Vijay Bhambwani of bsplindia.com said the markets are showing a sign of strength after a long time. He told CNBC-TV18 that 4,450 should be treated as a base at this point of time.

He said that today’s rally is an early sign that the market may establish a bottom. If the market maintains levels above 4,750 consistently, it would reassure players that the market intends to go up.

Bhambwani added that if the markets maintain levels above 4,775-4,800 from hereon, it would start to build an upward trajectory, which will take it to 5,050 to 5,100 in the coming weeks.

Excerpts from CNBC-TV18’s exclusive interview with Vijay Bhambwani:

Q: Dealers are looking at a near-term level of 4,954. How are you reading this move?

A: The markets are clearly showing signs of strength after a long hiatus. I think 4,450 should be treated as a base at this point in time. Should the markets actually maintain levels above 4,775-4,800, from hereon it should start to build an upward trajectory, which should take it all the way to 5,050 to 5,100 in the coming weeks.

Q: The leadership that we have seen coming in from the technology pack, how would you approach it?

A: These stocks were pretty oversold even on the weekly charts. So, what you are basically seeing is these stocks playing catch-up with the market. In the coming week too, you should see technology stocks actually trying to attempt scaling their channel tops, which they were trading into.

Q: In the midcap universe, we have seen a very broadbased rally. It is good to see the kind of strength or buying that is coming into these pockets as well. But the kind of drubbing that the midcap and the smallcap index have seen, what is the call on these?

A: These stocks are typically the first to take a hammering because most of these counters tend to be high beta stocks and tend to fly all over the place. These stocks will actually start to perform the last because the first round of buying will come in from stronger hands and then concentrate on the index heavyweights and frontline counters.

The midcap index is also a barometer of the retail risk appetite. Right now, I don’t think retail has either the will, the courage or even the firepower in terms of financial muscle to actually start buying in. So, you will see a lag effect. The midcap indices will play catch-up with the market at a later date.

Q: Do you think today’s rally is signalling the end of the pain or not quite yet?

A: Yes, these are early signs of the market establishing a bottom. Should we maintain levels above 4,750 consistently, it would reassure players that the market intends to go up. From hereon, one should see shorts getting squeezed and fresh long position getting built-up.

Q: Do you think we can carry on with this work and get above 5,100 kinds of levels?

A: A lot of work needs to be done and that work will actually mean building up fresh long positions. Yesterday, we had approximately Rs 65,000 crore in open interest. I would feel happy and am convinced that it Rs 1 lakh crore will again become a reality in the near future.

You will see a whole lot of buying coming in and momentum building up, once you approach Rs 80,000-85,000 crore of open interest in the markets. That will happen in the month of April itself and possibly in the first two weeks.  So, we are creating momentum and this is the first stage of a new upmove. 

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