Nifty unlikely to go above 8,550 short-term: Sushil Kedia

Kedia expect US and European equities to fall 10 percent over the next one month.

Below is the transcript of Sushil Kedia’s interview with Sonia Shenoy & Reema Tendulkar on CNBC-TV18.

Sonia: 8,350 on the Nifty so at least that 8,000 - 8,100 base has held how are the charts looking now?A: On the Nifty and Sensex I would put it this way, Sensex looks unlikely to go pass 28,250 before it goes back to 26,000 and equivalent on Nifty perhaps is 8,550 unlikely to be breached before we go back to 7,700 maybe. I will also add a further layer to this, I would say Nifty is unlikely to go below 7,700 before it goes into all times highs again. Same way Sensex looks like will go to 30,000 and more before going below 26,000. Reema: So in the near term you see the upside capped near that 8,500-8,550 level but you see the possibility of the markets making another dash upward before they move downward. How soon according to you before the markets move towards those all time highs and once they cross that 9,000 level how much could be the upside?A: I am not saying that we will not go pass 8,550 that is a kind of fulcrum where one has to take a call, it is a tentative market. After a sustain decline about a 1,000 point on the Nifty this looks like more like a small rally within the correction pattern that seems incomplete as yet. However, incase if 8,550 is taken out then the leg in between that I am forecasting about 7,700 gets abundant. Then you go with this further upside breakout. So 8,550 is where, it is a tentative thing where one will watch. If a reversals is coming, indeed it is coming, one will try to play down to 7,700 and pass 9,000 may be the next big area of consolidation or correction can come around 9,600-9,700. Those are conjectural the long-term trend is strong and up. Over next couple of years you go to 12,000-13,000 also so we keep getting those levels once we get there.

Sonia: What about on the Bank Nifty?

A: Bank Nifty is not showing any major outperformance or underperformance vis-à-vis the broad market so you can play along the Nifty. It is the same kind of pattern that is going on right now. Reema: You have got a very interesting view on the rupee, do you see the possibility of the INR strengthening so much that it can go to 57 per dollar?A: Why not? I would like to put it this way before INR goes past 67 per dollar I see over the next 10-12 months may be it is going down back again to 57 per dollar, the dollar is going down to 57 per dollar. In fact the INR-USD chart in long run has a very unique sort of an interesting pattern. That area between 55-58 per dollar is what I think over the next many years will be keeping getting re-visited again and again despite the fact that INR over the long run, over the next 2-3 years will keep making new lows.Say for a now if I am visualising a map and again you know these are subject to revisions going to 57 per dollar before going to 67 per dollar and then going to 72 per dollar perhaps and coming back again to 55 per dollar and going to may be 75 per dollar and coming back to 58 per dollar those kind of very wild gyrations in INR-USD over 6-8 months kind of cycles happening both ways over 2-3 years is what I am visualising.

Sonia: Do you foresee a lot of volatility in the equity markets as well because that is something that we have seen in last couple of months?

A: The 1,000 point odd correction that happened on Nifty after this small rally that is unfolding post which may be one more leg going down to 7,700, that much is what the volatility I am looking at. Perhaps after that again a sustained huge 2,000 point run-up so, in which sense should be take volatility that is what I am looking in as patterns.Reema: Gold has been largely range bound for the last many months, your view on it now? A: See there is a long-term reversal building up in gold so trying to get very adventurous in terms of cutting it fine doesn’t look appealing to me. Until 1,300 is broken one can’t rule out one more slide down to 1,100. However real big trade in the gold worth taking would be once we are past 1,300 then from the patterns I see it should be a ride all the way into all time highs into much more than that so we are right now in a long-term fulcrum. 1,100 – 1,300 range we are getting closer to 1,300 let us see what happens there.

Sonia: You track the global charts as well, a lot of people have been talking about the prospectus of a summer correction in US markets but that hasn’t come through yet. How are the charts looking any correction that you expect there or do you think they will continue to hit record highs at least till the first half of the year completes? 

A: I don’t think this is right away sustainable here, the prospects of a 10 percent dip than prospects of a rise beyond 3 percent further look more likely. S&P as well as DAX both look like may pull down by about 10 percent before summer is out so to say than continuing to persistent to make newer highs.Reema: you see the possibility of the Nifty going down to 7,700 in the medium-term?A: That is possible I can’t rule that out. Reema: Because if it does go to highs of 9,000 plus, you gave a level of 9,600 which you said is conjecture but it is a possibility so from there to fall to 7,700.A: I am taking about right away before going past 8,550 we will perhaps go down to 7,700 and perhaps before we go below 7,700 we will go back to 9,700. One interesting market that people have been not noticing and that has galloped up is the Shanghai composite. From 2,000 to almost 4,500 and now a lot of macro people have begun theorising why the leverage that is getting unleashed into that market at a household level is going to drive this market into all times high and all. However, from the chart patterns I see a very simple pattern that anybody can pull up on its screen there is a severe divergence in momentum coming up there. The risk of a 1,000 point collapse from a Shanghai composite is far greater than perhaps further 200 points in that.