Pullback possible; bottom seen at 4200-4250: Mithil Pradhan

Mithil Pradhan of Violet Arch Capital Advisors spoke to CNBC-TV18 about his expectations from the market today. He says that daily charts show a pullback rally for Nifty, but the greater question is what to do with the rally since sentiment is too low to start going long.

He says that a bottom for the market is likely around 4200-4250 levels and shorting opportunity is close to 4667 levels. Pradhan sees Bank Nifty gripped by a ferocious bear and says that it is best that investors avoid the capital goods space too for the time being. Below is the edited transcript of the interview. Also watch the accompanying video. Q: Technically, is there a possibility of a relief rally or a pull back from this low of around 4600?
A: There could be a pullback because the daily chart of Nifty is right now in the oversold zone, but then, the point is what will you do even if it has a pullback? Of course, you are not going to play on the long side because Nifty technically is not at a point where lot of people would have the courage to go long. We have just seen a breakdown below the 4700 level. That is the level which has given support to Nifty over half a dozen times in the recent past. So if you get a pull back towards 4701 or lower towards 4667, I think that offers you a shorting opportunity. But on the pullback, there are barely any stocks that I can find in my entire chart universe that you can actually open long positions. So I am not crossing my fingers for a pullback right now. Q: You spoke about the breach of 4700 on the way down, what targets do you have?
A: If you use the usual chart tools, I think there is a head and shoulder which is forming up on the line chart of Nifty. So that actually gives you a target of about 4000 levels.
The methods which I follow, and for a long period of time, they have been pointing out to a target area of about 4100-4200. I do feel that 4200-4250 is a level where I would look for a bottom. That is the best case scenario, looking at the overall fall from 6300 to wherever we are right now. Q: Bank Nifty has been so weak over the last few days. What kind of levels do you eventually see for the index?
A: Bank Nifty is actually into a ferocious bear market at this point of time. I was considering 8200 to be a support from where it did bounce back, but then the bounce was not something that changed the intermediate trend in that particular index.
The final level that I am looking at right now is anything between 7700 and 7800. However, I really do not think that this level will hold at this point of time because if you have a look at individual stocks, like say, Axis Bank, HDFC Bank and HDFC Limited, which were holding up very well for the last few months, even they have completed a large A-B-C correction and are on their way down now. I personally do not feel that this level of 7700-7800 will hold for more than two-three days in a row. So at this point of time, my targets on the downside remain open and I