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See Nifty support at 3600-4200 levels: Sukhani
Published on Wed, Jun 25, 2008 at 09:35 , Updated at Wed, Jun 25, 2008 at 13:52
Source : CNBC-TV18
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He advises to set up long short positions only on rallies and then take profits. For today, he advises to stay away from the markets because of a gap down. Excerpts from CNBC-TV18’s exclusive interview with Sudharshan Sukhani: Q: How do you expect the Nifty to pan out now, and how would you trade from here on?
A: 4400 was broken and the idea was that we will see a free fall but unfortunately that analysis seems to have worked out correctly. The markets have support between very wide zones, 3600 to 4200. 4200 was broken yesterday and it is going to remain below that at least in the morning. So, the best case scenario is that the Nifty will stop its decline anywhere between 3600 and above and go below 4000. When will this decline stop, how will this trend start again are difficult questions to answer.
As on date there are no signs that this is going to happen soon but a minor up move can come any time. We have seen how those vicious 100-point rallies have started in the Nifty intra-day and in 15 minutes the bears have literally been thrown out and then the markets come back. So, for trading it is important that you set up long short positions only on rallies and then take profits. We can’t say that this market is in a downtrend so it can go down further. It’s also important to close your positions, take your short profits and then wait for another opportunity.
There is also an opportunity that once the market gives the signs of a short term up move, there are opportunities on the long side. So, for traders there are both ways of moving. A gap down today is a sign, stay away.
Q: What are your views on the two heavyweights from yesterday, HUL on which incidentally a large chunk got marked for delivery and Tata Steel? A: I am not upbeat on HUL, it’s been moving in arrange for many years and it is a defensive stock in the sense that if you buy it now, it could fall only 5% while others could fall 20%. But, it’s not going to give you the gains whenever the market rallies. Lever is not a trading opportunity and not even an investment opportunity. Tata Steel, inspite of the declines remains in a bull-market. So, at some point when we get a sense that maybe this bleeding is stopping, so at that point Tata Steel would be a buying opportunity.
Q: From a trading perspective can you think of any stock specific strategies on the long or the short side of the Nifty? A: There are a lot of stocks where we could actually go long given an impression that market is stabilizing. It’s a fairly decent list, Axis Bank, Nevville, Glaxo, which is a stock that doesn’t move much but that’s there. Then there is Nagarjuna Fertilizers, Chambal, the sugar sector Bajaj Hindusthan; so these are some names where there are possibilities of setting up long positions and everything else is a candidate for going short on rallies.
Q: We have been talking about this technical pullback that happened for the last few days for half to one hour but they get swallowed intra day as well you are not getting meaningful technical bounces which are enduring, what is that telling you about the structure of the market now? A: It’s telling me that the bears are very strong and these technical bounces come because some of these get scared. But at higher levels, it’s not just the bears that are selling. The moment Nifty is 100 points higher than what it was, it comes out to sell, liquidate and get out. So, this process tells us that there is a lot more in the market that has to get out, the long positions. That’s not very comforting and this market is not going to rally on a dime and is not going to turn on a dime. It is going to take its own time and the important factor is that if we stop falling then that would be a big achievement. Q: When you say everything else, can you think of five-six names that you reeled off from the long list? A: Reliance continues to underperform. The Nifty itself is a short selling candidate so are all those so called momentum stocks whether its RPL or RNRL. This now becomes a Reliance-kind of a list but if Reliance Capital breaks now, it is likely to heading for Rs 600 or Rs 500. Q: What do you make of the opening moves, a gap down then a pullback and then a bit of a weakness clawing back into the Nifty again? A: The pull-back has not been sustained at least not in the first five minutes. The opportunities are again only on the short side, it is when the selling is exhausted then we can think of a buying opportunity. But, the exhaustion doesn’t seem to have happened today. So, in any case these volatile markets like today are not very good days to trade, but if someone were to trade they would have to take a short position. Q: At 4120, would it make any sense to consider a long position to play for a technical bounce back or would that trade not really work? A: At this point in the early morning as we speak, it wouldn’t work. 4120 is no assurance that the markets are going to hold there. They are going to easily slid to 4050.
Q: Aside from playing these intra day moves, because the trend has been so strong towards the downside, are you being able to take some kind of a positional call on the Nifty as well? A: There is only one positional call on the Nifty and that is if someone has a short position, then he or she can simply hold on to it. This market has not turned; the intermediate downtrend is very much intact. So, that position could be maintained when it was initiated at 5000 and this could continue. Q: For somebody who is not short right now but is looking for a shorting opportunity, is this a good time or would you want a little bit more of a cushion or margin of safety at a slightly higher level on the Nifty? A: I am not short right now, and this is as good a time as any because you cannot wait for a cushion or a margin and then find out that it has gone away beyond the reasonable levels for selling. Any short position or for that matter any long position must be protected with proper stop losses and in any case only professional traders should go short.
Q: So what would be your stop loss if you took at 4130 Nifty? A: My stop loss would be about 50 points from wherever I go short. Q: What do you see for some of the frontline banking stocks, not these midcap trading favorites but HDFC Bank or even SBI? A: The Bank Nifty has broken down from an extremely bearish pattern and that tells us that lower levels are likely. The same thing has happened with State Bank. State Bank should probably see below Rs 1,000 numbers. The same thing is happening with ICICI Bank and HDFC Bank; both have already broken down from large bearish patterns. These breakdowns consistently on each of the banks charts tells us that at least for the time being they are not bullish. It is difficult to say whether they will complete their patterned targets and that would suggest a much lower levels, which may not come about. But they are certainly not buying opportunities now. Q: If there is a pull back, a technical one, what would be the limits on the way up, you see will it get up to 4200-4250 or could it get back to the last important level of 4400? A: If there is a technical pullback, it will be more than one day and will last longer; a couple of days and then it could easily reach 4400. It would also depend on how the international markets behave because that is affecting us. 4400 is not a very difficult target to achieve on the upper side and then who knows and maybe today’s lows could actually be the lows of the bear market, that’s something the market will tell us. Disclosure
I have investments in different shares. |
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