Technical analyst, Sudarshan Sukhani, s2analytics.com said that it is not just the weak global context; it is also the fact that our market is already in a downtrend. The market appears to be heading lower.
Further Sukhani said that we are going to have a correction of the entire up move that started from 4,500 and went to 6,120-6,130.
"Today is another down day, the chances are we will go down and try to test support. This support may hold because the Budget is coming by or it may not hold and we may simply crack it," he said in an interview to CNBC-TV18.
Q: We have got a slightly weak global context today, how would you approach the Nifty?
A: It is not just the weak global context, it is also the fact that our market is already in a downtrend. The market appears to be heading lower, we are going to have a correction of the entire up move that started from 4,500 and went to 6,120-6,130. That is a 500-600 correction that should be expected in this market, which brings us to a level of 5,500-5,600 eventually. This won't come about in a day, it won't even come about in a stream of declining days so that it comes and gets over with. It won't happen like that. It will happen in a very choppy way, market will go up and they will quite often come down and eventually they will go lower than they go up. It is not going to be easy.
This is the background in which all analysis is being done now. Today is another down day, the chances are we will go down and try to test support. This support may hold because the Budget is coming by or it may not hold and we may simply crack it. However the bigger trade is on the downside. So, yesterday the idea was to sell, today the idea is to sell again on rallies or even on a breakdown of the morning range.
Q: Bata India has been popping up on your sell list for sometime.
A: Yes and it has been coming down. These are the signs that blue chip stocks, stocks that double, triple themselves are now going through deep corrections. That is just one of the many indicators that suggest that we are in a strong downtrend. Bata made a small narrow range triangle and it has broken down from it that tells us that the current levels are just midway in an ongoing down move. That could give an eventual position trading target much lower than we can image for Bata. However, for the short-term trader it is a short sell and see, what other stocks like Jubilant Foodworks, Titan Industries are doing. They are all going down so it has very good company on the downside. I would be a seller in it, every rally is a sell.
Q: Where is Tata Steel headed eventually?
A: It is very disappointing because Tata Steel’s final frontier is Rs 350-360 and I do not think that that is going to hold. It has been falling relentlessly. It had a two-three day rally and the idea was to sell into that rally. That is over with. It is now breaking. It is at Rs 378. It is on the verge of going into a freefall. It is very disturbing. That is a longer term view. In the shorter term, Tata Steel is a sell today. Yesterday’s breakdown should see lot of momentum on the down side. All metals are very weak.
Disclosure: I have no holdings or interest in the stocks discussed.
Q: You have a buy on Aditya Birla Nuvo?
A: Aditya Birla Nuvo is a far better chart. Now stocks will not outperform in the sense they will not go up if the broad market comes down but they will certainly outperform. This is likely to be one of the outperformers. Yesterday we had a big up day after a small trading range so it seems that the bear market or the downtrend or correction in AB Nuvo is probably over. Any dip, consolidation intraday should be used to go long in it. It could easily go up even while the markets remain choppy.
Q: You are long on Madras Cement today?
A: Yes. It is probably for the first time that this name has come in my list. It has a dream pattern, a rally and then that rally ended up with a bullish head and shoulder pattern from which it broke out. It is a chartist's delight. A consolidation and then a breakout from a perfect pattern and in any case I have been a little upbeat on cement earlier also. I have been saying cement is bottoming out and that sense is coming in a lot of charts. Madras Cement is a position trading opportunity; it is also a day trading buy. Look at it there is going to be lot more momentum on the upside.
Q: Cairn India has been coming up in your sell list; do you think it is headed sub Rs 300 levels now?
A: I think so. Eventually the pattern targets for Cairn are Rs 250-260. I do not know whether this will come about so there is no sense in talking about it but for short-term trading the view is very clear. Any rally, any breakdown in Cairn, sell it. It is certainly heading sub Rs 300.
Q: Tata Consultancy Services (TCS) is a stronger looking chart?
A: It is a much better looking chart. It is on the verge of making lifetime new highs. In a market as bad as this if a stock manages to do that we want to respect it. The context for day traders is very important, if the whole market is going to be subdued today, there is no need to buy TCS.
However, if one gets an intraday sense sometime during the day, during the afternoon that the market is now rallying or even consolidating, it will be wise to go for TCS than to buy the Nifty. One will get much more upside there.
Q: If we get a pullback intraday, how would you approach the index?
A: I would call it a continuation of the downtrend and I would be looking to sell it. Yesterday also that was the idea, to short at 5,940. The reason is that today is not a buying day for me. We want to buy only when the market gets exhausted. We bought on Monday and Tuesday. Today is not exhaustion. It is going to be the start of a new downmove, wherever it goes. Therefore, buying for me is completely out of question today.
Q: Do you sense any breakout coming in Reliance Industries?
A: Not a breakout. Reliance is a buy and it is a buy on every dip, every consolidation, which means that no matter what the index does we do not want to sell Reliance. We want to be buyers whenever we can. That is a broad outlook for Reliance.
Q: What about Bharat Petroleum Corporation (BPCL) from the oil space?
A: BPCL is a buying opportunity for the day. It is an intraday trade. The entire oil and gas sector, as we can perceive is doing the right thing. Therefore, BPCL also should only be looked for buying.
Q: Your views on Crompton Greaves?
A: Crompton is a short sell, in fact even today. I think the decline is not over yet. It is cracking, it is going to go lower than we can imagine. We have seen so many midcaps do that and Crompton is following that way.
Q: Would you trade IDFC from the financials?
A: It is a matter of regret because I thought IDFC was starting a bull market then it made a distribution pattern, a head and shoulder, broke down. It is making another big distribution pattern that suggests much lower levels are coming. So, IDFC is a short sell. Today, for a positional trader, for both kinds of timeframes, should be selling it.
Q: Is there anything on Aptech's chart?
A: Yes. It is worth buying into. It has fallen so much. It is coming in exhaustion category. Yesterday everybody got exhausted so people thought of buying this.
Sometimes this works out and in case of Aptech it could easily work out on the long side. Do not have large expectations, for trader. However, it is worth buying into.
Q: How would you approach Tata Motors technically?
A: Tata Motors is a buying opportunity but I would not buy it today. I am not sure how the markets will pan out and if there is softness, there is no reason to buy Tata Motors. However, at some point it will become a buying opportunity. That point will come perhaps next week for the Nifty and for the blue chips like Tata Motors, Reliance. Essentially, I would be a buyer. I would not short sell.
Q: How much more downside do you see in Jaiprakash Associates from the level of Rs 70-72?
A: It is giving the sense that it will go back to Rs 55. It has done all the wrong things, broken every single support level and given my own view that the market is not likely to be cheerful, JP Associates will see much worse carnage. It is not bottomed out. Much lower levels are coming.
Q: What level on the way up will convince you that this correction has come to an end and is not proceeding to 5,500-5,600 levels eventually?
A: It is an awkward answer because if the Nifty makes lifetime new highs and that is 6,350 then all prognosis of a bear market, of a downtrend have gone wrong. However, that is long way off.