Nifty may test 4200 soon: Darashaw & Co

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Nifty may test 4200 soon: Darashaw & Co

The Indian market has started 2012 on a weak note. Regan F Homavazir, chartered market technician (CMT), associate vice president, technical research of Darashaw & Co says, the Nifty may test 4,200 very soon.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Reliance BSE | NSE 29/05/12 Are Mutual Funds betting on Reliance? Other Stocks in this news HDFC Bank | Axis Bank | ICICI Bank | State Bank of India | Kotak Mahindra Bank | Yes Bank | Larsen and Toubro | Bharat Heavy Electricals | Hindustan Unilever | ITC | Tata Steel | Jindal Steel & Power | Hindalco Industries |

The Indian market has started 2012 on a weak note. Regan F Homavazir, chartered market technician (CMT), associate vice president, technical research of Darashaw & Co says, the Nifty may test 4,200 very soon. "That would be our immediate target and 3,800 would be our major long-term target," he adds.

In an interview to CNBC-TV18, Homavazir says, the Sensex should hit 12,800 before any meaningful rally. "We have been taking our shorting stance right from 19,500. We are going to continue taking that stance," he adds. 

According to him, index heavyweight Reliance Industries will surely be a 'buy' at Rs 630 levels.

Also read: Bearish in near-term; Nifty may hit 4400, says Violet Arch Cap

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: We have reached around 4,600 Nifty, what is your next stop?

A: The last three months everyone kept speaking of 4,700 being a very critical level. Below that, there was resumption of the downtrend. We, among the few, had taken a bold stance saying that we are going to go below 4,700, more likely towards 4,200 and 3,800.

Taking that point forward, we have gone below 4,700 and given a pullback till 4,800. Expecting another pullback, I think, would be not technically right. Although there could be pullback, but we will be looking at 4,200 coming very soon. That would be our immediate target and 3,800 would be our major long-term target.

Q: For the year going, if you had to plot the Sensex's chart, would you say it would continue to be a declining chart and this is probably a market to approach with a shorting stance through the year or do you think it is going to be more choppy?

A: We have been taking our shorting stance right from 19,500. We are going to continue taking that stance. Reason being we expect the Sensex to hit 12,800 mark before any appreciable rally comes in because chartically we have deteriorated beyond belief. So, I would say that charts are continuing downwards. We are not expecting a very sharp pullback.

Q: The last attempted pullback was tapped at around 4,800. From wherever we start the next pullback, where would you draw the ceiling for the market now, strong resistance?

A: At best, we would see 4,950. First, for any sustainable short-term rally 4,800 will have to come in decisively. Failing that, I don't think we are going to be seeing any upside meaningfully. We are going to be more stressing on 4,200 coming.

Also, realise that most of the charts, which were once bullish- HDFC Bank , Axis Bank , are starting to deteriorate internally. It is turning out to be a case where each sector is taking a hit and eventfully stocks like Axis and ICICI Bank , which were once very strong, have taken a bashing in the last fall.

The market per se hasn't reduced itself by 5%, but Axis bank from Rs 940 has become Rs 800. We are looking at stocks specifically which are going to get bashed out.