Sep 02, 2013, 05.13 PM | Source: CNBC-TV18

Nifty rally to be short-lived; may fall to 5000: Atul Suri

Atul Suri feels that the current rally in the Nifty may be short lived as it is heading to levels of 5,000 in the long-run. The fundamentals suggest that there will be a sharp fall going forward, he told CNBC-TV18.

Trader Atul Suri feels that the Nifty will extend its current pullback to 5,700-5,900 levels in the near-term, but will see a sharp fall to levels of 5,000 in the long-run. "We are in for a short-term spike up and then we may have another leg down", he told CNBC-TV18.

The market has been extremely oversold and is due for a bounce back for the short-term, he told CNBC-TV18. Information Technology (IT) stocks will continue to see an uptrend and the index may revisit the highs witnessed in the year 2000. Pharma pack's performance will also be similar to that of IT, he adds.

Also read: I am positive on India: Rakesh Jhunjhunwala

Below is the edited transcript of his interview to CNBC-TV18.

Q: It has been a hectic and hellish month for you. How are things looking for the market post last week and the recovery in the last couple of days?

A: The last few weeks or months have been difficult as I belong to the camp which thought that the market will get into life time highs. That concept had to be reversed. I use the Dow theory where markets and uptrend make higher bottoms and tops.

We really went out and made a lower bottom which was at 5566 on the Nifty. Beyond that we have entered into down phase. For the short-term, the belief that I had we will get into life time highs, make new highs takes a backseat.

The signs really came from the Bank Nifty. The Bank Nifty has very well worked as a lead indicator to the Nifty.

Just as when one uses a Dow theory in the US, one uses a Dow transportation. I try to use the Bank Nifty. The index went out and created newer lows much before the Nifty did.

In fact, the Nifty was around 5900 or thereabouts when the Bank Nifty went down. What we really got into is a pace of lower lows. The more basic thing was the change in trend where I again recalibrate and redo my calculations. It sets out a target for Nifty around 5020 for me.

We went to 5100 plus but we bounced back. Barring the short-term pullback we would have another leg down and we would revisit those levels. That is my bigger picture as far as the Nifty goes.

However, what I find in the short-term is that we are extremely oversold and we are due for a sharp bounce back. We are already seeing in the last few days because what one really sees is that the sentiment is very bad everyone you speak to, it is in all headlines in the media.

Every one is in a very bad mood in the market etc. Interestingly the equity market has not done so bad in the last one or two weeks. The last two weeks have been large range based. If one looks at it technically, they have closed at the upper end. If one looks at last week for all the poor sentiment we really didn’t have a negative week.

It is also for the week before that contrary to the general opinion, which is very bearish and where everyone is talking about going short. The markets are saying something different in the short-term and the markets are saying they don’t want to go down.

With a lot of oversold readings, I feel that in the next few days or next few weeks the next leg will actually be up. It will be very sharp again, the participation will be very low and sentiment made on one side, prices weighed on the other side, prices will prevail and we may have a pullback.

However, beyond this pullback we will have another sharp leg down which would take us to around 5000 levels but I don’t think things are doing to end or people are talking off like total catastrophe or calamity.

We may take some time, rebasing and finding a base at those levels and then have another leg up. To sum it up, that we are in for a short-term spike up and then we may have another leg down but it is not the end of the world. It is not the end of equities, it is not the end of India that is the feeling that one gets when one looks whether it is international media or one speak to domestic people.

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