Levels of 9,000 to 8,900 below 9,300 are important for the Nifty, and if the Nifty breaks the level of 8,900, it could fall to 8,700, 8,500 or even 8,000, Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) A massive sell-off on the first day of May series. Nifty broke below 9300 – what is the way ahead for markets in this series. Will Sell in May Go Away apply in 20202? Which are the important levels you are tracking?
A) This time, of course, the "sell in May and go away" theory is going to apply. Levels of 9000 to 8900 below 9300 are important for the Nifty. If the Nifty breaks the level of 8900, it could fall to 8700, 8500 or even 8000.
The main reason behind this is that the Nifty has completed a pullback trend and once again it is now ready to convert in trending fall once again.
Q) What is your take on NiftyBank? Do you think the weakness is here to stay?
A) It is underperforming heavily and whenever there is a fresh round of selling in the market, the NiftyBank bleeds first. The Nifty had touched the level of the entire fall to 50%, while NiftyBank managed to reach only up to 40 percent.
Weakness is more likely and the index could fall to 17000 maximum, and below that 15000 or 14400 is also possible.
In the year 2008, when the market crashed due to the crises of “subprime” at that time as well the Nifty recovered after forming higher bottom whereas the NiftyBank made lower low (newer low) before recovering.
Q) In terms of rollover statistics for May series – which sectors are likely to underperform or remain under pressure?
A) Based on rollover statistics, Reality, Consumer Durables, and Infra Capital Goods sectors are more likely to underperform. Based on Technicals, NBFCs and PSU banks should also underperform.
Q) What do you advise traders and investors to do? Traders could be looking to cash in the volatility but after a sharp 3% move on Thursday most would have caught on the wrong side of the road?
A) Index rollovers were also on the lowest side (81%), which shows traders were not comfortable when the market was hitting the levels of 9900 on the day of expiry.
However, they failed to take a short-selling bet at the exact technical level 9900(50% of the entire fall). However, technically, we feel that the Nifty would spend more time between the levels of 9000 and 9600 before falling to the levels of 8000.
Be short-seller around 9500/9600 levels or keep on reducing weak long positions.
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