Sudarshan Sukhani of Technical Trends said the market was nearing its significant support area of 3,600 and 3,800 on the Nifty. He however added that momentum was on the downside and it would be advisable to not initiate traders either on the short or on the long side. “This is not so surprising when we view it in context of the upmove, we went up from 2,500 to 4,700, a lot of people like me said that this looks like an intermediate top, we cannot go up indefinitely. This is simple common sense that we forget time and again. This market will end, this decline will also end, we just have to wait for the market to tell us where,” Sukhani said.

Here is a verbatim transcript on Sudarshan Sukhani’s exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: What was that move at the end of Friday? How do you add that up and today’s move? Do you think the shorts think the markets are starting to go down or do you believe we are starting to form some bottom? How do you read all this right now?

A: We are not starting to form any bottom. Right now, the Nifty is 75 points lower than Friday. How can that be the building of a new base? It is falling. Momentum is on the downside, what seems to have happened on Friday — and this is just a conjuncture — is that the weak bulls and the local operators who were holding on and trying to defend 4,100 finally gave up. A massive bout of selling came, which pushed markets down. The trend was already down. We were already below 600 points from 4,700 peak — that is a down trend. This is not so surprising when we view it in context of the upmove, we went up from 2,500 to 4,700, a lot of people like me said that this looks like an intermediate top, we cannot go up indefinitely. This is simple common sense that we forget time and again. This market will end, this decline will also end, we just have to wait for the market to tell us where. The massive waterfall decline tells us that there is pain left in the market.

Q: For someone to make money on this pain, it would be a short-selling call even now, what would be the stoploss on the Nifty?

A: No, it is no longer a short-selling call because this market could stop here. We are very close to significant support levels between 3,600 and 3,800. There is no sense in going short and seeing the market decline just another 50 points. When we spoke last time, we were at 4,100, there was a visible short call there but that is no longer available. The markets could still fall but a trader would incur higher risk. So at this point, I would say there is no trading opportunity: you should not go short and certainly not go long.

Q: What is giving you the encouragement or the feeling that we could be perhaps bottoming out in 50 points and that is why it doesn’t make sense to short at this juncture? What gives you the confidence it won’t be further waterfalls?

A: There is no confidence, this base was visible before Friday’s decline, before today’s decline. The Nifty has a significant support zone between 3,600 and 3,800. Any decline should stop there or earlier or in that zone.

Q: The issue with the chartist is you have to look at a level and then decide whether the next we are hitting a support or a resistance. As we stand here, where are the next levels of support which means what kind of a range are we in and if we break through that once again, upwards or downwards, can you give us those levels on the Nifty?

A: When we look at levels, we don’t say the Nifty is going to reach there. It is not necessary at all. The point is: if it reaches 3,600-3,800, there would be a buying opportunity provided the Nifty doesn’t fall further. So to your question, if the band between 3,600 and 3,800 stabilizes, it will give us a good buying opportunity. Further shorting would happen if 3,600 gets broken — then we are in for a freefall. There is nothing to support the Nifty till 3,100, though I don’t think that will happen.

Q: Will you short in any stock?

A: At this point, I think the short opportunities are very minimal but if at all, real estate still has significant decline. So on any rally, real estate is a short-selling candidate, so are metals.