If mkts bounce back, banks will run up: Sushil Kedia

Market opened at 5700 with banks leading the way. TCS has outshone Infosys after reporting their third quarter numbers and recording better growth. Even the Sensex got back above 19,000 level on strong pullback after a massive sell-off seen in last week.

Sushil Kedia, FRM, CAIA CMT, President, ATMA, in an interview on CNBC-TV18 says, "We are close to that 200 DMA which will break." He says banks have been leading the run up, especially when markets have been facing a lot of volatility. "If a bounce comes up, banks will be the fastest to run up and the farther most to run up." Below is a verbatim transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. For the complete details watch the accompanying video. Q: What looks like the more prudent trade on the Nifty now? A: Today is a different day from the usual. There is a key timing point and there is a potential bottom. It is not yet confirmed as the day is not yet traded. Typically what happens is capitulations happen after such a slide that can be possible. We are very close to that 200 DMA which will break. Last time it kissed around that and moved up. It was actually 270 DMA touched right on the day 200 DMA broke last year in May. Unless it goes below 5,400 perhaps 5,470 to 5,550 is what can come during the day and if it comes, it will be really worth going out and doing a lot of shopping with some stops in place. Q: What do the medium-term charts tell you if you look at three-four months, do you think there is a chance that the market actually bottoms out for 2011 or do you see lower levels ahead? A: There is a high probability chance for this to be a bottom for Q1 of 2011 and the coming rebound. Once it goes past 5,910, it can sharply shoot up all the way to a new high. That is all presumptive right now. We will need to watch how the day goes today and tomorrow. If that happens, my view for the remainder of 2011 after March is out by which time the creation of volatility out of China Shanghai composite would have been done, commodities would have clearly been in a downtrend and perhaps 2011, April to December onwards may have a severe bloodshed. Two different parts to this year and perhaps these two parts can play out very differently. Q: What do you see on the charts of the Bank Nifty or the frontline banks because they seem stable yesterday relatively? A: Banks led the run up and the matching of the old highs by slightly breaching it. Banks have been leading on the fall and the stabilisation of volatility that we saw yesterday after five days of very high rising volatility show that banks have been leading on every timeframe. I am clearly seeing patterns where, even though there is a capitulations selloff, but while a lot of Nifty stocks may be lagging by, between three-10 days, if this bounce comes up the banks will be the fastest to run up and the farther most to run up. Whether you look at an ICICI Bank or HDFC Bank or an Axis Bank or an SBI deeply oversold, divergent momentum, several patterns, it makes sense to do a lot of shopping there. Q: What do you see on the charts of some of the infrastructure stocks, not the frontline ones but faces like Nagarjuna, IVRCL and BEML; they are all at 52 week lows? A: Not only are they at 52 weeks lows but along with the leading names L&T, Siemens. After banks, this is one sector where I will train my eyes today to do some contrarian shopping. Though the rebound in them doesn