See further downside in mkts

The problem is yesterday in trade first 4,000 went then we saw 3,900 become a struggle; psychologically it was the big blow:

It was and levels are not particularly important as we have found out over the last few days because I do not think this is the market where the Nifty is trying to cling to any big level for support. So people have spoken about various levels in the last few days but it takes a few minutes for those levels to break and crumble. So all those 4,050-4,030 watchers then 4,000 psychological level then 3,950 it is just not sticking every level is being broken every day.

The only thing that you now need to see is whether we get that technical pullback at some point in time. So around the current levels give or take 50-100 points on the Nifty can the market stage one of those 200-300 point rallies on the Nifty. At this point to conceive anything more than that would be difficult because the fundamental situation is quite bad. But it is possible that you get to 3,800 and then from there you pullback to 4,100 in a sharp pullback that can always happen it can happen over a day or two.

The other scenario is that, no we are not going to get those technical bounces because there is just too much fear in the market and even a modest attempt at an up move will get sold into very viciously and therefore we come back to those 3,500-3,600 levels on the Nifty in one stop. That could happen as well because for the last three days I do not think the market is behaving in a rational way. It is one of those completely climactic kind of falls which is happening so in this kind of irrational environment and the fact that fear has overtaken greed completely you might easily not have those technical bounces as you have not over the last few days and go back all the way down to 3,500-3,600 Nifty, which would be a sub-12,000 level for the Sensex.

Is it distressing? Absolutely it is. Is it impossible? Not quite, anything can happen in this kind of a market environment. It is difficult to say after having fallen so much whether we get a small bounce or we do not. My sense is that there are too many people who are waiting for that bounce to pounce on it once again, to try and hammer the market even lower. So even if you did get that bounce, I do not think people will be sanguine enough to say that the market has bottomed out finally and they will see for what it is which is a technical bounce and this is quite pointless talking about valuations and stuff because we have been talking about great value in many stocks for a long time now but we have to be realistic; the market became terribly expensive once it crossed 17,000 on Sensex. It did not stop till it went to 21,000-22,000 regardless of very expensive valuations. So we should not kid ourselves that once good value has emerged in many stocks, immediately the market will stop falling. Now technicals are into play and that is typically what you should be respecting here.