How to trade a falling market? Jitendra Panda explains

Plunging rupee, bleak economic outlook and upcoming General Elections are the perfect script for highly volatile markets, especially, in equities. Jitendra Panda, Head of Sales Broking at Capital First, says: given the market condition, there will be sellers only. Nobody would like to invest. On every fall, new positions are coming in, he adds.

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He told CNBC-TV18, the factors that he looks at are open interest, people who are holding on their positions, volatility, is it very volatile and finally the volume.

Today, most companies are global in nature, so everything and every sentiment affects the companies and the economy as well, he adds.

Below is the verbatim transcript of Jitendra Panda's interview on CNBC-TV18

Q: The first question that comes to mind is you have been in the market for about a decade and a half, what are the signs that you look out for when the entire scenario, the markets are so negative?

A: Markets have huge volatility and naturally they have news driven things and currently whatever negative news we have, the market will be down. There will be no buyers. There will be sellers only, nobody would like to invest. So in this whole scenario, we look at the various market components and see how the positions are built, on every fall is the new positions coming in and they are going short.

So those are the indications we look at. We even look at the people who are holding on their positions, the open interest (OI), volatility is also a major player, is it very volatile and finally the volume, is it happening with volume? These are the factors which are very important in the market which has to be looked into. OI, volume and where the positions are getting created at every price change. So these are the three main criterions, which determine where the market is going to move ahead.

Q: Do you think that the kind of volatility that we have seen over the last couple of months is only going to increase, we are seeing the rupee which has touched 68/USD, possibility of going further, do you think that is how it is going to be, results might surprise on the upside because expectations are so low, what is your analysis of it?

A: Now the way the markets are, certainly I believe volatility is here to stay. All the asset classes will keep on changing because demand/supply is everywhere now, not only in India, but worldwide. The scenarios – one is when we are globalised now and everybody is connected. Crude prices, gold prices, interest rates, the cost of financing and the money coming from various countries and money flowing out also.

So now you see whether the companies in our country, the Tata, the Hindalco, everybody has worldwide exposure, the Bharti, everybody has business not only in the country but outside. So you are dealing in companies, which are global and naturally everything will affect and all sentiments will get affected. So it affects the companies, it affects the economy and I believe volatility is here to stay and you have to make a strategy understanding that things will change everyday.

Q: So there are more bearish indicators rather than enough indicators on the upside?

A: Again you are going unidirectional. Market is not unidirectional. We thought gold will come down, gold has certainly moved up, currency has moved up, currency may correct also. Rupee has depreciated, may appreciate but the volatility I am talking will be very fast and the swings you have to manage. So your strategies have to cover all those aspects.