Play with low exposure right now: Orpheus Capitals

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Mukul Pal, CEO, Orpheus Capitals said it is a very tough time for a trader to get in and stay there, because the real money is made when you stay there, as 5-10% moves that happens just overnight is really not sustaining.

 

"So, play with low exposure now and maybe see for markets to hold and then come with a real exposure," Pal said.

 

Here is a verbatim transcript of the exclusive interview with Mukul Pal on CNBC-TV18. Also watch the accompanying video.

 

Q: Take us through the technicals of the Nifty at this point in time. What would be the resistance levels that it faces? What kind of support levels will you be comfortable with, is 2,900 a very strong resistance, or is 2,700 reasonably a very strong support level?

 

A: Markets rarely make a V-shaped rise, so this basing might take some time. So it may retest these lows but, 3,000-2,900 are key levels for us to get a first signal that, yes things have turned.

 

Q: What would you do now for slightly shorter-term trader maybe of a couple of weeks view, would you take profit at current 2,850 level or would you short?

 

A: The short-term trader knows that one who trades on future, there is extreme gapping happening on shorter time frames. So this is a very tough time for a trader to get in and stay there, because the real money is made when you stay there, as 5-10% moves that happens just overnight is really not sustaining. So, I would tell them to play with low exposure now and maybe see for markets to hold and then come with a real exposure.

 

Q: If you have to differentiate between developed and developing markets, what phases of this bear market are we currently in, in terms of a base formation and how much by way of downside do you see for the Indian markets for some of the developing markets, the S&P 500 for example?

 

A: You cannot connect those advanced economies with what we are seeing here. These are more volatile markets that we are in and the structure of the market is not same as in US or other indices. Therefore, these bear markets that we are seeing now is of another structure, say a cycle or something not same as what the S&P will see. So we see more volatility here now, then what we have seen in Dow, as the whole mess is in US, but there si been correction more in emerging markets. So this is some volatility, which is not going to be in sync. We have to complete some time frame because bear markets are not just about price, but also about time.

 

Q: How would you look at the near-term bottom that appears to have been put in place 2,252- 2,250 mark, is that a bottom that will hold or do you think that could yet be tested anytime soon?

 

A: Retest can happen, but 2,200 and 2,000 prices are very important. They are not only important when we see the cyclicality from 2000 onwards, but from 1990 onwards these are very key prices which would hold.

 

Q: A word on the commodity space as well, especially crude - what are the levels you are looking at and is USD 60 per barrel a pretty strong support level?

 

A: The same thing happens with oil, because oil started falling sometime in July and as it is not just about price, it is going to take time. So we expect oil to test, stagnate and stay around these levels or may be to go till USD 50 per and only then take a bounce back or relook at the trend by somewhere around Q1, Q2 and 2009.