Trading very risky now, keep tight stop losses: Atul Suri

Markets are going through very turbulent times as bulls on rampage have spared none. Though experts were betting on Indian market earlier, time seem to be changing now. Alarm bells have already been rung, domestic investors are busy selling while FIIs look very disinterested.

Atul Suri, trader too is cautious and warns of a further downturn. In an interview to CNBC-TV18, Suri pointed out that the Nifty may slip to 4200 levels. He sees support of Nifty at 4050-4100 and subsequently at around 4650. However, Suri feels that 5200 is a key level to watch out for. "It may take some time before markets bottom out," he noted. Stressing that the market is currently in a bear phase, Suri added that trading at the moment is very risky and the best way is to keep tight stop losses. Meanwhile, there is some respite for those already losing heart. According to Suri, market is likely to stabilise in latter part of the year. Below is the edited transcript of his interview. Also watch the accompanying video. Q: It's been a tumultuous run for the market, where is it that you think the Nifty could find support now? A: It is very difficult in these circumstances to find supports. One is tempted to put on your analyst hat, but experience in the market tells me that these are not normal times. If you really look at what is happening in the global scenario, some of the global charts whether it is US or Europe, especially, the chart of Italy and Spain tell you that the events are pretty nasty. There seem to be actually tectonic shifts that are happening, so in this environment, it just does not make sense to go and look for levels, our earnings ratio and our supports etc. I personally think that a much bigger story is the space that global markets are in. Nonetheless, we stand a very good support of around 4,650 or thereabout. If you go back and look at the markets, you will find that 4,650 was a very important resistance area for the market. It had not crossed it for long and when it did, you saw a very good sort of upmove. So that 4,650 area is something which I would consider as an intermediate support now, but getting back to the base question, where is the final bottom, I don't know. Nobody knows because we are going through some massive shifts in global charts, global asset class plays, whether it is commodities, currencies or equities. Q: There is lot of hope around 4700-4800 level but in your eyes how vulnerable is it and do you see the possibility of us drifting down close to even 4200-4300 levels? A: It is a possibility. The kind of moves that are happening are out of the box. The way developed markets move 5% in one night and next morning again they go down another 2-4%, these things very rarely happen. We are in that phase. So whether we will stop at 4,200 or at 4,050, because that is another technical target that has been set out, but I think it is going to be more of function of global markets. In the short run they are over sold, so you may have surprise up days and many people will call that the bottom has happened. I do not think that the bottom is going to happen so soon, it is going to take some time. You may have sharp pullbacks, throwbacks, so that really puts out the big question that should I short at these levels or should I sell on pullbacks? I think that would be a bigger case at the moment. Also read: Market may treat 4800 as the new 5200, says Udayan Q: The question also seems to be how long the market will take to find its feet and stabilize, but time-wise, how long do you this period lasting? A: I guess this thing would take time and this could play out to the latter part of the year. However, in recent days, I have been a little wrong in terms of time corrections. Markets are moving much faster than we had classically seen, and the function of this is huge global flows in liquidities and the whole being macro-trades that are happening. These macro-trades happen across regions, across concepts, across stocks sectors and markets, and that is the kind of move that you see happening are very fast. Generally what I have observed is that targets get achieved much faster than we project them out to be and vice-versa. So I think is a new trend, it is a new normal to live with. Q: So what the stance a trader should take now, is short on every rally? A: Trading such markets is more of a question of your risk appetite. The thing is what sort of risk appetite do you have? Do you come out and short when the market opens 1-3% down? Well then what is the kind of stop loss that you have? It has to be large, it has to be 5-10% for pullbacks and things like that. So from a traders point of view, I think this is the point when you really have to go in and look at your own risk profile because trading at the moment is very risky. I would actually personally think the best way is to keep tight stop losses, the risk is that if you get taken out, you get taken out with a small hit, but just incase you get in with the trend and the tend happens to be fast and in your favour, you can make a sizeable return. So it has good risk reward ratios, I would say. Q: We have been taking about bank and IT space, the two which have been singled out for punishment. How are you approaching these two spaces technically now? A: Banks are very important for our market, simply because of the weightage it has on the Nifty. I for one, always look to the banking index as a lead indicator to the Nifty or to the markets. So for me looking at banking would be very important. And yes, IT is under threat. The IT charts have got spoiled and destroyed, but I think what is going to really affect mood and sentiment is going to be banking because today, the single largest weightage, importance, play, speculation, trading positions are banking and banking is a space you have to watch in this market. Q: You spoke about the supports at 4650 and possibly 4100. In case of pullbacks, what could be the extent of the upside for the Nifty now? A: On the way down, the market has created some gaps and very often, the markets tend to pull back to cover these gaps. So yes, 5,200 or so tends to be very important area where there is a gap and that is a gap I would look back. Even if pull backs happen to that place, there could be turning points or pullback spaces. So it