Technical analyst Sudarshan Sukhani of s2analytics.com expects market to remain choppy this week, warning traders to be cautious while taking any short positions. The week is crucial for the market as the much-awaited Union Budget 2013 will be presented by finance minister P Chidambaram.
The Nifty ended on a flat note on Friday at 5850 levels, according to Sukhani, any further fall towards 5,700 should be used as a short-term buying opportunity.
"We are near very strong support level at 5,780-5,800. We are moving down and we should take advantage of intraday moves on either side," he said in an interview to CNBC-TV18.
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18
Q: How would you trade this important week?
A: I would be wary of taking short positions this week on dips. The market is likely to be choppy. We are near very strong support level that is at 5,780-5,800. Therefore, a move towards 5,700 should be use as a short-term buying opportunity. The keyword here is short-term for a couple of days or even intraday.
I would be willing to take short positions on any market rally. These would be positional trades where I am betting that the market will fall down significantly lower than 5,800. That would be in March options and options are the best way to trade it. So, the view is that we are moving down but this week could be choppy and we should take advantage of intraday moves on either side.
Q: Market was flat on Friday, but some stocks like DLF did well.
A: DLF is something that has a theme. It is a long-term buying opportunity. I have spoken about it and put it in my buy list repeatedly. The reason why it comes again and again is because it gives us new buying opportunities. So, this theme is going to be a long-term affair. DLF currently is just breaking out to new highs for this upmove. It is a buying opportunity. It is being supported by a very strong long-term outlook on charts that is on prices. Therefore, in both cases DLF is worth buying into.
Q: McLeod Russel keeps coming up in your buy list. Do you see big targets there?
A: I see big targets there. It was in a trading range. After a big rally that trading range has decisively broken out. Intraday targets will be more modest but eventually it should cross Rs 400 and go higher. It does appear that it is doing some very interesting things. Perhaps it is becoming some kind of a unique asset in the sense that it is one of the very few stocks which have large plantations.
Disclosure: I have no holdings in the stocks discussed.
Q: You like Infosys within technology?
A: Yes, I do, in fact Wipro has come in our buying list earlier last week and Wipro finally did well. However, the same story is coming out with Infosys, big rally after the results, a trading range and a breakout from the trading range. Assuming that the market is going to see some rallies today, tomorrow, in this week, IT should outperform and the two stocks should be Infosys and Wipro. Today, Infosys should be the focus where it is breaking out to new highs.
Q: You are selling Punj Lloyd?
A: Punj Lloyd has a catastrophic chart. It is disappointing because I thought the stock had bottomed out and I was fairly upbeat on it as it was with Jaiprakash Associates also. However, Punj Lloyd’s chart is now broken down almost completely. The downside targets could be so low that they are not worth discussing. For a short-term trader, we could still be seeing Rs 45 in the next few days and that is 6-7 percent below closing but eventually it could crack Rs 40 and go lower. Punj Lloyd is now a short sell and that applies to most infrastructure stocks.
Q: Century Textiles and Industries is also part of your sell list today?
A: Yes, here is a stock that has done all the wrong things; it entered a bull market, it broke down from that bull market and now it is not stopping. There was a small consolidation and Century is breaking down from it. Stocks that are in consolidation, breakdown suggests much more downside is coming. It is a short selling idea for the intraday trader. If one gets money, exit and could keep on taking this trade for the next two-three days. On every rally, every breakdown, sell it.
Q: Your view on Maruti Suzuki India, which you think is headed lower?
A: That is a correction I would assume. Maruti has also been favourite and I am assuming eventually it will go above Rs 2,000. However, the market currently is saying something else. Maruti has now made a fairly bearish pattern that suggests an intermediate top is coming in place. I do not know why this blue chip is doing this but that is not for me to ask. The trade is to go short on Maruti, lower levels are coming.
Q: Any intraday trade that you can setout now given the preopening indications?
A: Yes, I would be a buyer in Nifty and that is an intraday trade so let me qualify that. We will wait for first 10-15 minutes and after that if the Nifty stays where it opens then a buying opportunity is justified. Traders are savvy; they can modify the timeframes, early or late. However, the trade is to go long. We have strong support underneath so we will just wait for this rally to exhaust itself on the higher side and then start creating short positions again.
Q: Power Finance Corporation (PFC) did not have a good close on Friday, how would you trade it?
A: I would still be a buyer in it. It has come back to a strong support level, Rs 200. Therefore, I assume that support will hold for the day. In the morning PFC will represent a buying opportunity, intraday traders have their own issues but traders should be aware that the trend is up in this.
Q: We have spoken about Coal India and its recent weakness before; does it still look like it is headed lower?
A: Yes, it is headed lower and it is a blue chip. However, we are looking at Rs 320 and then a crack below Rs 320 also. So, the trade should be, sell into a small rally.
Q: Would you trade Idea Cellular for more?
A: Yes. I would look at Rs 120 in it soon enough. Telecom stocks are now likely to bounce from the correction that they have already seen. The trend for both Bharti Airtel and Idea is up.
Q: Your view on Apollo Tyres?
A: Apollo Tyres has given a good chart pattern and it should be moving eventually towards Rs 100 but immediately towards Rs 93-94. This is a positional trade, not just a day trade. Traders should be positioning themselves on the long side, at least till the Budget.
Q: How about Hindustan Unilever (HUL). That look like it was recovering from its recent losses but Friday was a weak day again?
A: Yes, it was a terrible day but it has come back to Rs 450 support level. Now support can work two ways; it can breakdown so below Rs 450 we take off all bets. If Rs 450 holds then I would be a buyer in HUL, expecting at least another rally back to the higher resistance levels of Rs 475.
Q: Wipro is a long trade from IT space?
A: Yes, it is. Wipro is a nice chart. It has now recovered from all the losses that it had on the back of results and that by itself suggests a gap is being filled. Both Infosys and Wipro are good opportunities to buy.