Those long on market should get out now: Jai Bala

According to Bala, in the long term Nifty can test the high of 5,630 , which it made in February, but there are small possibilities of that being broken. "In the short-term it’s very likely that this rally will falter slightly below 5,349 then the selling is likely to intensify."

Further, he pointed that global markets are almost moving in tandem together. Once one market starts to crack every other market will start to roll over. "This is the last chance for people who are long in this market to get out," he suggested.

Below is the edited transcript of Bala’s interview with CNBC-TV18.

Q: After the big run to almost at 5,200 level what you hope to see today?

A: There is nothing to hope in the market. You better follow trends now. Hope is very poor strategy. The market is still looking like a triangle formation. If you look at slightly longer term 5,630 that the markets made in February that’s very, very likely to be the high for the year.

There are only small possibilities of that being broken. In the short-term it’s very likely that this rally will falter slightly below 5,349 that it made a few weeks ago and then the selling is likely to intensify.

Q: At what point would you start taking profits on any short-term longs or start initiating any kind of short positions?

A: This is the last chance for people who are long in this market to get out. The medium-term trend which has been waiting to take control of this market is very close enough. People when they are comfortable they talk about China. China is right now hitting 52-week lows and this has been going on from 2009.

People have been talking about India and China being the drivers, but when the key index hits 52-week lows all these fundamental analysts just disappear. They don’t come and talk about that being a problem at all. If you look at euro if you have been trading the forex, you will be so bored of making profits.

You see half measures from the European region and then you see a pop and the markets rollover. Along with the euro, every other market rolls over together. This is such an easy trade and it’s getting very boring. That’s the same situation we are in at this point in time.

The euro is seeing a pop and the European markets are seeing a pop. The one good thing is until a few weeks ago the markets were fractured. Now, the global markets are almost moving in tandem together. Once one market starts to crack every other market will start to roll over.

Q: Sun Pharma is seeing new 52-week highs everyday. You would expect more traction there?

A: That’s true. In fact most of the pharmaceutical space, front line stocks are showing considerable amount of strength. You have a low-risk trading opportunity here. You can even go long in Sun Pharma with a stop loss of Rs 610-605 and expect the stock to scale closer to Rs 695-697.

There is greater potential, but you can be conservative at this point in time. You don’t know how long this outperformance will last. So you can set your objectives slightly lower.