Reduce long positions, be a seller at each high:Shrikant Chouhan, Kotak Securities

Shrikant Chouhan, Senior Vice President, Technical Research, Kotak Securities, says markets are not going to perform from these levels and there could be one more selloff in the next few days of time. Edited excerpts:

ET Now: What is your view on the market with the week that has gone by how do you see Nifty
shaping up?
Shrikant Chauhan: This time the market has fallen from the record high of 10180 to almost 9700 and yesterday was a very crucial day as it was the expiry day. It was very close to its previous low, the market again recovered.
We are of the view of that the overall trend is still weak but because of the excessive selloff in the short-term, we are seeing some pullback in the market. We were of the view of that 9850-9875 is the level to watch out for because it is the first resistance level for the market and profit taking or some liquidation of long positions should come.

In the second half, we witnessed a selloff. We are of the view that the market will spend some time between this range of 9850-9875 on the higher side, and maybe a maximum of 9900 on the higher side and in the downside, 9700 is the level to watch out for Till the announcement of credit policy, we are expecting market to remain in a range. On the downside if we see market is falling to 9720-9730, we can take a contra call of going long ahead of the policy and if there is any higher opening on Tuesday, then we should look for taking a short call with a stop loss at 9900.

ET Now: Are you a bear?
Shrikant Chauhan: See the way the formation is, we should be cautious at each higher level. The way Bank Nifty and Sensex has broken previous lows and Nifty survived just about its previous lowest low of 9683, I am of the view that one should consider taking some short bids at higher levels, at resistance level. Why we are advising to sell at higher levels is because we have seen
excessive selloff in the short term.

In just four-five days of time, from 10180, the market has fallen to the levels of 9785 and the previous rally was extraordinary, from 7900 all the way, the market went to the levels of 10180.

That is why we are of the view that the market will fall but it will take time and because it is a very quick selloff, one should be a seller at each highs, one should look for reducing some long positions even if we go through with other technical factors like currency which is continuously depreciating from this 63.50 levels, crude prices which are quoting at $58-59. If we see the overall trend of crude prices, then we are seeing very clear upside in the next few weeks of time. So, all these parameters are clearly indicating to us that markets are not going to at least perform from these levels and there could be
one more selloff in the next few days of time.

ET Now: What are the stock specific trading ideas that you have brought for us today even though I should once again remind our viewers you are sounding like a bear today?
Shrikant Chauhan: If somebody wants to focus, then HDFC looks really weak because HDFC Ltd has spent a lot of time around this Rs 1780-1790 kind of levels. Since August the stock is very close to these levels and it failed to make a new high even if Nifty made a new high of 10180 so there are like very clear cut negative divergence on the stock and it is lower top kind of formation. All these things are clearly indicating us that it is again heading towards its previous low of Rs 1680-1670
so there we have a target. Currently it is trading at Rs 1730-1735. So, with a stop loss at Rs 1760, we should look for shorting
HDFC Ltd at current levels. Again it is a part of index. So, if you are expecting weakness in index, then HDFC should contribute in that. The other stock which we like on the buying side is Escorts Ltd and the reason is because we are of the view that monthly numbers are going to come and this particular stock is forming some interesting formations.
Stocks like Maruti, Hero Motors, Tata Motors, Mahindra & Mahindra all have formed a very good kind of formation on daily basis but Escort is like relatively outperforming in this particular space. And we are of the view that Escort is heading for
690-670 kind of levels which is the next resistance level for it. Here it is available at Rs 665 kind of levels, with a stop loss at Rs 650, we should look for adding this.
stock to our trading portfolio and we can keep a
target of close to Rs 690-700 on the higher side.