Mkt may be positive if RBI doesn't hike 50bps: Dipan Mehta

Dipan Mehta, member of BSE and NSE told CNBC-TV18 that the Nifty would recover the current losses and post a higher top from the 5,150 levels or thereabout. "Until then, one should keep a negative view from a trading point of view," explained Mehta.

Mehta also indicated that the Indian market have been acting as an extension of European markets at this point of time with the absence of any local news flow. 
"The market might trade on the positive side post Reserve Bank of India (RBI) policy, unless the RBI decides to increase interest rate by another half a percent, which is on the cards too," he added. Here is the edited transcript of his interview. Also watch the accompanying video. Q: What happened to the market? How did it lose its nerve? Do the 5,050 levels look formidable?
A: All this has to do with the global markets. Once the Europe turned, the reaction was seen instantly in our market. In the absence of any local news flow, our eyes set on the events taking place overseas.
It looks like we are an extension of European markets at this point of time, considering that the FIIs are trying to match the gains and losses between the two markets. This main problem is that we have our own specific issues due to which we are not as attractive as we were in the past.
There is absence of adequate retail or domestic institutional appetite for Indian stocks. We are left to just mimic what is happening globally. Q: The volatility could cut on both sides. Is the local trading fraternity keeping away from the market right now?
A: Most of the activity of trading has now moved on to futures and options, especially options. Implied volumes have certainly gone up there. This means that the players there have been taking a slightly safer approach. Even the actual quantum of open interest is much-much lower than two-three series ago. The trend is that traders have cut the size of their positions.
We are still in a trading range, which is giving the cues to buy and sell at particular levels. All eyes now set on the RBI policy and the inflation numbers as that could give some cue on a break-up or a break-down. Greece is also in under a lot of risk. These are the two things which the market has been grabbling with at this point in time. Q: How would you trade the Nifty right away? Is it still in an incline? Are these reverses are short? Will 5,050 levels or 5,100 levels turn out to be a formidable resistance level?
A: I mostly track the pattern, whether they are more of rising tops-rising bottoms or lower tops-lower bottoms. We had a situation where the market made a top and corrected from there.
It is important for the market to recover these losses and post a higher top from the 5,150 levels or thereabout, which is a challenging task. Until then, one should keep a negative view from a trading point of view. Q: How would the market react if the RBI hikes interest rates by 25 basis points on Friday?
A: It will be positive because nobody has been taking any chances this time. The market is going nervous into the particular event. They want to be caught on the wrong side as happened last time.
The market might trade on the positive side post RBI policy, unless the RBI decides to increase interest rate by another half a percent, which is on the cards.