Expect a correction by tomorrow or day-after: Sushil Kedia

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Expect a correction by tomorrow or day-after: Sushil Kedia

Sushil Kedia, President ATMA, spoke about the market outlook. Below is the edited transcript of his interview on CNBC-TV18.

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Sushil Kedia, President ATMA, spoke about the market outlook. Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: How does the trade remain for someone who is working with the Nifty? Is it long or would you get cautious now?

A: For a day trader there is perhaps one more higher close. I think within tomorrow or day after you should see the correction setting in. In the last four days on Nifty, we have seen sideways move within a 100 point band. Typically after markets move out of a range, that becomes an impetus for a lot of traders to go in this direction of a break out and that is actually simplistic. So in that sense that becomes a base for a bull trap. I am not betting on a bull trap formation happening, but that looks likely here. Combine this with RSI making a divergence and now it is starting to dip under it's smoothening 9 day line combined with a number of elite wave counts in a lot of other things. This looks a very high probability zone that by tomorrow or day after, this market is quite likely to get into a correction that has not come for quite some time.

Q: How severe could that correction be? Are you talking just about a 150-200 point garden variety correction or something more meaningful than that?

A: People can end up gardening even within that garden kind variety correction. But I would say about 5070 was where the last significant dip was and should be the minimum anticipation, and then wherever it reverses we will see. So this entire rise has many extensions inside and the wave counts are not clear. Even if it drops as low as 4790, I am not predicting that, then also it will not be possible to predict if Nifty will not come back and test the highs that it may form by today/tomorrow or may even breach them by minor 100 odd points. So it's going to be quite a bit of an open ended both ways trading and a reasonable anticipation for now is about 300 points.

Q: Two heavyweights had a bad week, Bharti was down more than 9% and Hindustan Unilever (HUL) lost nearly 3% or more than that?

A: HUL is something that one is a lot more averse to doing major trades on. It's worked against the market cycle and I will not like to take any major views on HUL right here. It could very well be a case of just one tepid downmove and it could oscillate around here into a sideways band.
Bharti had fallen quite a bit in the last 2-3 days, might go down to about Rs 330-320 area and may again be that noise factor on the Nifty.

Q: Do you track the rupee-dollar chart because that's also staged a bit of a pullback over the last few days from that level of 48.30?

A: The rupee-dollar is very likely, 97-98% chance, to make a reversal and we should be seeing shortly this move, that has started now, going up to about 52. To forecast anything more than 52 is little too aggressive. The fall that came from 54 close to about 48 is what is about getting retraced now and 52 area had a lot of struggle. The dollar index has made a reversal, even the euro has made a large down gap and the closing was lower than the open. So both public and professional interest is in line. Even if one day rebound comes with some kind of news flow from Greece, that's about it.  Even British pound against dollar has reversed. So quite a number of currency in the world have over Friday reversed against the dollar and combined with the rupee reversal 2-3 days ago, it looks like we have a 8-10% odd move possible here.

Q: Do you take a look at Tata Steels chart after that big move on Friday?

A: Tata Steel might move about Rs 500 and it will consider a break out upwards. It can't go up to Rs 550, too late for me to get into this trade and try to predict a 10% move up further. It's more like final burst up phase after which whether it tops out at Rs 520-540, I don't know. It will play it over the next 2-3 days. I want to stick my neck out and say that on the next fall Tata steel will go and form a new low.    

Disclaimer:

The above views are the personal analysis of Sushil Kedia, President ATMA and do not  reflect any opinion of ATMA

To know more about ATMA, please visit http://www.atma-india.net/