Richard Ross upbeat on Nifty, says long-term chart healthy

Richard Ross, Global Tech Strategist, Executive VP, CMT believes that charts of both the Nifty and the Sensex are healthy in the longer-term. He remains bullish on the Nifty. "If Nifty gives a false breakdown below 5,500 levels then there will be a fast move back in the opposite direction," he told CNBC-TV18.

Also read: Market reversal still far away, prefer pharma, IT: Axis Cap Below is the verbatim transcript of his interview to CNBC-TV18 Q: It has been a very difficult day for both Indonesia and India, what do you make of this emerging market rout that we are seeing over the last several days? A: I think it is interesting when we break down the emerging markets (EMs). It divides into resource driven economies, those that produce them and export them largely and those that bring them in like India and Indonesia, which have been on the losing end. Whereas some of the markets are holding up rather well or kind of deriving like a Brazil which is up 7 percent on the month-to-date basis coming out of nowhere, Russia holding its own as well. However, I think when we are talking about markets like India and Indonesia we have to look at those currencies, which are under a lot of pressure. Both the Indian rupee and the Indonesian Rupiah is pushing out here to fresh multiyear or if not all time lows in terms of the rupee. So, we need to get those currencies under control before we can get the stock markets under control. I don’t want to paint such a dire picture. I was just bringing down the charts of both the Nifty and the Sensex and in fact the longer-term charts still remain rather healthy despite the reason weakness in terms of the Sensex, you want to watch this 200 week moving average down around 18,000. I know typically we look at the 200 day but the longer-term gives us a sense for whether or not that big trend is still intact. I still remain bullish here. If we could get a false breakdown here in the Nifty below 5,500 levels, we are going to get a fast move back in the opposite direction. So, I remain optimistic here. We need to keep these currencies under control. If they continue to spiral lower, it is not going to be easy for equity investors vis-à-vis these cash inflows and outflows. Q: If you look at the basket of emerging market currencies where do you see spots of strength if the question has become about how big September tapering could likely be? A: That is a great point in terms of the real in Brazil and even across the EMs while the dollar has been surprisingly weak against the euro. Here the euro is testing 1.34 and even the yen strengthening back below 100, we have seen across the board strength across the emerging markets. We have seen some stabilization out of some most key macro proxies like the Australian dollar and the QE, not to say that they are surging but they are holding their own in fact the Aussie up on a month-to-date basis 150 bps and the QE up almost 100 bps. However, you make a great point, with the exception of Mexico perhaps which is where the peso has been particularly strong or at least that has held its own against the dollar. It is across the board weakness that we are seeing which is worrisome I am sure in those emerging markets.