Q: Are we still in an established downtrend or is it showing you any signs of bottoming out here?

A: Yes we are still in a downtrend. There were a good amount of declines during the month of June but there were no accumulations. The downtrend that started from the 5100 levels gave of 20% that is 1000 points, straight without consolidation at any levels.

What also happened was that due to the declines, the markets were oversold in the short term basis. They are trading at close to their support levels of 4100, which was the low that the Nifty had hit in August 2007 when the sub-prime concerns first came into light. We are oversold and close to a support, so you might see some kind of bounce back and a range-bound market. But on a long term picture, the trend still remains down.

Q: What would your eventual long term bottom for the Nifty targets be from here?

A: We are looking at levels around 3650-3750 on the downside. The entire up move started in April 2003 with the Nifty low of around 920. From there we went up to 6350, a total rise of 5400 points. So if you take away 2700 points which is 50% of retracement, we come back to around 3700 or 3600 levels which will coincide with the 12400-12600 levels on the Sensex.

Q: Are there similarities though, a lot of the key heavyweights are looking now versus how they were looking in 2007 because there is a lot of grief of how stocks like Reliance have been looking on the charts?

A: I have a slightly different take in terms of the heavyweights. The FMCG heavyweights look very weak. A good round of weakness can come across ITC and Hindustan Lever and these stocks could fall by 15%-20% from the current levels.

Reliance has been on a downtrend. The key factor here is that even an outperforming stock is not falling as much as the indices have fallen so the stock would continue to fall but it remains an out performer.

So the declines in terms of percentage levels will not be as much.

Q: If you do see a pullback from here, on the Nifty which takes us back to 4400 kind of levels, would you continue to go long at those levels? Would you check out if the long positions, would you go short, how would you approach it then if you get a bounce back?

A: If we get a bounce back at around the 4400 levels, it is a good level to start initiating a short position. Our long-term views remain bearish and we maintain our downside target of about 3700 to 3750 on the Nifty. So the 4400 levels would be a good level to start going short. Metals, particularly steel and iron ore have got some downside left. We are slightly bearish on stocks like Bharti, Reliance Communication and Idea.