Nifty to resume uptrend if 4600 breaks: CLSA

Excerpts form CNBC-TV18's exclusive interview with Laurence Balanco:

Q: Is the odds of crude going back to USD 100 per barrel or going back above USD 120 per barrel high?

A: Crude is testing important supports at USD 110-111 per barrel. If it breaks bellow that and hits USD 105 per barrel, it may then go down to USD 100 per barrel levels, which has been a psychological level. However, I don't see a convincing break below USD 100 per barrel. I see a period of rangebound trade above that level going forward.

Q: How does the medium-term picture for crude look? Will it get back to that USD 150 per barrel mark or do you think the top will get scaled down a bit?

A: We only look at the longer-term picture and look at monthly over weekly charts. The longer-term uptrend is still intact. If it does consolidate above USD 100 per barrel, it would suggest that it is forming a base for another attempt at an upside. In the longer-term, I don't think we have seen any severe damage to the technical structure. We see some more downside towards USD 100 per barrel level on the daily charts.

So, USD 100 per barrel is now becoming the next resistance. If we break below that, the next resistance will be down at USD 87.50 per barrel level, but that is not our base case at this point in time.

The longer-term trend on the weekly and monthly charts is still intact and that is not under threat at this point of time.

Q: What's the Indian market looking like on the charts to you?

A: The price section in the Nifty looks choppy of late. The downtrend from the January peak is still intact. At this time, the markets are trading quite volatile and choppy, but it remains in a longer-term downtrend looking at the weekly charts. We need to see the August peak to suggest that we have these kinds of base patterns in place. From a technical perspective, the clear recent peak in August for the Nifty and Sensex is 4,600 and around 15,300 respectively.     

Q: The other surprise has been the currency market. The dollar is at a six-month high against the euro, what do you see on the charts?

A: If the euro breaks below 153 triggered by a double-top pattern, it may give a major target of 146. Over the next month or so I expect to see some consolidation between the dollar-euro around 145-148 levels. So ,we will see some consolidation in the dollar at these levels.

Q: Do you see the Dow successfully breaking pass that zone of 11,700-11,800, where it's been getting stuck for the last few times?

A: There was a long-term downtrend from the October peak, which is a dominant trend in the market. Since the July lows, we have only seen a rising pattern till about 10,700. It's been quite an unconvincing rally. So, the risk is still on the downside and 11,250 is a key support level. To that affect, we haven't seen any real volume. I don't  see any convincing break above the 11,075 area.