700 on the bank Nifty in layers.
CNX-IT, I am looking at a secured sort of bottom to form around 5,500. That is way deeper than the last lows we saw and within that context, Infosys perhaps goes down to Rs 2,500, TCS goes by another 15% lower than its last low. So these two are like going to fall along with the market but seems like a final fall.
Q: The body blow has been coming to metal stocks over the last two days, things like Hindalco , Sterlite , what do you see on those charts?
A: Collapse, I see a collapse on those charts. Hindalco, I think next target could be about Rs 140. Sterlite has been gloriously trading between Rs 160 and 190 band for a very long and Rs 174-175 turns out to be a fulcrum it did not breach at this time. I think the next round of fall, Sterlite will perhaps break that lower end of the range, Rs 163-164 also should not hold and maybe it will go down to Rs 150 this time.
Q: What's the best way to approach the dips? If we do get a 50 point kind of a Nifty dip, would you buy that dip as a short term trader or are you looking at shorting opportunities on any early morning rebound?
A: The temptation to buy an oversold market is always there. But if I look at the broader perspective of 15-20 days kind of a timeframe and a kind of potential damage, then trying to get gutsy and try to suck nickels by trying to play for a rebound or 50-70-80-100 points is looking to be very dangerous. Sometimes to just sit out for a few hours and do nothing and wait for the rebound to sell as you are not lucky and you are not getting that rebound and you end up selling lower and still that rebound comes.
So the way to play this is - phase out your bets, place your bets in a slow staggered fashion rather than having very large trades and very stops because its going to be noisy. Its going down and predicting every turn and move is not wise, cant be done. So keep some space for fighting any counter trend moves, but the broad trend is down. If rallies come, get more aggressive in selling. If breakdowns come, sell in smaller pieces but broad idea is to sell, not to buy.
