In an interview to CNBC-TV18, Sudarshan Sukhani, s2analytics.com shared his reading and outlook on market and specific stocks.
Below is the verbatim transcript of Sukhani's interview with CNBC-TV18.
Q: How would you approach the start in the red today as that seems to be the indication from the SGX?
A: The index is starting at the red and this is the reason why we have maintained two different trend following mechanisms. The intermediate trend was down and we were saying that we have short positions. For the short-term trend the sense was that maybe we are seeing a pullback.
Yesterday we could not buy because the pullback never started. It opened with up gap and then did not sustain. The gap started getting filled.
Today the signs of a pullback have vanished. Now we have strong resistance in the 5,900 area that is now acting as resistance and the Nifty becomes a buying opportunity for short-term only beyond that. So, how do we trade the short-term? It is not easy because after 40 point gap down it is not always easy to short. At this point market is choppy in the short-term. The positional trades are short and should remain so.
Q: You see more damage on the charts of IndusInd Bank?
A: IndusInd Bank has been a distinct outperformer and earlier calls that the stock is topping out have been wrong. The same patterns have emerged again, a sense of distribution, a pattern called a descending triangle and a breakdown suggests that intermediate top is probably in place. It is a stock worth selling into and going short and the reason is that whenever this works out it will be big time and maybe we have to take small losses if at all.
Q: You have Reliance Power in your sell list.
A: Reliance Power started its decline from Rs 80. It continuously fell and for the last six-seven days there was a mild rally. That rally seems to have taken the shape of a flag, a bearish flag, which suggests that much more downside is available in Reliance Power. It is not just a day trade, it is a positional trade. One could take a short position and sit tight.
Disclosure: Sudarshan Sukhani has no holdings in the stocks discussed.
Q: You are long in Infosys today?
A: Infosys is building a base. It is suggesting that it is willing to go higher and that is happening with Wipro. Tata Consultancy Services (TCS) did not need a base because it is already in a strong territory. However, the message we are getting is that no matter what the Nifty does, IT stocks, at least the four large IT stocks are going their own way.
Infosys is the most attractive for today’s trading because it is breaking out of a trading range, which developed over the last one month. I would be a buyer here.
Q: You are also long on Indraprastha Gas (IGL)?
A: IGL has been too and fro chart; sometimes it gives an impression that it is breaking down, sometimes it suggests that is going up, at least for today the sense is that it is willing to see some upside momentum. Therefore, it is a short-term trade. Take the trade, if works -- sometimes it is high beta. If it does not, it does not.
Q: ITC is on your buy list among the largecap bluechip today?
A: ITC does not go down and that's the impression it is giving. At Rs 330 it has strong support. It has been making narrow range bars. I wouldn't buy ITC at the open, but if we see the slightest sense of stability coming in the Nifty then ITC is likely to be the first one to go up. Therefore, I would be a buyer in ITC once we see stability coming in the market.
Q: You are bearish on Future Retail?
A: I was bullish on it but it never works out. So, we have to follow the charts. A small rally and then a breakdown, which is like Reliance Power, suggesting that lower levels are coming. I think Future Retail is now going towards Rs 100, no matter what happens.
Q: Your views on the index?
A: The short-term trading strategy is quite confusion because it is not easy to go short after 30-40 point gap down. So, the intermediate short positions are maintained and for today I would see how intraday trading takes place.
If there is a rally then one should sell into that rally. The time to buy has gone. Yesterday was an opportunity and that did not work out.
Q: How are you looking at the chart of ICICI Bank which has come back to Rs 1,100 again?
A: Unfortunately it is bearish now. It is breaking down from a head and shoulder, which the Nifty has done, which the Bank Nifty has done. It is late, but the fact remains that it is going lower. Therefore, I would be a seller here.
Q: Bharat Heavy Electricals (BHEL) promised a bit after its results has gone back to Rs 180?
A: Yes, it has already confirmed a bearish head and shoulder. How nicely these patterns work themselves. The Nifty made that pattern; its components are now making it either confirming it already or in the process of confirmation. The same bearish pattern, BHEL has confirmed it, there is nothing here. We have to expect Rs 170-165.
Q: How would you trade Reliance Communications in the short-term?
A: It is still a buy on dips and the reason is just two days ago it made those new highs for the uptrend. One cannot challenge that. I would be a buyer here.
Q: Your views on Jain Irrigation Systems?
A: It is a big disappointment. It made a trading range broke out of it, repeatedly made higher highs and then in five days it has given up all its gains. A charitable explanation is that it is bottoming out and that process is choppy at best. However, as a trader one cannot stay long. If at all one wants to take a trade then it has to be on the short side and it is not easy to short this after this decline. Therefore, it is to avoid.
Q: If this downtrend continues then which are the really strong supports one should be watching on the Nifty. Is it all the way down to 5,500 or between this zone of 5,500 to 5,800 there are significant supports?
A: There is a reasonable support at 5,700 and that is the number one should be watching. It is only when 5,700 gives away then we are looking at 5,500, there is a free fall and there is nothing to hold it. But the first level of 5,700 bears watching, the way market momentum is developing, it is very worrying; it should be very worrying for the bulls.