Daryl Guppy sees strong support for Nifty at 4600

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS How will cap goods, autos, realty, telecom pan out in 2010? Motilal Oswal's portfolio picks ahead of Budget ALSO READ See what other FIIs are saying about the markets See what other experts are saying about markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

The market, Daryl Guppy of guppytraders.com says is likely to move sideways for the next few weeks with the possibility of testing key support levels. He sees strong support for the National Stock Exchange's 50-share index Nifty at 4,600 and resistance at 5,150. "I expect to see some more weakness at the Nifty."

On the Dow Jones, he sees 9,500 as the support level and 10,200 as the resistance level.

Shanghai, according to Guppy is still in a bullish trend only if it holds 3,000-"This remains a key pivot point for the Shanghai Composite".

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

Q: First a check on Nifty, which has been through a turbulent phase last week. Is it stabilizing around 4,900 or would you expect to see more weakness?

A: I expect to see probably more weakness. What we are getting is some stabilization developing in global markets. The trending momentum has stopped and now establishing is a broad trading range. So for Nifty we can look at a downside target around 4,600 and resistance sitting around 5,150. So we have this variation within this trading band.

Q: Where do you see strong supports for the Nifty and the Sensex now?

A: There is reasonable support for Nifty around 4,600. Sensex is slightly different. There is a reasonable support level sitting at around 15,500 but starkly the stronger support level for the Sensex is sitting down at 14,500. We still have got some room to move downward for the Sensex. But the key factor in both these markets is this development of this potential broad trading range, which is an end to the trading momentum that dominated 2009.

Q: Our markets are watching the Chinese market very closely because the Shanghai Index has been one of the weakest this year. Any threat of a breakdown happening in the Shanghai Index?

A: The key factor for Shanghai index was break below the 3,000 level. Market is retesting that level at the moment. If we can hold that level then we still remain in bullish environment. With the Shanghai market, we have again seen this decline in trending momentum and its replacement with sideways range trading behaviour. This may be become a dominant feature for March 2010 - this ranging behaviour rather than trending behaviour. That changes the way we trade markets.

Q: What about the S&P 500? What kind of levels are you watching there and any signs of a breakdown on either the Dow or the S&P charts?

A: They are both breaking down and the key factor to watch with American markets is probably the Nasdaq. But if we look at Dow for instance, the important factor is that 10,200 is the resistance level from a technical perspective - 10,000 is simply a media figure than the actual resistance level from a technical perspective.

The support level on the Dow is around 9,500. We have to be careful that we don't mistake volatility for momentum and the volatility we saw on the Dow last night with a 1.5% move is still within this broad trading range. So we are looking at the support of 9,500 to be tested with the Dow.

Q: How would you plot the near-term for the global markets, do you think we would play for a pullback after the deep correction we saw last week or might markets remains subdued and sideways?

A: We are likely to see markets remaining subdued and moving sideways with a potential to retest their nearest support levels, which is differ in variety of markets. The key factor is loss of momentum and development of broad trading ranges. That means we have to now start looking for rally trades and fast retreats.

Q: And how are you mapping the dollar, which sort of just snapped its upward streak last night?

A: It certainly snapped its upward streak but with the dollar index what we can see is a long-term uptrend that has developed. It was tested back towards the end of 2009 and then again a few weeks ago, so this gives us an up trending line. The key factor with Dollar Index is the increasing volatility. So we again have to learn how to hedge our counter exposure much more dramatically in 2010. Look for fast moves probably back towards 80 before a genuine retraction in the trend.