Nifty to free fall to about 4,850, even 4,700: Mohindar

The short-term trends are all pointing downwards. One should continue to play on the short side in my opinion and getting towards 4,800-4,850 would happen on the Nifty, he adds.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: Do you see more downsides technically or some kind of basing around this 4,950?

A: In fact last week itself I mentioned that this break below 5,150 is not going to auger well and I expect the market to free fall to about 4,850, even 4,700. I think the market is in a severe bear grip and will probably continue to do so. I agree with that rebound philosophy because we have seen for six-seven days in a row now with fairly savage cuts so that cannot be ruled out but its very hard for one to pick out precise rebound points at least on a technical basis.

What we really need to understand is the intermediate trends. The short-term trends are all pointing downwards. One should continue to play on the short side in my opinion and getting towards 4,800-4,850 would happen on the Nifty. If you look at the externals where I look at the rupee factor, whether I look at the overseas market, there is a sense of weakness overall and the overhang will come here.

Q: What would you do with names like JP Associates, GVK and GMR which have been the weak ones in the infrastructure related space?

A: They continue to look weak to me but selling at this level after 15-20% cuts in just a matter of two-three days is a tough spot to be in clearly because the risk-reward ratio won’t justify it. So I won't really enter fresh short positions. I think the next 4-5% on the downside should be used as a point to definitely get out of the short positions if you are already in them. All and all, I would really like to stay away from the infrastructure names.

Q: A word on two heavyweights moving in opposite directions - ITC and Reliance?

A: ITC is really a defensive play and even now the long-term trend on the stock looks good. So probably it could add 7-8% from here. But I’ll really be unwilling to get in at these levels. This is a point where people have already gotten in, they want to hold on, look for the next 6-7% and if they are traders that’s were I’ll look at getting out.

Reliance interestingly has a very interesting level Rs 685, the 2012 bottom really the 52 week low which is there. If Rs 685 breaks down we are obviously once again looking at a very sharp correction. If I recollect correctly a similar stock which also has its bottom in place is Tata Steel where you can see Rs 415 which is a key level there. Once that breaks down you will again see a good 6-7% down.