Nifty may slip to 5000 if 5270-5265 gives way: Jai Bala

Below is an edited transcript of Bala's interview on CNBC-TV18. Also watch the attached video.

Q: What's the Nifty shape looking like from this level of 5300 onwards?

A: When I was here couple of weeks ago, I had said the 5340-5400 area is going to be where the markets going to rollover to the other side. The markets hit a high of 5349 on July 10 and it has started to come down at this point in time.

The market is presenting a low risk shorting opportunity here and if the markets head below 5270-5265 today, I think the chances of a sharp correction is quite high. I think you could see even something like — where the breakout started to occur, the base of the breakout was about 5000, and market can even go below that level at this point in time if the market were to go below 5268-5270.

Q: Any thoughts on some of these IT stocks?

A: The structure for Infosys is a bit dicey for the short-term but the medium-term outlook is quite clear. Whether or not today the stock goes for a pop up or comes down, I think in the medium-term, the stock is bound to come down to about Rs 1900 levels. So you may play that accordingly.  There is a huge gap between Rs 2700 and Rs 2500 for Infosys, probably, it could bounce to that level and come down or can straight away come down. That’s very difficult to predict at this point in time because it’s a complex correction.

But if you look at TCS , it's got maximum of about Rs 100-150 upside. It has satisfied the minimum condition required to finish the ending wave. So, here again if you are already in the money its ideal to take profits and stay neutral on the stock here.

Q: For the market, who would you chalk out or mark out as the leaders now? Would you still watch the banks or is it a different sector?

A: I think L&T is the make or break for markets. If the markets are going to go high, L&T has to prove me wrong and its got to head above Rs 1500. But if you look at the correlation between L&T and Nifty for the last six months, it's been almost like very similar pattern. So if L&T were to breakdown, I think all the bullish hopes for the market is gone and banks are nearly at the end of their corrective rally.

I expected the Bank Nifty not to exceed above 10,690 but it overshot that. The next resistance comes in about 10900.