Nifty is still in a corrective mode: cashthechaos.com

Also read: Neutral on India, HSBC sees Sensex at 18,700 by year-end

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

Q: How to approach the Nifty now?

A: It is not time to open the champagne. The market is still in a corrective mode. If you look at the market from the February decline of 5,630, it took about 72 calendar days to come to 4,770. Now, we are at the 78th calendar day from 4,770, the low it made in June. So, if the market were to be in a trendy upward fashion, it should be breaking 5,630 in the next two days. That is roughly about 300 points a day. That is going to be impossible. The bottomline is that this is just a corrective price action in the broader perspective. So, do not get too excited about what is happening in the rest of the world.

If you look at the global markets, if you look at the Dow transportation index, it is way below 2011 highs. So, even that saying the US economy is not recovering. If you look at the regional banking index in the US, that is again below 2010 highs. So, the market is actually very well fractured. It is not the time to rejoice the upward move.

If you look at the Indian markets, the bank Nifty is way below the August highs, whereas the Nifty is very close to it. The market is saying that there are a lot of fractures within the internals of the market. So, do not get excited about the market. Treat this as a corrective move, play this for the extreme short-term and without getting excited. Once the market starts to crack, be ready to book your profits or even small losses.

Q: You have a buy on Asian Paints for the day, can you tell us about that?

A: That is true. Asian Paints has been one of the strongest stocks, even if you look at it from the multi-year perspective. It has been trending in a very strong fashion with higher highs and higher lows. The corrections have always been in a three-step fashion. I think there is one more last push that is possibly going above Rs 4,100 high made a few months ago. I think if we can place a stop of about Rs 3,600, we can aim for the stock to rise to about Rs 4,000. It is a conservative trade. It is a 1:3 risk-reward ratio.

Q: You have a view on Reliance Infra for the day, can you tell us about that?

A: If you look at the stock, it is trying to clock higher low above Rs 417, it made a several months ago. This is looking like a good move for the extreme short-term. I think a little bit of short-term downside is left. So, if we can place the stop below Rs 425, you can expect the stock to arise to about Rs 505.