Sushil Kedia puts 'sell' on Nifty if it closes below 5900

Sushil Kedia, Director - Quantitative Strategy of CIMB feels the Nifty will have a tough time crossing the 6000-mark. Right now, he is looking for a confirmed sell signal, which he says will come if the market closes below 5900 or 5843 to be more precise.

In terms of stock calls, apart from Tata Steel and Cairn India, everything looks bearish to Kedia. “Each and every bank is looking like good sell. Cement and autos stocks are looking bearish,” he told CNBC-TV18 in an interview. Also read: BSE Sensex volatile; cap goods, oil & gas crack; HUL firm Below is the verbatim transcript of his interview to CNBC-TV18 Q: Are we close to a turning point in the market you think or is this going to 6,100 next? A: It looks pretty difficult for me for this market to go past 6,000. If I run through a list of the Nifty 50 stocks, small dissonance that the IT sector where there is a consensus for a sustained underperformance is looking like will outperform. Hindustan Unilever has gone through the roof and that is one factor that is going to be positive. Maybe I don’t want to sell Tata Steel and Cairn, but apart from only these many stocks everything else is looking bearish. Oil and Natural Gas Corporation Limited (ONGC) and Reliance might have to wait a few days more for confirmation of a down signal. Each and every bank is looking like good sell. Even the metals that had been really underperforming and looking like are having some contrarian buying. Sesa Goa is fizzling out. Tata steel is one stock which might have a small pop that is all. Cement and autos stocks are looking bearish. Tata Motors will take a couple of days more just to give out a confirmed sell signal despite the numbers that Maruti has produced. Nobody is biting that stock above Rs 1700. There are patterns where there is a clear possibility for a very big downtrend to come by. When I am looking at the components and the Nifty chart I am waiting to find a confirmed sell signal which might come as early as mid-afternoon today. Q: What would convince you that the market is unable to clear this zone of 5,950 to 6,000 and that is making a U turn. Would it be a break below any particular level? A: Level based trading works up to a certain time. While today clearly are signs for one to unwind longs. What I am really going to be looking at is a confirmed sell signal. Should this market close below the close of four days ago, which is 5843 but perhaps the last three days range being above 5,900 maybe an early confirmation can be taken as given a close below 5,900. Q: What kind of targets would you play for then? A: My downside targets are not at all humble. Should this reversal work out which I believe has a very high chance. I see an immediate support only around 5,500. Then I am clearly ready to see a number which is anywhere between 5,200 to 5,300, to begin with. Q: Do you think the Bank Nifty will lead this fall or the reversal if it comes about? A: Yes that is what the banks have been always doing. They are somehow fundamental but high beta sectors. So, perhaps on this reversal I am looking at banks breaking below 11,000 to begin with and perhaps going down to 9,000. Q: Do you derive any of the confidence for these downside targets from anything that is popping up in the global charts? A: The global charts have had a dissonance between the equity markets, but to me this is an interesting thesis. The way we saw first the Japanese Yen being really driven lower and then a sudden crash kind of scenario came in gold and silver. Perhaps by tomorrow night or Thursday night in US trading hours I am expecting another firm top in gold and silver. This recent crash and from thereon this recall back upwards is going to be arrested in a day or two. Maybe a further 20 percent cut from wherever it tops out in the next two days is where a final bottoming out of gold and silver can happen. Half of the time I am still looking at an absurd sounding number like 50,000 INR pricing of gold in MCX terms. So, gold being the super currency after the Japanese Yen, gold has been made to crash. Maybe next in line will be euro and the British pound. So, selectively one by one the key money instruments are being crashed whether they are crashing or they are being crashed, whatever. On other hand, while gross domestic product (GDP) growth in the western world has really come to nearly a static scenario at a very low number. Maybe this is a hidden way of exporting inflation back into the countries. Given all of these scenarios while the real story on the equity markets have been Japan and the United States. Perhaps it is time to look at more of local factors. Who knows tomorrow in the Supreme Court final round on the coal investigation, there maybe embarrassments which are reason enough for the market to start crackling down. I am not trying to draw too many correlations between various equity markets but yes, on the larger macro factors 2013 does not look like to me a year where one should be an investor or one should be really looking at a lot of free money to be made by just holding on to assets. Q: For people who are short or are looking at short positions where would you keep a stop loss now beyond which you will revive a bearish call on the market? A: Around 5,970 is a theoretical number. So, roughly speaking around 6,000 each based on its size and risk tolerance should not get too adventurous. The market has been so far rising and you build out your entire size only in pieces when the trend starts favouring you. Roughly around 6,000 each will have to decide where one surrenders and gets out from a short position. Disclaimer: The above views are the personal analysis of Sushil Kedia, President ATMA and do not  reflect any opinion of ATMA To know more about ATMA, please visit http://www.atma-india.net/