Sushil Kedia of ATMA joins CNBC-TV18 to give his perspective on the technical charts for the market today. He calls the dollar index the villain in the market across the asset classes. The index of the greenback saw a near-vertical upmove on the charts yesterday from 73 levels straight to 80. "A trend reversal could come in today or tomorrow," Kedia says.
"What one is trying to build as a thesis is that the Nifty may go down to 4200 levels and a lot of other equity indices across the globe will pair down another 15-20%, but within that, if there is a large 10-15% kind of rally, that can come," he says. Below is the edited transcript of the interview. Also watch accompanying videos. Q: How is it looking in terms of a setup for the market and what would you say is the downside risk present on the Nifty in the near term?
A: Let me begin by discussing the chart of the dollar index which is what is the villain right now across every asset class- this major slide in metals, commodity and all global equity indices. We have seen a near-vertical rise on the USD index chart from 73.6, all the way up to 80 levels yesterday. This has the characteristics of a typical large bullish move. Yet, I do not have evidence that the movement this morning is a reversal that has come in.
Nonetheless, even a 5-5.5% pull down in dollar can justify a bear market sort of rally across all the key commodities and the major equity indices which are all in the deeply oversold territory.
The RSI has not been making lower lows even from 2600 level all the way down to 2350 levels. That
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