Nifty to fall to 4800-5000 in month's time: Daryl Guppy

Since the market is currently struggling to hold on to its key support of 5100, Daryl Guppy of guppytraders.com sees the Nifty falling to 5000 levels, or even going lower to test 4800, a month from now.

In an exclusive interview to CNBC-TV18, Guppy says the safest bet right now is to stay in cash or book profits on rebounds. "Uptrends in the current market are marked with bear pressure, so they are dangerous to trade. We really need to wait to see the support levels confirmed before we come in as long side buyers," he said. He is, however, positive on US equities and expects them to start moving higher. "These pullbacks are an opportunity to join a continuation of the rising trend on the Dow and the Nasdaq," he said. Below is an edited transcript of his interview with Latha Venkatesh and Reema Tendulkar. Also watch the accompanying video. Q: How does the Nifty look to you? In a month from now, does 5,500 look more likely or breach of 5,000? A: Let's say 5,000 looks more likely at the moment. We are struggling to hold onto that support resistance level around 5,100. A fall below that is going to retest that downtrend line and that takes us on a slide to 5,000, maybe even to 4,900. We need to see some bullish pressure come into the market. Q: What would you do on any of the Indian banking names? A: At this stage, we are very cautious on most of the Indian banking names. For instance, if you look at ICICI Bank, it's coming back to its support at Rs 840. Yes I could be a cautious buyer there, but I have a very tight stop on it. If you look at HDFC, it is already topping out so it's the time to take profits. We are looking for test of support with tight stop losses if we are going to enter that banking sector. Q: In case the Nifty falls to 5000, where do you see support coming in? At what point would you start shorting? A: I am going to start shorting once we have a sustained weekly close below 5,200; that’s the critical level at this stage. Once we get below that, then it's a fairly free fall towards about 5,000. The key factor is that the support is provided by a down sloping trend line. So 5,000 is the initial target, but it can continue to go lower to 4,800-4,900. Q: Which are the other charts in the Nifty which look exceedingly weak? A: There are many, many charts that look exceedingly weak. For instance, if you look at Reliance Communications, that's a classic pattern. You have got a head and shoulder reversal pattern, so Reliance Comm has a downside target of around Rs 70. You need to look at these end of trends and reversal patterns, set your downside targets and wait for the market to fall to those levels. Wait for support to develop and then buy proven rebounds, don’t buy an anticipation of rebound developing. Q: Since your overall view on the Nifty is bearish, what would be the relative safe heaven or what might be outperformers? A: Safe heaven at this stage is going to cash and taking cash on hand when the rebounds develop. Look at NTPC for instance, you got a rebound from Rs 160 support when that trend line is broken so there are some opportunities that are sitting there. You have got Wipro, which is probably the strongest I am looking at the moment. It’s got a rebound on uptrend from around Rs 430 support. But these uptrends in the current market are marked with bear pressure, so they are dangerous to trade. We really need to wait to see the support levels confirmed before we come in as long side buyers. Q: Do you look at the Indian rupee? Is there any patterns, directions as well as support resistances that you can tell us? A: I am sorry, I don’t have the Indian rupee chart in front of me at the moment, so I really can’t make a comment on that. Q: Tell us what the chart of the Dow and S&P500 looks like. Is there more downside in store for the US markets as well? A: There is probably not more downside in terms of the Dow. What’s happened with the Dow is that it’s moved above that projection of the neckline that developed back towards the end of last year, so around 13,000 is where it is. It’s oscillating around that uptrend line, so we still have upwards pressure in place. One of the key fact that is taking place is we are seeing more retail money coming into the market and that’s beginning to sustain the uptrend. But if we look at the Nasdaq, it tends to lead what happens in the US market. Nasdaq has had a reasonable pullback, but that’s not unexpected in the sense that the Nasdaq had an equilateral triangle. The projection for that equilateral triangle on the breakout was 3,150 and that target was achieved. Now we are looking for a consolidation, retreat on that coming back to around 2,950 and maybe 2,900, but then a continuation of an established uptrend. So what we are looking at the moment on both the Dow and the Nasdaq is that these pullbacks are an opportunity to join a continuation of that rising trend.