See Nifty resistance at 4450 levels: JM Fin

Q: What is the medium-term picture looking like on the charts, is it looking like what people are calling a bear market rally or a rally in a downtrend or any chance of a change in trend that you see there? 

A: This could be a change in trend because 12,500 was a very important technical support based on the medium and the long-term charts, and the fact that we have reversed from this level of 12,500, I would not rule out that reversal.  

But at the same time such downtrends don’t end so easily. It is better to give it another 2-3 weeks, there could be a retest of the recent lows and the retest could be on the account of the V-technical set up of another emerging markets. But all said and done, 12,000-12,500 looks like a major support for this entire downtrend that began in January and if you have to buy close to that or even at current levels or if you have to take a 12-18 months call you really cannot loss money. So investors can stay Put, one should not be in a hurry to book profits but from a trading perspective exit with an idea to buy back lower. 

Q: If the market manages to cross that 4,450 mark though, what kind of trade do you open up? Do you wait to see the next move for the Nifty or do you start looking at opening up a short position? 

A: We had initiated a short-term target of 4,300 in our reports on July 20. So we are advising our clients to exit trading positions in today’s trading session, even though 4,450 could be surpassed given the kind of momentum, which the market has and the fact that you have positive news flow coming on the political front.  

So in case 4,450 were to get surpassed on a closing basis, the next resistance area is only around 4,650 to 4,700. But that is not going to happen immediately because 2,000-points on the Sensex, 500-points on the Nifty is pretty huge. You have most of the technicals studies extremely overbought at this point and this is a market, where bad news comes out of nowhere. So this is a time to be a bit conservative and look to take profits around 4,450.  

A: If it has to happen it should be in the next 4-6 weeks. There is no confirmation that it has to get back to its lows but it is a possibility because most of the emerging markets - if you look at the technical set up of markets like Hong Kong or a China or a Singapore, they are still close to their March lows, whereas we have reversed from March 2007 lows. India clearly under performed its making up for its underperformance and the technical set up of the emerging markets is not great, so if they were to correct 5-10% from here, India might retest the recent lows. So if it has to happen it would be in the next 4-6 weeks, but I wouldn’t rule out a 700-1,000-point retracement before we begin the next leg of the uptrend.