Nifty may hit 4900, Re can touch 57: cashthechaos.com

The picture is very negative for the market, says Jai Bala, chief market technician of cashthechaos.com. “The market went into a very compressed range of about 190-200 points in the whole of April. Now that range has actually broken down on the lower side. So, the minimum move for the market is going to be the height of the consolidation, which is about 200 points for the lower range of about 5,135. So, it’s working to about lower range of 4,900 for the Nifty,” he explains.

According to him, the rupee can touch 57 mark.

Also read: Don't short Nifty now, advises Sudarshan Sukhani

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

Q: How bad is it looking this morning for the Indian charts?

A: It’s always been looking bad. The only doubt was whether the market was going to decline in the short-term, was it going to take a path higher and then decline or is going to take the path lower straightaway? Now that has been clarified.

The market went into a very compressed range of about 190-200 points in the whole of April. Now that range has actually broken down on the lower side. So, the minimum move for the market is going to be the height of the consolidation, which is about 200 points for the lower range of about 5,135. So, it’s working to about lower range of 4,900 for the Nifty.

If you also look at the currency markets, which I have been highlighting quite regularly, the rupee is unlikely to get to 47-46 levels for a very long time. The rupee is also looking like it’s going to go to at least 57. This is what I had said even when the rupee was quoting at about 45.

The rupee is now clocking all time lows against the Singapore dollars, it is at a 4-year low against British pound and a lifetime low against the US dollar is certain at the moment. So, the picture is actually very negative for the market.

Q: The big problem from last week is the bank space, the bank Nifty closed down 4% last week. What kind of levels would you watch there? is that index looking like it has got further pressure coming?

A: The 9,800 on the Bank Nifty is very important. If you look at State Bank of India, the highly awaited stock on the Bank Nifty, has actually broken down. Now, the critical level for SBI is going to be Rs 1,930. If SBI breaks Rs 1,930, it’s going to come down to about Rs 1,600 odds. So that is going to be critical. If that dips below that level, you are going to see the Bank Nifty get dragged to much lower levels from here.

Q: How are names like L&T , IRB , which took such a beating last week, looking to you?

A: I have been negative on the capital goods sector, infrastructure sector for quite some time. I have been saying that the rally of the December lows is only a corrective rally. I even mentioned that BHEL will definitely clock a new low below the December lows that’s actually happened.

L&T, which was consolidating in a range of about Rs 1,200 to Rs 1,400, has actually broken down. It’s increasingly looking like it will go much deeper below the December lows. It made about slightly below Rs 1,000, it’s looking like it is going to break in a big fashion. That conformation will come through, if we see a print of about Rs 1,059.5 for L&T, even on intraday basis, it’s a guarantee that L&T is going to about sub Rs 800 odds.