Technical analyst, Sudarshan Sukhani, s2analytics.com expects Nifty to face strong resistances at 5,900 followed by 5,940 and 6,000. As is the Nifty is entering a phase a strong resistance; there could be lot of selling, he said in an interview to CNBC-TV18.
"The trend and the momentum are still up. We want to buy on dips rather than rush headlong in the market. Therefore, wait patiently and then the rewards will be easier."
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.
Q: Is index looking good for stronger levels after the last three days?
A: Yes, the index is looking good and we caught the uptrend right last Friday and there is more momentum. However, easy money has been made. We have seen 200 point rally and that was relentless, that was one sided. Now as we touch 5,900, there is a strong resistance at 5,900, 5,940 then 6,000. Therefore, we are entering an area of strong resistance; a lot of selling could come.
The trend and the momentum are still up but it is not going to be as easy as the last five days were. So, the point is, ideally we want to buy on dips rather than rush headlong in the market. Therefore, wait patiently and then the rewards will be easier.
Q: Larsen and Toubro (L&T) has pulled back quite a bit, do you think it could do some more?
A: Yes, it seems so. L&T fell from Rs 1,660 to Rs 1,300 odd. A 20 percent decline for L&T was quite remarkable and it was one-sided. It has now made some kind of a micro double bottom. So, we have a pattern to support our upside momentum. Everything is going up for the last four-five days. In case of L&T the rally comes after a pattern. That is good. However, there is probably more upside here. I would suggest that rather than buying at the open wait patiently for those inevitable intraday consolidations and then go long. That will probably be more rewarding.
Disclosure: I have no personal holding in the stocks discussed.
Q: IndusInd Bank is in your sell list today.
A: Yes, IndusInd Bank is little bit of a risk. For the last two days the price action has not been very attractive. It has gone up like most other banks. However, the sense is that it is going to face significant resistance. I would suggest that this is a short selling opportunity and the chances are that one will make money. But again do not go headlong into it. Once getting a sense that the stock price is getting exhausted on the upside that is the time to go short and probably carry it also.
Q: You are also selling Raymond today?
A: This stock has done nothing except falling. It keeps on falling and does not stop. There was a three-four day small rally, it was a bearish flag and it promises a break under Rs 300 eventually. There is a story going on in Raymond, Century Textiles and Industries, I am not sure what it is. However, in any case there is more downside.
Q: Do you see more downside for Coal India?
A: Yes and that is a pity because I assume that a lot of people have this through the Initial Public Offering (IPO). They own it and lot of people must have bought it also. Coal India has been falling. At Rs 310-320, it made a small bearish flag and that suggests a sub-Rs 300 level. I would not know why it is falling. My job is to see whether chart pattern is poor or good. Unfortunately it is very poor for Coal India. It has come in our sell list a little while ago.
Q: The bullishness in technology continues. Today it is Tech Mahindra in your buy list.
A: Tech Mahindra had a strong rally, then a three day decline. A three day correction is almost the maximum one is going to get in a strong stock and yesterday it has begun its rally again and that is good news because the stock has cooled off. A bit of the overbought levels has come down. That heat has gone off. The chances are that it will make new highs for this upmove. All technology stocks are doing well. We have already seen Tech Mahindra and Mahindra Satyam do very well and are outperforming the others, which is saying a lot. There is much more upside here.
Q: You have a long call on Sun Pharmaceutical Industries.
A: One should do nothing in Sun Pharma other than buying it. It keeps on going up. It has been in a trading range for the last seven-eight days. It has not participated in the rally that the Nifty saw. But that is nothing. It will probably play catch-up. The chances are it is making lifetime new highs again. Sun Pharma is probably a buying opportunity in the morning. If there is a slight setback, do not worry. Just stay on with it.
Q: Would you go much beyond 5,900 in terms of long target or you think that is the first base to be covered by someone trading long?
A: Yes, 5900 would be the first base and if 5,900 touched today then traders should be alert towards taking profits. This market has run up. Now the next run up is not going to be in the same fashion relentless, it is not going to be day after day. So, there will be many opportunities next week of reentering this market on the long side. Short-term traders should plan to take most of their profits today. That does not mean the trend is changing. It simply means that carrying forward positions for next week is not necessary, they can be reinstated again.
Q: What do you see technically in Educomp Solutions?
A: I would not buy it. One cannot sell it. It is not in the Futures and Options (F&O) any longer. This is not a buying opportunity. It had a one big day yesterday and a very minor rally day before. It is not enough. These stocks even if they rally 30-50 percent, I would not touch them because they have to first build bases then only one would be justified and looking at them.
Q: Do you see Crompton Greaves getting back into triple digits or do you think it will get capped at Rs 100?
A: I think it will get capped soon enough. All we need is one day of weakness. Once we get that weakness, it is a short sell. It is same as Educomp, not same quality but it is not a buying opportunity.
Q: How would you trade Hexaware Technologies?
A: I would be a buyer. Hexaware has been coming in my buy list from the time when it turned around and it is doing the right things; it is making higher highs-higher lows. Traders should be going long in it and keep it as a position trade.
Q: Your views on Suzlon Energy?
A: Suzlon has been a big disappointment. On the settlement day when it was going out of F&O, I thought this is a one-off event and it will come back the next day. That has not happened. So, theoretically it is a sell but since one cannot short sell it any more one has to avoid it. This is not a buying opportunity.
Q: How much downside do you see in Hindustan Unilever's chart?
A: I have been thinking it is going to stem its fall and start going up so for me it is difficult to get a number on the downside. I have been wrong on that. Even now I would be a buyer here because Hindustan Unilever (HUL) and ITC are stocks that have to participate in any meaningful Nifty rally. I would be afraid of going short.