This is a traders market and they should now to be on the long side, says Sudarshan Sukahni of s2analytics.com. In CNBC-TV18’s special show Investor Camp, Sukhani suggests buying on dips.
"I would prefer a ‘buy’ rather than ‘sell’ at this point in time because the market is slowly but steadily shifting its focus from being bearish to being bullish," he added.
Below is the verbatim transcript of Sukhani’s market analysis on CNBC-TV18
Market is in a narrow trading range for the last four years. In the Nifty it is broadly in the range of 5000-6000. So, in a market which moves in a 1000 point range there is no trend, there is no bear trend either, it is not a decline but unfortunately there is no bull trend either which means that in this market if one were to buy shares and say I am holding on to them one might see big ups and downs. There is lot of volatility in the market and it is no fun going through a lot of volatility and seeing your shares become half – or lose 30 percent of your value.
At this point, we are in a traders market so I am going to give you a checklist for what successful trading is about. Before I give you that checklist let me also tell you what will be the shape of this market.
The 5000-6000 range of the Nifty cannot last forever. Sometimes it gives the impression that we have spent our whole life looking at 5000 Nifty, 5500, 6000 then 5500 again and see nothing else. But this is a consolidation or a trading range. This Nifty pattern will do one of the two things. It will break above 6000 and give us a new bull market.
You do not know what a bull market is because for the last five years we have forgotten what a bull market looks like but in a bull market the Nifty will go to 6500-8000 and 10000 and 11,000, I do not know where it will go but it will do all these things. That is one option that the market will give us.
The second option is that the Nifty collapses and comes back to 3000. Given the fact that we have gone in a trading range for four-five years it seems very likely that we are going to see a new bull market emerge. Whether that emerges in 2014 or 2015, I have no idea and we should not even care. It does appear that our bias now should be on the long side of the market.
We should be buying dips if at all even when we are trading we should be looking to buy rather than sell because it does appear that market is slowly but steadily shifting its focus from being bearish to being bullish. Once the bull market starts then what will one do, one will become an investor.
One does not have to trade in and out, one does not have to trade to buy and sell in three days because in a bull market investors make the most amount of money. That day will come, but as of now we are in a trading range market. Sooner or later we will break above 6100-6200 then that will become a big base. That will become a big consolidation towards a move that could take the Nifty all the way much higher than we can imagine. That is the forecast and has uncanny way of going wrong and therefore, do not hold me to it. I do not trade on perceptions, I trade on charts and I trade only on real prices, these are only judgments.
This is a trading market and even if we assume that the market has become bearish and is going towards 3000 Nifty, or the markets become bullish and go much higher and make life time new highs.
Trading will still be an activity that will be profitable. In a trading range market trading is the only activity that is profitable. In other markets trading will still significantly outperform all other stock market activities so, we should be traders.