Markets closed at a seven-month low of 7965 on Thursday.
From now till the market recovers to around 8400 level, it is best for short term traders to exit their long positions in Nifty, Ramki Ramakrishnan of wavetimes.com and Assistant General Manager, Al Ahli Bank of Kuwait told CNBC-TV18.
Discussing the main drivers of this fall, the Bank Nifty, Ramakrishnan focuses on ICICI and SBI. For ICICI, currently at a high of 288, he said it will show support at around 270, but will not last there for long. He advises to wait till it goes to 255 levels for medium term investment.
SBI has completed its five wave move from low at 145 in 2013 to 336 in June 2015, he said. Currently, it is valued at 254, and needs adequate recovery to reach 240-245. It might go up to 275, but will fall eventually to 220, which is the time one can invest in it, he said.
Ramakrishnan also spoke about Tata Motors, which he expects will go down at least 10 percent to 370-385 level.
Below is the transcript of Ramki Ramakrishnan's interview on CNBC-TV18.
Q: Stopping at the lowest point in 2015 and ending at that lowest point, is this opening the floodgates for big losses on the Nifty?
A: A few weeks ago, we discussed this support around 7,980 to 8,080; from there we anticipated a recovery. While that recovery did happen the personality of the bounce was a clear give away that this context correction has not been done.
I have now reassessed this whole scenario and I think that any recovery from now to 8,400 levels is a time for the short-term traders to exit their long positions in the Nifty and any weak stocks that they are holding because I think that we have a move down to perhaps around 7,750 to around 7,680 as the next level from where we will get the recovery again back to last time.
So, look at 7,750 to 7,680 as the next level to buy and the way that recovery happens will tell us whether that is the fifth wave up which we are looking for. That up move is bound to come but I now think that the up move is going to happen from those lower levels. So, any interim recovery I think will fail around 8,420 levels.
Q: For a trader who wants to get into the Nifty now, do you think he can go ahead and short after such a big correction? I think we have seen 500 points just in the last seven to eight trading sessions. Is there a short opportunity currently?
A: Exactly, as you pointed out, when such a big move has happened in a short timeframe. We will inevitably get short covering rally and I would recommend wait for that rally perhaps towards 8,400 to establish new shorts. Always traders should have nearby stops and not turn that into long-term positions which will sit there forever.
So, wait for that recovery and sell because the right way to chase any market is to get into key levels and not get into the market at drop of a hat just because somebody has seen the move happen we cannot sell after the current move has happened.
So either you buy it at around 7,680-7,750, in which case you can sit on it for a couple of days and it will come back and perhaps go well into the profits or if you see 8,420 happening in the next two or three sessions you can sell there because it is bound to come back and retest its low and perhaps break it because the market is telling us that in the near-term it is not ready to go up. We should listen to those signals.
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