Technical analyst Sudarshan Sukhani of s2analytics.com expects Nifty to breakout its 100 points trading range of 5,040- 5,140 going ahead. "This range has kept the Nifty locked for the last nine trading days. It’s going to breakout one way or the other, so a breakout from this range will be the bigger trade," he said in an interview to CNBC-TV18.
Meanwhile, he has suggested traders to buy on dips and intra-day breakouts. However, if the Nifty falls from here on, Sukhani is not looking short it.
Below is the edited transcript of Sukhani’s interview with CNBC-TV18. Also watch the accompanying video.
Q: We managed to get back to 5,100, how would you trade the index today?
A: I would still be a buyer and that has been consistent. We want to buy the dips; we want to buy any intraday breakouts. So we need to have a clear view that the trade is going only on one side that is on the long side. If the market decides to slip then I step aside. I am not looking to go short in it.
But interestingly we now have visible trading ranges to talk about. We have about 5,040 on the lower end and 5,140 on the other hand. This 100 point range has been keeping the Nifty locked for the last nine trading days. It’s going to breakout one way or the other, so a breakout from this range will be the bigger trade.
Q: BPCL is on your buy list today?
A: Yes, it’s on my buy list. BPCL is at a point at which it is now breaking out. It had made trading ranges earlier and now those ranges are on the verge of a breakout on the upside. So I am going long in BPCL in anticipation of a much bigger move.
Q: You have chosen to buy Polaris from the midcap IT bunch?
A: Polaris had a massive bear market. It fell from Rs 220 to Rs 100 and that is not just a decline but that now seems to be getting over. Polaris made a double bottom. It’s come out of that double bottom. There is a visible and clear reversal pattern. Yesterday, there was some follow-through and today one can expect more gains in Polaris. For positional traders Polaris is a good idea.
Q: Why you have a sell on Hexaware Technologies?
A: Hexaware is turning around. It is now making something which I would consider a distribution. So the rally in Hexaware seems to be over. Sometimes the distribution takes a lot of time but often sharp spikes are seen on the downside and yesterday also that happened. Once this distribution is over I would expect Hexaware to slide significantly lower.
Today the stock is willing to be pushed much lower than the broad market suggests on the upside. So Hexaware is a short sell as a hedge and also independently as a positional trade.
Q: You are selling Orchid Chemicals and Pharmaceuticals?
A: I have been selling Orchid Chemicals for a long time, including the big declines we saw on news. Orchid went into a small trading range and it has broken down from that trading range, not up and that is remarkable because most stocks are now making these ranges and going on the upside. So whatever news was there is not yet fully adjusted in the prices. The chances are it will go below Rs 100.
My targets are Rs 110 for the short-term trader but in a market where broadly stocks are going up it’s a nice idea to have one-two stocks that are relatively weak on the short side.
Q: Lupin is a buy?
A: Lupin is more of a buy, in the sense that it has come to Rs 520 which is where significant support comes. Lupin is an excellent stock, a very strong pharma stock. So at support, I would expect it to rally on the upside and if that happens then one is buying almost at the lows of a decline. But if this support breaks decisively and that is why we need to use a stop loss then Lupin’s chart will change. I am assuming that this support will hold and we will see a rally. So it’s worth getting into.
Q: You have a buy on Alstom Projects?
A: Alstom Projects is a stock that has fallen, gone through a deep correction and made a very bullish reversal pattern on the downside. We are seeing number of such stocks doing that. Once this bullish pattern is complete and yesterday it confirmed that pattern, I would expect a new uptrend to start for Alstom Project. So it’s a good stock for today. Yesterday’s big gains should see follow-through today and eventually much higher levels are possible.
Q: Looks like a flat start coming up is that level of 5140-5150 assuming some importance now given that we have struggled to close above that over the last 10- days?
A: It is very significant for a technical trader or any kind of trader the Nifty is locked in a very narrow range. So luckily we don’t have to make a call on the market inside tht range, we can simply trade the boundaries breakout. Anything above 5140 even intra day would give me a sign that the Nifty is willing to go up and below 5050, would tell us it is not working out. This is always a nice trade to take when we don’t do anything the market does the work for us.
Q: How do you trade cement?
A: I would actually buy it;. There was news and then we saw some knee-jerk reaction. There is certainly a buying opportunity. Long-term charts for cement are very attractive. They have been in a trading range for years altogether and did nothing, something like HUL was doing. So now, cement becomes a long-term buying opportunity.
Q: What about a stock that was under pressure but managed to close off the lows of the day that is Reliance Communications?
A: There is so much news since yesterday and on the charts it made new lows. So even though it rallied off the lows, it would be a sell rather than a buy. I wouldn’t touch RComm on the long side till dust settles down. Even a slightest selling pressure can push it towards Rs 61 which would be a downside target
Q: Your view on Wockhardt which continues to move higher?
A: Yes, it surprises and astounds all of us and you still have to buy it, in spite of the fact that it is now at Rs 900 but it can come to Rs 925, which is a short-term target and we don’t question why it is going up. If somebody wants to trade it and it is a good trade because it’s on the verge of breakout again. It is a long position, go and buy keep a stop loss.
Q: What do you make of the movements in Pantaloon?
A: Now at Rs 175 Pantaloon is on the verge of another breakout. There is a strong resistance at Rs 175, it closed exactly at that point. So if we see gains today then that would tell us that the market is now willing to pay a significant premium to Pantaloon’s prices. The decline for the time being is over. So Pantaloon becomes a buying opportunity. We just need to be sure that the levels are being crossed. If they are then there is much more upside here.
Q: How about an IGL?
A: IGL is doing nothing. So in all fairness it shouldn’t really be a buy or a sell. But if you have to make a call on it, there has to be a buying opportunity because it’s in a small trading range. The slightest nudge to Nifty, the slightest nudge in sentiment on upside can push it to Rs 250.
Q: Any clarity on how you would want to trade Apollo Tyres?
A: Yes it’s absolutely clear; I have been bearish on Apollo Tyres for sometime now. I had explained that it has made a confirmed very bearish patterns and it is going much lower. I don’t know why because earlier we saw very stunning rally from Rs 40 to Rs 85 but whatever the reason Apollo Tyres is a sell on every rally, on every occasion.
Q: What is Infosys chart looking like?
A: Rs 2500 is a point at which Infosys opened when there was that big gap down after the results and we are now at Rs 2500. Anything above Rs 2500 tells us that the market is willing to fill up that gap, that is bullish news. So I am upbeat on Infosys, and I am looking to buy it at every occasion
Disclosure: I have no personal holding in the stocks discussed.