On Friday, the Sensex fell 60.05 points and closed at 16,972.51. The Nifty dropped 18.95 points and ended at 5,146.05.
In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com says, the trend is up. "Trade is still to remain long on the index," he adds.
According to him, the Nifty will reach 5200 and maybe higher in the next few days.
Below is the edited transcript of his interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.
Q: We are heading into an expiry week. What kind of upside would you work with as a Nifty trader?
A: The trade is still to remain long on the index. The market has held on to support levels, 5,000 is way down, even 5,040 has been holding steady. Is the trend in any kind of difficulty? The answer is it is not.
I assume what is irritating to traders is the fact that the market is not obliging us by immediately going up. The market will do what it wants and it doesn’t respond to one’s wishes in that way.
The trend is up. So, we stay long. It is very difficult to make a call on expiry. I would have thought 5,200 was within easy reach this Thursday, but there is so much of news. So, the idea is that we will reach 5,200 and probably higher in the next few days. I do not know about this Thursday.
Q: Hindalco is a sell in your book?
A: Yes it is a sell because the rally that one saw in Hindalco and the bullish pattern that was made has failed. Failed bullish pattern has its own implications on the downside. It’s a pity because I own shares in Hindalco. Metals have been underperforming but this is distinct under performance when patterns cannot meet their targets on the upside. Hindalco has turned around. In a choppy environment it is likely to go down; of course if the broad market suddenly starts to move up, it may not go down as much or may under perform but the fact remains that it’s a short sell.
Q: You would say the same of SAIL as well?
A: Yes SAIL is also a sell. The stock is now on the verge of completing a fairly bearish pattern but it’s difficult to say how much lower this stock can go. The market seems to be pricing in a lower price. An immediate target for SAIL is Rs 87 but that may not be the end because it could slide down to Rs 81-82.. It could happen that maybe the market maygo up and in that case these targets won’t be met but they will remain underperformers and for today both the metal stocks are short sell.
Q: HDIL is a buy today?
A: Yes HDIL it is a buy because it has done all the right things and built a base for almost one and half months. Then went through a mild correction and on the last two days has been going through some dramatic rallies. I feel that these rallies are not going to end soon. We will have consolidations and some small dips which are excellent buying opportunities.
The stock is suggesting that this is the first leg of what could be an interesting uptrend and the first leg will not end. So this is a stock we want to go into at every opportunity, as a long candidate and today one can see a follow-through for Friday.
Q: You have same strategy for Reliance Capital?
A: Yes, same for Reliance Capital. It has almost similar charts like HDRIL except that HDIL’s percentage moves have been larger and it is a high beta stock but Reliance Capital seems to have found its lower levels. Rs 270-280 is the bottom that we are seeing and it is very likely that it will hold.
Currently, the stock build a base, broke out, corrected and now has renewed its advance. That correction could be a flag, which is often midway suggesting a target of Rs 410 or even Rs 415 or Rs 430 eventually. The Reliance Capital targets are Rs 377-380 for the current one-two day upmove or if it gets postponed for two-three days. But the stock is a buy.
Q: You have also picked IndusInd Bank from the financial space?
A: Yes, its one of the better banks and IndusInd is making an excellent pattern. It fell from almost Rs 400 to Rs 300 and that is a deep correction by any standards. That correction seems to be getting over and if that is so, then after a deep correction the stock will find its levels at Rs 400 and if banks do well, it’s likely to outperform.
On Friday we have something called an inside day in IndusInd Bank and that’s usually a sign that a big move is coming. For short-term traders, IndusInd is a buying opportunity. Wait for first 15-20 minutes and if strength is seen then go long immediately.
Q: Bombay Dyeing is a buy in your book today?
A: Bombay Dyeing has gone through a deep correction form Rs 560-570 to Rs 380. These deep corrections are signs that this stock has completed its downtrend and is now resuming its upmove. Tat upmove resumption requires price gains which Bombay Dyeing is doing. So once the price gains are there it built a small narrow trading range and is now willing to breakout above it.
It does appear that Bombay Dyeing will eventually test its highs at Rs 570-580. We have modest and much lower target for this upmove and that is Rs 530 but that is a good target. So, today Bombay Dyeing is on the verge of a breakout from a narrow trading range and should be a long idea. The markets can open slightly weak, so there is no rush. But if there is sense that this market is now stabilizing, the long idea should be picked up immediately.
Q: One of the stocks which did well on Friday was Jain Irrigation, would you back it?
A: I would back it, in fact after a long time the stock is coming at a place where I would buy it. It has made an excellent bottoming out pattern, a double bottom, is on the verge of crossing it and it should. So Jain Irrigation is now a buying opportunity. It is a high beta stock, so it could do nice things on the upside.
Q: Shree Renuka Sugars rallied nearly 7% last week; do you see more upside there?
A: Yes and gratifyingly it was in our buy list before it gained that. There is more upside but sugar stocks at this point are not in the range where they give back to back gains. So perhaps today is a cooling off day for them. If the stocks cool off, then that ideal buy on dip opportunity comes, there is more upside and Shree Renuka can easily see Rs 32 and maybe higher eventually.
Q: How about to something like Jaiprakash Associates that did not have as much luck?
A: Yes but Jaiprakash is a good stock now, it is bottoming out. This bottoming out process takes a long time, it doesn’t happen in a week or month. So JP Associates is a buying opportunity. We ignore what is happening to cement and ignore everything else; charts are telling us that the worst is over for the stock. On Friday, it actually rebounded from its lows and that tells us we may have follow through, if not today then in the next few days. It is an ideal buy.
Q: What did you make of how Sintex Industries moved on Friday?
A: It was disappointing, it rallied and then it could not hold to its gains. We had a buy on Sintex and that buy seems to have materialised and met its target. So of all the 3-4 targets we have discussed so far, Sintex would me my least preferred stock. It is still a buy but it probably needs to do a lot more good things, which Jain Irrigation has apparently has already done.
Q: Your view on Jet Airways?
A; Aviation is my least favourite space. I have never seen a company make money in it as a corporate entity but the market likes it. Jet Airways after a brief correction has made a pattern that suggests a significant upside here. So, those who like momentum stocks and love aviation should go for long position. It is quite easily going to cross much more than we think. Rs 410 is an immediate target but I suspect this pattern will take it to Rs 450 plus.
Q: How are you trading gold now?
A: I am out of gold. After having maintained long positions for a long time, I don’t have a position in gold. I don’t have a bearish view on gold but the international markets are not very conducive. Indian markets have rallied thanks to the very weak rupee that could also be coming to an end. So we are looking for a choppy market in gold, sometimes going above Rs 30,000 per 10 gm, sometime dipping down to Rs 29,000 per 10 gm. Currently, for traders it is untradable. For those who want to keep positions, positions should still be on the long side. Just be prepared for volatility.