Q: In the time being, do you sense bottoming out in any terms on market because you have seen that the Shanghai Composite, for example, which usually has been a bit of a leading indicator, has bounced back from lows of about 2,600 to 3,000 plus. Any sense of a bit of bottoming out or do we have more correction in the offing?
A: No, not at this point. I am looking at the global index. The Morgan Stanley Capital International Global Index based in dollars and that is still on an intermediate sell signal.

Q: What about the Indian indices? Are they also still in a downward spiral or is there some kind of bottoming out there?

A: I do not see much difference between India and the rest of the world. If you look at the intermediate momentum on the Nifty, it is still overbought and falling. The short-term momentum is still falling but it's on a neutral level. So, I would like to see these momentum indicators turn up. At the same time, I don't see the Nifty falling below 4,000–4,100. That's where the long-term averages are.

Q: And where do you see the supply zone on Nifty?

A: The resistance back at the recovery high which is at about 4,800–4,900.

Q: Some months back you spoke about how these large stocks were seeing a sideways sort of pattern in their mid-term indicators, have they turned down at any point in time? Have most of those indicators conclusively turned down at this stage?  

A: A lot of them have. One of the things that I am watching is brokers because brokers discount the markets, just the way markets discount the economy. The brokers make their money when the market goes up because there is quite a lot f commission from IPOs and so forth. And the relative action on brokers is quite weak last two or three months. When I compare it with last March, it was actually quite strong, it led the market up and now it's giving us a warning signal that we need to little bit cautious here.

Q: A lot of the rally and now the temporary retracement we have been seeing has been linked to the dollar. What is your view the dollar index going forward?
A: The Dollar Index has been on a sharp downtrend as you know sometime. Sentiment is extremely bearish which makes me, from a company point of view, going to get a rally. However, we need the dollar index to move above 77 levels in order to trigger that rally that is the previous minor high of the dollar experienced. I think a lot of momentum indicators are falling in line for a major dollar rally. It's like having gasoline on the fire, we have to have the match for the gasoline going; we haven’t had the match which is the break above 77 levels on the dollar index.

Q: Do you think we will get that match because every sort of short covering rally gets sold into because even last week we saw a bit of pullback to that 76 level and then it’s cooled off again?
A: I would have thought so, but I have been in markets long enough to know that I have to let the markets make the decision because they rarely do what I want them to do, so we have to wait and see whether that is going to happen or not.

But certainly the sentiment is extremely bearish. About 10 days ago there were tremendous reports about people going off the dollar as reserve currency and so forth and way the stories are running, you would think the dollar was falling; it was just going down little bit each day. It isn’t anything that serious. So think the conditions are right for rally but we need to get that 77 level on the dollar index broken on the upside for it.

Q: Where does that leave commodities?

A: Commodities have been moving in the opposite direction to the dollar, I believe commodities are in a primary bull market. All my fundamental indicators and momentum indicators are telling me that. So on intermediate momentum basis they are not similar to stock market. So it wouldn’t surprise me to see some kind of intermediate correction take place in commodities which, of course, would be consistent with the dollar rally.