Jai Bala warns of market crash, suggests profit taking

In an interview to CNBC-TV18, Jai Bala of cashthechaos.com shared his outlook on the markets and various stocks.

Below is a verbatim transcript: Q: Disastrous day yesterday, do you expect a bounce technically or lower targets on the index? A: I will not call it a disaster. It is quite favourable for me. I have been warning about this coming through for quite some months. The internals of the market were screaming on the top of their voice and people who listened to it have definitely benefited from it. However, the internals were pretty jarring and rotting, this had to come through and had to happen. From an extreme short-term, the markets are oversold but oversold does not mean that the market has to bounce right away. I have seen in the last three years, when market has been deeply oversold, that is the time when markets have crashed. When the market has refused to respond to those oversold levels, that is when market has crashed. I am not saying, the crash is coming at this point in time but we have to be very careful about it, do not go and stand in front of the moving train. Q: Some of your peers have suggested 5,500 as the next target for the index, is that what you see or lower downside? A: Last time I said 5,500. That is going to be hitting around March 7. We are pretty close to that target date. That is a distinct possibility and that is a major support at this point in time. 5,600 is an important Fibonacci retracement level. There could be some amount of bounce back coming through at that level too. Q: What kind of level do you think the bounce could take us to in case such a pullback happens? A: 5,970, it made after the initial decline, itself is going to be a ceiling for this market. Market is going to find very tough to cross 5,970 and all the bounces are very likely to stay under 5,970. Q: How would you approach markets today onwards, would you still keep your short positions open or would you want to take some profits there? A: We are definitely taking some profits here. Things can change around in a matter of time. The larger trend remains intact. So it is a matter of discipline that we must keep some positions open. We shorted the Nifty on the very day the market topped and here on your channel we were asking your viewers to go short at 6,160. You must take profit right now and hold on to partial position. It is ideal to low down to further shorts once the market sees a pullback. Until that, we need to do nothing at this point of time.