The week gone by was disastrous for Dalal Street. The Indian stock market was bogged down by political uncertainty, global markets and a lacklustre monetary policy. The Nifty ended the week down by 4 percent and touched the lowest levels of 2013.
There are just three trading days in the next week, so Sudarshan Sukhani of s2analytics.com expects the Nifty to be choppy.
"Bank Nifty is trading at its lows, so short selling is difficult, buying is not very easy therefore the chances are that in the three days are likely to pass away without any significant trades," he said in an interview to CNBC-TV18. However, short-term traders may take positions if they see some opportunity.
Below is the verbatim transcript of his interview on CNBC-TV18’s weekend show Taking Stock.
Q: Next week is truncated but we do have the Futures and Options expiry. Would you just sit back, relax and enjoy the two holidays that we have or would you take trading positions next week?
A: Short-term traders are likely to take positions if the market gives an opportunity. So three days are enough if there is something to trade on. However, as we enter the next week the Nifty itself is choppy, the Bank Nifty is trading at its lows, so short selling is difficult, buying is not very easy therefore the chances are that in the indices themselves the three days are likely to pass away without any significant trades.
Individual stocks are offering opportunities and that of course will remain.
Q: After the 5 percent slide that we saw in the midcap index last week it may be too late to perhaps take fresh short positions. But do you think there are still some opportunities in the midcap space where you can short in this upcoming week and if yes which are those stocks?
A: I think so. There are lots of stocks in the midcap sector that are just beginning their declines. All the stocks don't move at the same time in the same direction. The direction is usually common but the timing is different.
We have Adani Ports and Special Economic Zone. Adani Ports has now confirmed a bearish head and shoulder pattern that tells us that the distribution was taking place, it is confirmed by the market. The market is willing to give it lower prices and the stock is likely to head lower to its pattern targets. Adani Ports is a short selling idea and this has nothing to do with the Nifty. Of course on a day if the Nifty rallies, the stock itself will be a little higher. To that extent you can sell into strength but beyond that this stock will go its own way. It is just a little late as compared to the others.
In the same way one of my erstwhile favourite and hopefully future favourite also is Petronet LNG Ltd which is a short selling idea. Petronet has made a similar descending triangle in an ongoing downtrend. Without being very technical about it we had a downtrend, we had a consolidation. That consolidation took the shape of a bearish pattern and then the stock has fallen on Friday below it. It tells us that lower levels are coming. So you can look at Petronet as another selling idea. It is not directly linked with the Nifty. Because the market is weakening all of these things are coming up on the charts anyway.
Without referring to the other midcaps these are independently available for a trade next week.
Q: Any buy ideas that you have on your list for next week?
A: To uplift the mood we will start with some buy ideas and this time in midcaps it is Biocon. It is not doing anything especial, which itself is good news because it is not tumbling, it is not falling, it is in a sector which is broadly cheerful. So, Biocon is in a trading range and it is giving the first sense that it may be willing to breakout on the upside. Biocon is something that we should be looking at to buy. That is a nice idea to be in.
Second is IGL, the stock has been choppy after the price news which came out few months ago. However, IGL is now coming out of that choppy trading range; it is moving towards Rs 270-280 which is where it is now and breaking out. So IGL is another midcap idea that is likely to do its own thing irrespective of what the Nifty does.
IGL and Biocon are worth looking at for the long side and probably it is possible to make some money in it.