Daryl Guppy, Founder and Director, guppytraders.com, sees strong downtrend for the Nifty. He expects markets to retest supports before consolidation. "We see resistance for the index at 2,900–3,600 with good support at 2,400.”
He feels the Sensex is likely to consolidate around 10,000. "We see strong resistance for the Sensex at 12,200. The support band at lower levels is 7,600-8,500, while the technical support target is 6,100."
Commenting on US markets, Guppy expects the Dow to consolidate between 7,500 and 9,000. "It has weak support at 9,000. A fall below 7,500 has a downside and gives a bearish target of 5,300. We see support for the Nasdaq at 1,850. The recession support is at 1,200 while the depression support is at 800. We think the S&P will see support at 780, resistance at 1,050, and consolidate at 950."
Here is a verbatim transcript of the exclusive interview with Daryl Guppy on CNBC-TV18. Also see the accompanying video.
Q: On the Sensex and Nifty are you getting the sense that they are beginning to consolidate in a range now or is it still looking distinctly weak to you?
A: We are seeing some consolidation taking place but let’s not get too enthusiastic about it. We have still not successfully retested those support levels on either the Nifty or Sensex. So, we need to see this rebound develop, come back, retest these support levels, and rebound again before we can have some confidence in continuation of a consolidation and a change in trend.
Q: So far you would still say the market remains in a marked downtrend out here?
A: Certainly, it remains in a strong downtrend. If we look at individual stocks, you can see the tremendous strength of downtrend that is in place. We are still tethering on a level distinction between a recession and depression. We are simply testing recession support levels at this stage.
Q: Just for the Nifty and Sensex, what are the important technical levels that you see in this downtrend?
A: In this downtrend in terms of the Nifty, we are looking for good support around 2,400. We can test resistance at 2,900 perhaps go through to 3,600. But we are in that trading band.
With the Sensex, there is a strong support trading band between 7,600 and 8,500. In a bear market, we tend to test those lower levels. We are trading around 8,700-8,800 at the moment. So, it will consolidate around 10,000 levels. It is a rally within the context of an established downtrend.
Q: What are you seeing on the charts of these two stocks: Reliance and SBI?
A: For Reliance, we are not seeing any particular developing strength taking place. For Reliance Communications, we are still in an exceptionally strong downtrend situation. If you look at Reliance Industries there is a strong downtrend. There is some weak consolidation developing between Rs 1,000 and Rs 1,200. There is exceptionally strong upside resistance around Rs 1,450. So, technically we can still test support around Rs 1,000, almost as low as Rs 950. Technically, the downside support target is at Rs 700.
