Below is the verbatim transcript of an interview aired on CNBC-TV18.
Q: Yesterday there was some talk around the market and whether or not it could defend its 50 day moving average. Is that an important level and would you be watching that today?
A: Moving averages are normally used only by traders to identify their entries and exits. So, for the broad market, I never watch them and it is not relevant. The supports at resistance levels are much more important and that is where the focus is. The Nifty is doing what it does best; it goes into a huddle and then goes into a narrow trading range. It has done that again.
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The breakdown has not been decisive enough to take only short positions. It could simply be a mild and minor correction, the three day decline that we have seen. It is a bit of confusion. However, there is some clarity on how we trade it rather than what the market will do. The clarity is that the Nifty is now logged in a very narrow range between 5,950 and 6,000. This is a no trade area, nothing to do. If one has short positions, just keep them. Above 6,000, the trend changes and below 5,950, conviction on the short side grows. Therefore, once we have clarity on how to approach the market, things become easier.
Q: You think the down drift continues in Bata India ?
A: Yes, the down drift continues and from Rs 1,000 it has come to Rs 750. That is a 25 percent decline. A bear market is announced when a stock or an index falls 20 percent. So, Bata is not in a bull market now. At Rs 760 it's on the verge of a breaking down. Six days ago Bata had a big upmove and for the subsequent five days it has given up all the gains that it notched up. It has come back to the starting point. That is not a good chart. I think Bata has much more downside. It is not just Bata, it's a question of all midcaps, all momentum midcaps, which are now tumbling down, giving bearish chart patterns. That is one reason why I feel that even if we get a rally in the Nifty, it is going to be either short-lived or extremely narrow.
Q: You have also picked Cairn India from the oil and gas list to go short on today?
A: Yes, Cairn India is a horrible chart. It went up 30 points, it comes down 30 points and it is giving us a no sense of direction.
However, for the short-term traders, the sense of direction is that Rs 320 is breaking down and the next target could be Rs 308 or even Rs 300. It is not a big move but it is a tradable opportunity. Cairn India is a short sell simply because it is now moving in a trading range and as we speak, it is probably heading towards the lower end.
Disclosure: I have no holdings or interest in the stocks discussed.
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