Due to the lack of cues, Sudarshan Sukhani of s2analytics.com advises traders to stay away from both the indices today. He believes taking a trade on either the Nifty of the Sensex would prove to be difficult.
“What has happened is the Nifty has locked itself now into a 100 point trading range from about 5,100 to 5,200, and we have repeatedly found that trading inside such a narrow range is froth with danger,” he said in an interview to CNBC-TV18.
Therefore, his trading call for today is to go long on the Bank Nifty. While he was mildly bearish on public sector banks yesterday, the Bank Nifty’s outperformance has changed that view. “So for today we would like to trade the Bank Nifty and completely stay away from the index,” he said.
Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: Closing the series with a bit of a whimper, but how would you approach the trade on the Nifty and would you take a position going into July as well?
A: I am bit confused for the day because there is no indication of the market going up or down. What has happened is the Nifty has locked itself now into a 100 point trading range, about 5,100 to 5,200. We have repeatedly found that trading inside such a narrow range is froth with danger; one loses money because the market moves 20 points and we think the trend has started and retreat back.
So for today, for the Nifty there is no view. There is a view on the Bank Nifty. The Bank Nifty seems to have outperformed yesterday and therefore there is a buying opportunity in the Bank Nifty. Yesterday we had turned mildly bearish on PSU banks but the view seems to be changing today. This is exactly what a trading range does. It gets those mood swings. But for today we would like to trade the Bank Nifty and completely stay away from the index.
Q: You have a sell on Titan Industries?
A: Titan has been a sell for sometime because it was distributing and at that time it cracked Rs 250 that was the first sign of Titan going down and that downtrend persists. I suspect the immediate target for Titan is around Rs 190 or Rs 180. A day trading target is Rs 210 but Rs 210 may not hold. Once the stock starts on a downside it persists and continues going down.
Q: Jubilant Foodworks too is a sell in your books?
A: Yes because most fast moving consumer goods (FMCG) stocks are sell as are pharmaceutical stocks. They are going through a correction. We have repeatedly explained and these stocks are coming in our list. Jubilant seems to have made an intermediate top and because it’s a concept stock its rallies are fast and therefore its declines could also be quite spectacular. I would expect Jubilant to come to below Rs 1,000 sooner or later.
Q: You are playing a long trade on Bajaj Auto today?
A: Yes and Bajaj Auto is now on the verge of a minor breakout so when one is looking at day trades these minor breakouts can add a lot of value to traders who is looking at a one or two day trade. Bajaj Auto in any case is in an uptrend just like Hero MotoCorp. The stock is in an uptrend, it’s in a narrow range, willing to breakout. I think the breakout is imminent so Bajaj Auto becomes a buying opportunity. In any case when one buys a strong stock the chances of going wrong are minimal.
Q: Idea Cellular is a sell as well today?
A: Idea has also been a sell earlier. This stock made a V-shape reversal, an inverted V. It was rallying and suddenly Idea and Bharti Airtel started falling and Idea started falling much more. Idea is a sell that is continuing. There is no sign that the decline has come to end and it’s a bit of a surprise but I would expect lower levels before it stops, before it begins consolidating.
Q: NMDC is a buy in your list?
A: I think NMDC listed at Rs 300 and now it’s Rs 150. At around Rs 150 it built a reasonable base. It’s now breaking out of that base. At Rs 175 gives a new breakout. So this public sector undertaking (PSU) stock is rich in content in terms of whatever it owns. It made a base, first breakout and now at Rs 175 one is getting a second breakout. It’s not only a day trade; I think it’s also a positional trade. If one is willing to buy and hold for few weeks then should look at NMDC.
Q: What about NTPC?
A: NTPC had a decent rally and then a very sharp correction. There is something going on broadly in PSUs which is why PSU banks are also coming on the forefront and Coal India was coming earlier. NTPC seems suggesting that at Rs 140 the lows have been made for the stock. It’s already made a pattern of higher highs-higher lows. Yesterday it had shown some gains and the patterns that one has seen for the last four-five days suggests a strong and sharp rally to Rs 160- 165 immediately and Rs 180 in the slightly longer-term.
Q: What kind of stop losses does the trader work with assuming you have got a long stance on the Nifty? How tight would you keep the range even for an intraday move?
A: Intraday moves, the trade could be different, depends on how we open and where we go. But for somebody who is carrying positions in the short term, let’s say a swing trader, the stop losses are easy. This is just under 5100. If the Nifty cracks 5100, I don’t think long positions should be held on to. It hasn’t done that.
Q: The heavyweight Hindustan Unilever (HUL), you were talking about some of the consumers. Is HUL also looking weak technically?
A: It has seen a very decent rally. Yesterday it saw a big decline but one day is not enough. So I would assume that today HUL is a buy on dips for the day trader. It’s not yet given the kind of distribution patterns that we expect from FMCGs or that we have seen elsewhere. So far HUL has held onto its own.
Q: Media stocks have seen some buying over the last few days. What about something like a Dish TV?
A: Dish TV has an excellent chart. At Rs 60 it is now willing to cross and give a target of Rs 65 almost immediately. So unless something unforeseen happens, it’s a trade that we should take as a day trader and as somebody who wants to keep positions.
It is not just Dish TV. A lot of media companies are now giving very attractive chart patterns, building bases, bottoming out including TV18 Broadcast. So there is a theme developing in media and Dish TV is certainly one of the better ones.
Q: Any stability on the charts of Ambuja Cements?
A: Yes, Ambuja Cement saw a decline on the back of news. Ambuja Cement’s charts now suggest that the worst is over and by worst, I mean the small correction is done with. The undercurrent in cement charts is bullish. The current dip in Ambuja Cement should be used as a buying opportunity.
Q: How about something like an HPCL?
A: HPCL has already seen a very sharp rally. So while theoretically anything that’s moving up should be bought into but ideally, you really want a dip or a correction to go and buy. Eventually HPCL’s target of Rs 350-360 are available in the short-term, you just need to time your entry a little better.
Q: Alok Industries movements have been a bit erratic, what are the charts suggesting there?
A: The charts are horrible. It’s making lower lows, lower highs. It’s actually in a visible and clear downtrend and that in the market which is going up. So it’s a distinct underperformer. An immediate target on the downside is Rs 17. But that’s probably not the end because the market is clearly discounting some terrible news here.
Q: Just to switch back to some of the media names, Zee Entertainment technically?
A: It is also having a decent chart, although Dish TV is probably getting ready for a much bigger breakout. For Zee Entertainment Rs 140 is a strong resistance, Zee is now standing at Rs 140. Once it crosses that hump then you go and buy because it broken out of resistance. Zee already had a decent rally from Rs 110 to Rs 140, so its far better for it to cross Rs 140 and then traders should wait for a correction or a dip ,and then enter rather then just buy on the breakout.
A: No, I do not tracking Muthoot Finance although I track Manappuram, I also held shares in it which I sold yesterday. Manappuram had an immediate target of Rs 30 which is within striking distance which is where profits should be taken.
Disclosure: I have no holdings in the stocks discussed.