Sudarshan Sukhani of Technical Trends is not very optimistic, as markets have been in the bear grip for long now. The regular pattern of lower highs and lower lows has been persisting.
The earlier support of 3,850 was touched in yesterday's trade but it is not known if that support will hold. Sukhani doubts if in the medium term even 3,800 will hold. And once this level breaks, there will be a freefall till 2,650, he said.
He suggests that investors should hold and not trade in this market. "Please do not dabble in stock futures, these are designed to draw money out of your pockets," he said emphatically.
Excerpts from CNBC-TV18's exclusive interview with Sudarshan Sukhani:
Q: What about the market?
A: I do not think I am very optimistic about the market. We have been in a bear market for long and that’s something I have been saying and we have seen the regular pattern of lower-highs, lower-lows. Last week we tried to rally; we stopped at 4,200 could not go up to 4,350-4,400 which was the earlier high, that pattern seems to be persisting. Yesterday we stopped at 3,850 which was a support earlier. It’s anybody’s guess how long we are going to stop here and try to find out if this support holds.
In the medium-term, I doubt if 3,800 or 3,850 will hold. Once this breaks, we have a free fall in the sense there is nothing to hold the market till 2,650; it doesn’t mean that the Nifty will reach that level, it simply means that we have no measure of saying the market can stop here; the market will then decide where it wants to stop. In such a scenario, buying is not a good idea and it’s much better if the investors hold on to their money and wait for better times that’s going to take some time coming.
There is suggestion not to dabble in stock futures; these instruments are designed to take money from your pocket, stay away from them.
Q: How do you trade the metals now? They looked good for a couple of days and they collapsed yesterday. How would you approach them for trading?
A: I would simply avoid them; they looked good for a couple of days. Hindalco was never on my radar, but Nalco was certainly saying, and Sterlite, that something could be done. But the broader market continues to be down therefore buying opportunities need to be evaluated very carefully and the market is not justifying any kind of buying anywhere.
Metals, my impression is, are going to underperform the market, which probably means they will fall much more. I had earlier made a suggestion that Hindalco is probably looking at double figures and I think I hold on that view.
Q: Would you buy this pullback 30-points higher on the Nifty? Do you think it will go higher or is it too dangerous a trade?
A: I don’t know if it will go higher, but it’s too dangerous a trade. This is now a a mini dead cat bounce in intra-day. So I don’t think we should be trading these rallies. If the Nifty goes 200 points up, then pulls back and begins a second move, that’s the time to buy. I wouldn’t trust this - I mean it could do anything, but I would not buy them at all.
Q: At the start of the series we were playing for a bit of a rangebound market. On a medium-term basis now, what are the levels that get thrown up on the Nifty?
A: Support is at 3,850, which is where we stopped yesterday and hopefully we will stay above it today. I don’t know but that is the range 4,200 and 3,850. Now if 3,850 breaks, I have no support levels on my chart so this is the trading range 4,200 on the upside, 3,850 on the downside, we could as well bounce inside it. If we don’t we will see what the market does.
Q: What do you see on the sugar charts now?
A: It's one of those rare sectors that suggests there is a bottoming out process going on and investors could as well take advantage of the current prices even today and say, “I am going to buy a small lot.” But if prices fall further and then stabilise, add to your positions. I think sugar is probably now like fertilisers going to go on its own bull market and that’s a cheering piece of news because there is something we can probably buy.
Q: What happened to the good old bear market rally because bear markets have those great rallies as well? One doesn’t seem to be materialising. When do you start playing for that?
A: Don’t start playing; it’s a matter of great worry. Here is a bear market that’s fallen 1,200 points without giving us any kind of relief rally except for 100-200 point moves and they are also sometimes gap up.
What's momentum telling us? Momentum is telling us that there is so much selling coming in the market; the market is not able to review even the smallest, and the slightest, that’s a cause for worry. I think this market will fall more than we can imagine and the bear market will last in time much longer than we can visualise. It’s not very cheerful news but that’s the way it pans out now. The rallies are missing completely and that’s giving us a message.
Q: What are you doing as a trader and investor right now? Are you trading less, have you moved some of your investment portfolios to cash as well for the moment? How have you approaching the next 6-12 months now?
A: When the Nifty was at 5,500 and there was a sense and I had explained that there is 1,000-point vacuum, at that point I had moved a lot of my investments into cash. So in that sense personally I have invested a small amount in terms of percentage, but at 4,400-4,500 when the impression was that this market is going to bottom out, it cannot go below this like most other investors and traders, I did take some long positions and almost all of them resulted in losses and had to be cut. So at this point I am not taking any chances of buying; there is no sense in buying as a position trader. As an intra-day trader, I have a lot of computerised systems that keep on buying and selling and trading and doing small trades but there the volumes have come down.
Disclosure:
I have delta neutral positions in Nifty and investment in shares.
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